NRT INC, S-1/A, 1999-05-14

NRT INC
S-1/A, 1999-05-14
REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)

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<PAGE>

As filed with the Securities and Exchange Commission on May 13, 1999
Registration No. 333-72093

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-----------

AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------
NRT INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)

Delaware 6531 33-0769705
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)

6 Sylvan Way
Parsippany, New Jersey 07054
(973) 496-5700
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)

Steven L. Barnett, Esq.
Senior Vice President, General Counsel and Secretary
NRT Incorporated
6 Sylvan Way
Parsippany, New Jersey 07054
(973) 496-5700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

-----------

Copies to:
Stephen F. Arcano, Esq. Mark L. Weissler, Esq.
Skadden, Arps, Slate, Meagher & Milbank, Tweed, Hadley & McCloy LLP
Flom LLP One Chase Manhattan Plaza
919 Third Avenue New York, New York 10005
New York, New York 10022 (212) 530-5000
(212) 735-3000 (212) 530-5219 (fax)
(212) 735-2000 (fax)

-----------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

-----------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

-----------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until this
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. Although we +
+are permitted by U.S. federal securities laws to offer these securities using +
+this prospectus, we may not sell them or accept your offer to buy them until +
+the registration statement filed with the Securities and Exchange Commission +
+relating to these securities has been declared "effective" by the SEC. This +
+prospectus is not an offer to sell these securities or our solicitation of +
+your offer to buy these securities in any State or other jurisdiction where +
+that would not be permitted or legal. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION--May 13, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospectus

, 1999
NRT Incorporated

14,062,500 Shares of Common Stock

- --------------------------------------------------------------------------------

NRT Incorporated: The Offering:

. NRT is the largest . NRT is offering
residential real 9,375,000 of
estate brokerage the shares and
company in the Apollo is offering
United States based 4,687,500 of the
on home sales shares.
volume.
. The underwriters
. Affiliates of have an option to
Apollo Management, purchase an
L.P. and Cendant additional 2,109,375
Corporation shares from Cendant
currently own all of (upon conversion of
NRT's outstanding its convertible
common and preferred preferred stock of
stock. NRT) and Apollo to
cover
over-allotments.
Symbol & Market:
. This is NRT's
initial public
. NRTX/Nasdaq offering, and
National Market no public market
currently exists for
NRT's shares. NRT
estimates that the
price of the shares
will be between $15
and $17 per share.

. NRT plans to use
$88.2 million of the
proceeds from this
offering to
repurchase preferred
stock held by
Apollo, $10.7
million of the
proceeds to
repurchase preferred
stock held by
Cendant and the
remainder of the
proceeds for general
corporate purposes,
which may include
acquisitions.
NRT will not receive
any proceeds from
the shares sold by
the selling
stockholders.

. Closing: ,
1999.

--------------------------------------------
<TABLE>
<CAPTION>
Per
Share Total
---------------------------------------------------
<S> <C> <C>
Public offering price: $ $
Underwriting fees: $ $
Net proceeds to NRT: $ $
Net proceeds to selling stockholders: $ $
---------------------------------------------------
</TABLE>

This investment involves risk. See "Risk Factors" beginning on Page 12.

- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------

Donaldson, Lufkin & Jenrette
Bear, Stearns & Co. Inc.
BT Alex. Brown
Lehman Brothers
Merrill Lynch & Co.
Morgan Stanley Dean Witter
<PAGE>

NRT'S OFFICES*

[MAP OF NRT'S OFFICES]

NRT and its subsidiaries own and operate franchised real estate brokerage
offices under the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) brand names.
COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) are registered service marks of a
wholly owned subsidiary of Cendant Corporation. As used in this prospectus,
unless the context otherwise requires:

."NRT" means NRT Incorporated and its subsidiaries and predecessors;

."Cendant" means Cendant Corporation and its subsidiaries and
predecessors; and

. "Apollo" means Apollo Management, L.P. and its affiliated investment
funds, Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P. and Apollo (UK) Partners III, L.P.

------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 12
Special Note Regarding Forward-
Looking Statements.................. 20
Use of Proceeds...................... 21
Dividend Policy...................... 21
Dilution............................. 22
Capitalization....................... 23
Unaudited Pro Forma Condensed
Consolidated Financial Information.. 24
Selected Consolidated Financial
Data................................ 34
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 36
Business............................. 49
</TABLE>
<TABLE>
<S> <C>
Management.......................... 63
Principal and Selling Stockholders.. 73
Related Party Transactions.......... 75
Description of Capital Stock........ 90
Description of Indebtedness......... 99
Shares Eligible for Future Sale..... 101
United States Federal Tax
Considerations Relating to Non-U.S.
Holders............................ 102
Underwriting........................ 105
Notice to Canadian Residents........ 109
Legal Matters....................... 112
Experts............................. 112
Additional Information.............. 114
Index to Financial Statements....... F-1
</TABLE>

<PAGE>

PROSPECTUS SUMMARY

This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision. Unless otherwise
indicated, the information contained in this prospectus gives effect to a
1.875-for-1 split of NRT's common stock that will occur immediately before the
closing of the offering and assumes the underwriters' over-allotment option is
not exercised. Statistical information on the residential real estate brokerage
industry has been derived from publicly available sources, which NRT has not
independently verified but believes to be reliable.

NRT Incorporated

Based on data provided by Real Facts, an industry publication, multiple
listing service data and other publicly available information, including
information regarding other real estate brokerage companies, NRT believes that:

. NRT is approximately five times larger than its next largest competitor,
based on home sales volume.

. NRT operates in 19 of the 30 largest domestic markets measured by
population and believes it has a leading market presence in each of the
markets in which it operates.
. NRT is the only national residential real estate brokerage company.
. NRT markets more homes on the internet than any other residential real
estate brokerage company based on the number of homes listed with NRT,
all of which are marketed on the internet.

As a full service brokerage, NRT offers, either directly or through third
party arrangements, a wide variety of homeowner services in addition to
traditional real estate brokerage services, including mortgage, title, escrow
and relocation services, home warranties, home security systems and other
services. NRT believes it benefits from:
. operating economies of scale;
. national brand identity;
. training programs for its sales associates;

. the wide variety of brokerage-related services offered by NRT; and
. access to capital.

NRT was formed in August 1997 by Apollo and Cendant. Shortly after its
formation, NRT acquired the assets of National Realty Trust, which included the
former real estate brokerage operations of Coldwell Banker Corporation.
Although NRT had only recently been formed, the operations acquired from
National Realty Trust provided NRT with a strong core operating business. NRT
has grown rapidly since the National Realty Trust acquisition, completing
84 acquisitions through April 30, 1999 representing a total of over 500
brokerage offices. NRT has acquired five of the fifteen largest residential
real estate brokerage companies in the United States, based on home sales
volume before being acquired by NRT.

3
<PAGE>

Growth Strategy

Internal Growth Strategy. NRT will seek to expand its market presence and
increase its revenues and profitability through initiatives that are intended
to:

. capitalize on the benefits provided by operating under the COLDWELL
BANKER(R), ERA(R) and CENTURY 21(R) brand names;

. increase ancillary revenues by offering a broad range of services to the
homeowner;

. recruit, retain and develop high-quality sales associates; and

. enhance productivity with information technology.

Acquisition Strategy. NRT will seek to take advantage of acquisition
opportunities in the highly fragmented real estate brokerage industry by
continuing to:

. expand its presence within its existing markets through acquisitions of
local and regional brokerages;

. enter new markets by selectively acquiring high-quality, leading real
estate brokerage firms; and

. improve operations of acquired companies through the elimination of
duplicative operations and costs.

The Industry

. NRT estimates that in 1998, the domestic residential real estate
brokerage industry generated over $50 billion of real estate
commissions, based on information reported by the National Association
of Realtors and the United States Census Bureau.

. According to the National Association of Realtors, since 1990, home
sales volume in the domestic residential real estate brokerage industry
has grown at an average annual rate of 9.4%.

. According to the 1998 edition of Real Facts, the 20 largest residential
real estate brokerage companies in the United States represented 8.1% of
home sales volume for 1997.

4
<PAGE>

Relationship with Apollo and Cendant

Control by Apollo and Cendant. Apollo and Cendant currently own all of the
common and preferred stock of NRT. After giving effect to the offering and the
repurchase by NRT of shares of convertible preferred stock from Cendant
following the closing of the offering and assuming the conversion of all of the
convertible preferred stock of NRT then held by Cendant, Apollo will
beneficially own approximately 39.6% and Cendant will beneficially own
approximately 19.0% of NRT's outstanding common stock. Upon the closing of the
offering, the convertible preferred stock held by Cendant will have the right
to vote on an as converted basis together with the holders of NRT's common
stock. As a result, Apollo and Cendant will have the power to elect the entire
Board of Directors and approve other matters submitted to a vote of
stockholders. In addition, Apollo, Cendant and NRT are parties to a
stockholders agreement relating to the voting, transfer and registration of the
shares of NRT's capital stock held by Apollo and Cendant. Under this agreement,
both Apollo and Cendant have agreed to vote their shares of NRT's capital stock
in favor of a Board of Directors consisting of five directors nominated by
Apollo, five directors nominated by Cendant and two directors nominated by a
majority of the Board of Directors.

Acquisition Cooperation Agreement. NRT and Cendant have entered into an
acquisition cooperation agreement under which NRT and Cendant cooperate to
jointly fund brokerage acquisitions in which Cendant agrees to participate.
Under this agreement, when NRT and Cendant jointly fund an acquisition, NRT
acquires the brokerage operations and Cendant acquires the trademarks and, in
most cases, any mortgage operations of the acquired brokerage. While Cendant
can decline to participate in any brokerage acquisition, it has participated in
each of NRT's brokerage acquisitions to date and has provided more than 50% of
the total acquisition cost for all of NRT's brokerage acquisitions, excluding
the National Realty Trust acquisition. Cendant has agreed to provide
approximately $1.446 billion for brokerage acquisitions, of which $487 million
has been provided through April 30, 1999. Under the acquisition cooperation
agreement, $500 million of Cendant's commitment will not become available
before February 9, 2004, unless Cendant agrees otherwise.

Other Operational Agreements and Arrangements. NRT has entered into a number
of other agreements with Cendant relating to NRT's operations, including:

. franchise agreements between NRT and subsidiaries of Cendant under which
NRT licenses the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) brand
names;

. a program outsourcing agreement under which Cendant acts as NRT's
exclusive agent in negotiating arrangements with third party service and
product providers;

. a marketing agreement relating to the marketing of Cendant's mortgage
origination services;

. a relocation management arrangement under which NRT provides brokerage
services to relocating employees referred to it by Cendant Mobility
Services Corporation;

. an acquisition services agreement under which NRT provides acquisition
related services to Cendant in connection with NRT's brokerage
acquisitions;

. lease agreements under which NRT leases its executive offices from
Cendant; and

. a support agreement under which Cendant provides NRT with computer and
data related information services.

NRT and Cendant may from time to time enter into other agreements and
arrangements affecting NRT's operations. The relationships between NRT and each
of Apollo and Cendant could result in potential conflicts of interest. For a
discussion of these potential conflicts of interest, you should refer to "Risk
Factors--NRT's relationship with Apollo and Cendant could result in potential
conflicts of interest."

5
<PAGE>

The Offering

The number of shares of common stock in the table below to be outstanding
after the offering:

. includes 6,473,503 shares of common stock issuable upon conversion of
convertible preferred stock held by Cendant, after giving effect to the
repurchase by NRT of 725.4 shares of convertible preferred stock from
Cendant following the closing of the offering; and

. excludes 3,399,141 shares of common stock currently reserved for
issuance under NRT's stock option plan, under which a total of 4,687,500
shares are authorized for issuance (the weighted average exercise price
of outstanding options under the stock option plan is $4.85 per share).

<TABLE>
<S> <C>
Common stock offered by:
NRT................... 9,375,000 shares
Apollo................ 4,687,500 shares
----------
Total............... 14,062,500 shares
Common stock to be
outstanding after the
offering............... 34,023,928 shares
Use of proceeds......... NRT intends to use the net proceeds of the offering to
redeem all outstanding shares of NRT's Series C junior
preferred stock held by Apollo ($88.2 million) and to
repurchase 725.4 shares of NRT's Series B convertible
preferred stock held by Cendant ($10.7 million). The
remainder of the net proceeds will be used for general
corporate purposes, which may include acquisitions. NRT
will not receive any of the proceeds from the sale of
shares by the selling stockholders.
Nasdaq trading symbol... NRTX
</TABLE>

6
<PAGE>

Summary Financial and Other Data

The following tables present summary historical and pro forma financial and
other data of NRT. For additional information, you should refer to "Selected
Consolidated Financial Data," "Unaudited Pro Forma Condensed Consolidated
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
of NRT and its predecessors and related notes. The pro forma data are provided
for informational purposes only and are not necessarily indicative of the
financial position or the results of operations of NRT had the events described
below occurred on the dates specified. In addition, the pro forma data are not
indicative of NRT's future financial condition or results of operations.

In May 1996, Cendant acquired Coldwell Banker Corporation and contributed the
real estate brokerage operations owned by Coldwell Banker Residential Brokerage
Corporation to National Realty Trust. In August 1997, NRT was formed and
acquired all of the real estate brokerage operations owned by National Realty
Trust, including real estate brokerage offices acquired after May 1996.

Historical Data

<TABLE>
<CAPTION>
Predecessors
---------------------------------------
Coldwell Banker
Residential
Brokerage National Realty Trust NRT Incorporated
--------------- ----------------------- -------------------------------------------------
Three
Five Seven Eight Four Three Months
Months Months Months Months Year Months Ended
Ended Ended Ended Ended Ended Ended March March 31,
May 31, December 31, August 31, December 31, December 31, 31, 1998 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
--------------- ------------ ---------- ------------ ------------ ----------- -----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Real estate
commissions............ $228,005 $400,076 $570,150 $446,134 $2,010,123 $330,241 $469,596
Other revenues.......... 7,810 12,101 14,636 17,380 110,879 15,434 31,289
-------- -------- -------- -------- ---------- -------- --------
Total revenues........ 235,815 412,177 584,786 463,514 2,121,002 345,675 500,885
Commissions and
royalties(a)........... 141,404 276,364 393,235 330,169 1,482,719 237,284 345,380
Selling, general and
administrative
expenses............... 93,532 119,862 168,863 124,785 571,938 115,805 164,904
Amortization of
goodwill............... 482 104 1,162 637 3,403 1,083 1,610
Acquisition related
costs.................. 26 22,188 10,735 78,462 61,150 34,266 5,618
-------- -------- -------- -------- ---------- -------- --------
Operating income
(loss)............... 371 (6,341) 10,791 (70,539) 1,792 (42,763) (16,627)
Interest expense, net... 11 44 117 (2,843) (1,819) (868) 568
Provision (benefit) for
income taxes........... 156 -- 4,432 (25,453) 2,302 (16,758) (6,772)
-------- -------- -------- -------- ---------- -------- --------
Net income (loss)..... $ 204 $ (6,385) $ 6,242 $(42,243) $ 1,309 $(25,137) $(10,423)
======== ======== ======== ======== ========== ======== ========
Loss applicable to
common shareholders.... $(54,232) $ (35,309) $(34,046) $(19,704)
======== ========== ======== ========
Loss per common share:
basic and diluted(b)... $ (2.89) $ (1.88) $ (1.82) $ (1.05)
Weighted average shares
outstanding:
basic and diluted(b)... 18,750 18,750 18,750 18,750
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
Predecessors
---------------------------------------
Coldwell Banker
Residential
Brokerage National Realty Trust NRT Incorporated
--------------- ----------------------- -------------------------------------------------
Seven Eight Four Three Three
Five Months Months Months Months Year Months Months
Ended Ended Ended Ended Ended Ended March Ended March
May 31, December 31, August 31, December 31, December 31, 31, 1998 31, 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------ ---------- ------------ ------------ ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Data:
Depreciation and
amortization........... $ 3,812 $ 1,129 $ 3,026 $ 2,998 $ 18,909 $ 3,733 $ 7,036
Amortization of
goodwill............... 482 104 1,162 637 3,403 1,083 1,610
Acquisition related
costs:
Amortization of pending
real estate sales
contracts and real
estate listing
contracts.............. $ 26 $ 21,449 $ 9,314 $ 69,896 $ 44,153 $ 20,301 $ 5,310
Office conversion
costs.................. -- 739 1,421 8,566 16,997 13,965 308
-------- -------- -------- --------- --------- --------- -------
Total acquisition
related costs........ $ 26 $ 22,188 $ 10,735 $ 78,462 $ 61,150 $ 34,266 $ 5,618
======== ======== ======== ========= ========= ========= =======
EBITDA(c)............... $ 4,691 $ 16,341 $ 24,293 $ 2,992 $ 68,257 $ (17,646) $(2,671)
Net cash provided by
(used in) operating
activities............. 4,855 29,810 20,625 9,527 31,977 (36,872) (7,264)
Net cash used in
investing activities... (18,420) (14,770) (44,795) (107,475) (186,651) (54,365) (9,506)
Net cash provided by
(used in) financing
activities............. 14,577 (3,953) 30,759 263,308 42,015 (15,212) (13,923)
</TABLE>

<TABLE>
<CAPTION>
Three Three
Combined Combined Year Months Months
Year Ended Year Ended Ended Ended Ended
December 31, December 31, December 31, March 31, March 31,
1996 1997 1998 1998 1999
------------ ------------ ------------ --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Operating Data:
Sides(d)................ 109,994 154,066 300,229 47,732 65,471
Average sales price per
home................... $ 205 $ 239 $ 245 $ 243 $ 255
Home sales volume (in
millions).............. 22,593 36,822 73,686 11,613 16,710
Average sales commission
per side as a
percentage of home
sales volume(e)........ 2.78% 2.76% 2.73% 2.84% 2.81%
Number of offices (at
period end)............ 353 463 692 604 681
Number of sales
associates (at period
end) .................. 13,765 19,914 30,658 26,515 30,131
Real estate listing
contracts (at period
end) .................. 27,170 33,256 54,614 54,932 60,108
</TABLE>

8
<PAGE>

Pro Forma Data

The following pro forma data give effect to (1) the offering and the
application of the estimated net proceeds, (2) the repurchase on April 6, 1999
of 574,575 shares of common stock from Apollo, (3) the additional royalties
that will be payable to NRT's franchisors following the closing of the offering
and (4) the acquisitions described under "Unaudited Pro Forma Condensed
Consolidated Financial Information."

<TABLE>
<CAPTION>
NRT Incorporated
------------------------------------
Pro Forma Pro Forma
Year Ended Three Months Ended
December 31, March 31,
------------ -----------------------
1998 1998 1999
(unaudited) (unaudited) (unaudited)
------------ ----------- -----------
(in thousands, except per share
amounts)
<S> <C> <C> <C>
Statement of Operations Data:
Real estate commissions................... $2,315,367 $ 422,879 $469,596
Other revenues............................ 146,902 20,434 31,289
---------- --------- --------
Total revenues.......................... 2,462,269 443,313 500,885
Commissions and royalties................. 1,761,337 310,098 351,380
Selling, general and administrative
expenses................................. 646,564 149,353 164,904
Amortization of goodwill.................. 4,270 1,441 1,610
Acquisition related costs................. 66,347 61,730 876
---------- --------- --------
Operating loss.......................... (16,249) (79,309) (17,885)
Interest expense, net..................... (1,066) (641) 568
Benefit for income taxes.................. (5,309) (31,651) (7,281)
---------- --------- --------
Net loss................................ $ (9,874) $( 47,017) $(11,172)
========== ========= ========
Loss applicable to common shareholders.... $ (25,312) $ (50,863) $(15,725)
========== ========= ========
Loss per common share:
basic and diluted(f)..................... $ (0.89) $ (1.79) $ (0.55)
Weighted average shares outstanding:
basic and diluted(f)..................... 28,416 28,416 28,416
Other Data:
Depreciation and amortization............. $ 21,691 $ 5,070 $ 7,036
Amortization of goodwill.................. 4,270 1,441 1,610
Acquisition related costs:
Amortization of pending real estate sales
contracts and real estate listing
contracts................................ $ 49,350 $ 44,733 $ 568
Office conversion costs................... 16,997 16,997 308
---------- --------- --------
Total acquisition related costs......... $ 66,347 $ 61,730 $ 876
========== ========= ========
EBITDA(c)................................. $ 59,062 $ (28,065) $ (8,671)
Net cash provided by (used in) operating
activities............................... 22,782 (47,291) (13,264)
Net cash used in investing activities..... (186,651) (54,635) (9,506)
Net cash provided by (used in) financing
activities............................... 58,110 16,883 (13,441)
</TABLE>

<TABLE>
<CAPTION>
As of March 31, 1999
--------------------
<S> <C> <C>
Historical Pro Forma
---------- ---------
(unaudited)
(in thousands)
Balance Sheet Data:
Cash and cash equivalents................................ $ 22,008 $ 49,373
Total assets............................................. 507,993 535,358
Long-term debt........................................... 42,735 42,735
Redeemable preferred stock, net.......................... 261,358 188,642
Stockholders' deficit.................................... (134,413) (34,332)
</TABLE>

9
<PAGE>

(a) Royalties were not payable by Coldwell Banker Residential Brokerage during
the five months ended May 31, 1996.
(b) Before the closing of the offering, NRT intends to effect a 1.875-for-1
split of its common stock. Accordingly, historical loss per share has been
restated to reflect this stock split.
(c) EBITDA is defined as operating income (loss) plus depreciation and
amortization of goodwill and other intangibles. EBITDA is calculated as
follows:

<TABLE>
<CAPTION>
Predecessors
-------------------------------------
Coldwell
Banker
Residential National
Brokerage Realty Trust NRT Incorporated
----------- ------------------------- -------------------------------------------------
Three Three
Five Seven Eight Four Months Months
Months Months Months Months Year Ended Ended
Ended Ended Ended Ended Ended March 31, March 31,
May 31, December 31, August 31, December 31, December 31, 1998 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------- ----------- ------------ ------------ ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Historical
Operating income
(loss)................. $ 371 $(6,341) $10,791 $(70,539) $ 1,792 $(42,763) $(16,627)
Depreciation and
amortization........... 3,812 1,129 3,026 2,998 18,909 3,733 7,036
Amortization of
goodwill............... 482 104 1,162 637 3,403 1,083 1,610
Amortization of pending
real estate contracts
and real estate listing
contracts.............. 26 21,449 9,314 69,896 44,153 20,301 5,310
------ ------- ------- -------- -------- -------- --------
EBITDA.................. 4,691 16,341 24,293 2,992 68,257 (17,646) (2,671)
Office conversion
costs.................. -- 739 1,421 8,566 16,997 13,965 308
------ ------- ------- -------- -------- -------- --------
EBITDA before office
conversion costs....... $4,691 $17,080 $25,714 $ 11,558 $ 85,254 $ (3,681) $ (2,363)
====== ======= ======= ======== ======== ======== ========

<CAPTION>
NRT Incorporated
------------------------------------
Pro Forma
Pro Forma Three Months Ended
Year Ended -----------------------
December 31, March 31, March 31,
1998 1998 1999
(unaudited) (unaudited) (unaudited)
------------ ----------- -----------
(in thousands)
<S> <C> <C> <C>
Pro Forma
Operating loss............................................................. $(16,249) $(79,309) $(17,885)
Depreciation and amortization.............................................. 21,691 5,070 7,036
Amortization of goodwill................................................... 4,270 1,441 1,610
Amortization of pending real estate contracts and real estate listing
contracts................................................................. 49,350 44,733 568
-------- -------- --------
EBITDA..................................................................... 59,062 (28,065) (8,671)
Office conversion costs.................................................... 16,997 16,997 308
-------- -------- --------
EBITDA before office conversion costs...................................... $ 76,059 $(11,068) $ (8,363)
======== ======== ========
</TABLE>

Management believes that EBITDA is a widely accepted financial indicator
used by investors and analysts to analyze and compare companies. Management
uses EBITDA as a supplementary tool to measure NRT's ability to generate
operating cash flow. Management also uses EBITDA to establish performance
goals and related bonuses for its employees. EBITDA is not intended to
represent cash flows for the periods presented, nor has it been presented
as an alternative to operating income or as an indicator of operating
performance. EBITDA should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. NRT understands that while EBITDA
is frequently used by securities analysts in the evaluation of companies,
EBITDA is not necessarily comparable to other similarly titled measures of
other companies due to potential inconsistencies in the methods of
calculation.

Office conversion costs include primarily signage change, name change
advertising and other transitional costs.

(d) Each real estate transaction has two sides, the selling side and the buying
side. NRT may participate as broker on one or both sides of a transaction.

(e) Represents the average sales commission rate received by NRT per side in
home sale transactions in which NRT participated as broker. This amount is
calculated by dividing NRT's real estate commissions by NRT's home sales
volume.

10
<PAGE>

(f) In addition to the stock split described in (b) above, pro forma loss per
common share gives effect to acquisitions by NRT, additional royalties that
will be payable to NRT's franchisors following the closing of the offering,
the additional shares that are assumed to be issued (at an assumed offering
price per share of $16, the mid-point of the estimated range of the initial
public offering price per share) to fund the repurchase of common stock
from Apollo, the $45 million cash dividend paid to Apollo, the repurchase
of convertible preferred stock from Cendant and the redemption of the
junior preferred stock held by Apollo, described under "Unaudited Pro Forma
Condensed Consolidated Financial Information."

11
<PAGE>

RISK FACTORS

Set forth below is a description of material risks to investors considering
an investment in the common stock. You should consider carefully the following
factors and other information in this prospectus before deciding to invest in
shares of common stock.

NRT has a limited operating history upon which an evaluation of NRT and its
prospects can be based

While NRT's predecessors have conducted real estate brokerage operations for
a significant period of time, NRT has conducted operations only since August
1997, when it acquired the assets of National Realty Trust. Through April 30,
1999, NRT has completed 84 acquisitions, including 9 acquisitions in 1997, 55
acquisitions in 1998 and 20 acquisitions in 1999. As a result, NRT and its
acquired operations have a limited combined operating history upon which an
evaluation of NRT and its prospects can be based.

NRT has recorded operating losses in the past and may record operating losses
in the future

NRT recorded an operating loss of approximately $70.5 million for the four
months ended December 31, 1997 and approximately $16.6 million for the three
months ended March 31, 1999. NRT's operating loss for the four months ended
December 31, 1997 was due primarily to the large number of acquisitions
completed by NRT and NRT's amortization of a significant portion of the
purchase price for these acquisitions during the first year following
completion of the acquisition. NRT believes its operating loss for the three
months ended March 31, 1999 was due primarily to the seasonal nature of NRT's
business. NRT may incur significant operating losses in the future,
particularly if it continues to make acquisitions, which could adversely affect
the price of NRT's common stock.

NRT is required to make substantial royalty payments

As a franchisee of the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) real
estate franchise systems, NRT is required to pay royalties to its franchisors.
NRT paid royalties of $121.3 million for the year ended December 31, 1998.
Under its franchise agreements, following the closing of the offering, NRT will
incur additional royalties that were not incurred during prior periods. If NRT
had incurred these additional royalties beginning on January 1, 1998, NRT's
royalty payments to its franchisors would have increased by approximately $24.0
million and net income would have been reduced by $14.3 million for the year
ended December 31, 1998. The payment of these increased royalties could
adversely affect NRT's ability to be profitable in the future.

NRT's business activities are restricted by its franchise agreements

As a franchisee, NRT operates each of its offices under one of its
franchisors' brand names, but does not own any of the brand names under which
it operates. The franchisors have significant rights over the use of the
franchised service marks by NRT and the conduct of NRT's business. Under the
franchise agreements, NRT is not permitted to engage in any business other than
the residential real estate brokerage business and businesses permitted under
its program outsourcing agreement with Cendant. In addition, the franchise
agreements require NRT to:

. coordinate with the franchisors on significant matters relating to NRT's
operations, including the opening and closing of offices;

12
<PAGE>

. contribute significant amounts to national advertising funds maintained by
the franchisors;

. indemnify the franchisors against losses arising out of the operation of
NRT's business under the franchise agreements; and

. maintain standards and comply with guidelines relating to its operations
which are applicable to all franchisees of the franchisors' real estate
franchise systems.

NRT's franchise agreements restrict NRT's ability to incur indebtedness and
pay dividends. They also permit NRT's franchisors to prevent NRT's acquisition
of one or more new offices if the acquisition would have an adverse impact on
other existing franchisees of NRT's franchisors. In addition, under the
acquisition cooperation agreement, Cendant has the right to cause NRT to sell
one or more of the brokerage offices that were acquired in connection with a
brokerage acquisition. These provisions may prevent NRT from pursuing
acquisitions that it otherwise wishes to pursue.

Termination of any of NRT's franchise agreements would adversely affect NRT

NRT's franchisors have the right to terminate NRT's franchise if any of the
following occur:

. a bankruptcy or insolvency event affecting NRT;

. a transfer by NRT of any right or obligation under the franchise
agreements;

. a change in control of NRT;

. NRT's affiliation with another real estate franchisor that is not an
affiliate of NRT's existing franchisors; or

. NRT's failure to promptly pay amounts due under the franchise agreements.

If a franchisor terminates NRT's franchise due to a material breach of its
franchise agreement, the franchisor could require NRT to pay damages equal to
the franchisor's lost future royalties for the remaining term of the franchise
agreement, up to 25 years. The franchisors could also seek damages and/or
equitable relief for other violations of the franchise agreements. Any
termination of one or more of the franchise agreements would have a material
adverse effect on NRT.

The cyclical nature of the residential real estate market could adversely
affect NRT's business

In recent years, existing home sales have risen to their highest levels in
history. However, the residential real estate market tends to be cyclical and
typically is affected by changes in general economic conditions which are
beyond NRT's control. Any of the following could have a material adverse effect
on NRT's business by causing a general decline in the number of home sales
and/or prices which, in turn, would adversely affect revenues and
profitability:

. periods of economic slowdown or recession;

. rising interest rates;

. decreasing home ownership rates; or

. declining demand for real estate.

As a result, NRT would be adversely affected if economic conditions do not
continue to be favorable or an economic slowdown were to occur in the United
States or elsewhere. The National Association of Realtors has forecasted that
existing home sales will be lower in 1999 than in 1998. This decline in
existing home sales could adversely affect NRT's revenues and profitability.

13
<PAGE>

Seasonal fluctuations in the residential real estate brokerage business could
adversely affect NRT

The residential real estate brokerage business is subject to seasonal
fluctuations. Historically, NRT's revenues have been strongest in the second
and third quarters of the calendar year. While NRT pays commissions to its
sales associates only upon the sale of a home, many of NRT's other expenses,
such as rent and personnel, are fixed and cannot be reduced during a seasonal
slowdown. As a result, NRT may be required to borrow cash in order to fund its
operations during seasonal slowdowns or at other times. Since the terms of
NRT's franchise agreements and bank facility restrict the ability of NRT to
incur indebtedness, NRT cannot assure that it would be able to borrow cash.
NRT's inability to finance its funding needs during a seasonal slowdown or at
other times could have a material adverse effect on NRT.

NRT's operations are concentrated in metropolitan areas

NRT owns real estate brokerage offices located in and around 19 large
metropolitan markets in the United States. NRT's offices operate principally
within these markets. Local and regional economic conditions in these markets
could differ materially from prevailing conditions in other parts of the
country. While NRT believes that its offices are located in geographically
diverse metropolitan markets of the United States, NRT has more offices and
realizes more of its revenues in Northern and Southern California and the New
York metropolitan area than any other regions of the country. In 1998, NRT
realized approximately 57% of its gross commission income in Northern and
Southern California and the New York metropolitan area. A downturn in
residential real estate markets or economic conditions in these regions could
result in a decline in NRT's total gross commission income and have a material
adverse effect on NRT.

NRT cannot assure its ability to complete future acquisitions

NRT has pursued an active acquisition strategy as a means of entering or
strengthening its position within metropolitan markets and has sought to
integrate acquisitions into NRT's operations to achieve economies of scale. As
a result, NRT has derived a substantial portion of its revenues and profits
from acquired brokerages. The success of NRT's future acquisition strategy will
continue to depend upon NRT's ability to find suitable acquisition candidates
on favorable terms and to finance and complete these transactions. The
inability of NRT to complete brokerage acquisitions could have a material
adverse effect on NRT's growth strategy.

NRT's ability to complete future acquisitions will also depend in large part
on Cendant's continued participation in such acquisitions under the acquisition
cooperation agreement. Cendant is not required to participate in any brokerage
acquisition. As a result, NRT cannot assure that Cendant will participate in
any future brokerage acquisition or that NRT will obtain alternative sources of
financing if Cendant does not participate in any brokerage acquisition.
In addition, due to a change in the purchase price calculation applicable to
Cendant's agreement to fund future brokerage acquisitions under the acquisition
cooperation agreement, NRT expects to pay a higher percentage of the total
purchase price for its brokerage acquisitions than in the past. Furthermore,
Cendant and NRT may agree to pursue an acquisition on terms different from
those set forth in the acquisition cooperation agreement, in which case NRT
could be required to pay a greater share of the total purchase price than it
otherwise would pay. In that case, NRT may not have sufficient funding for
other acquisitions that it otherwise would have pursued.

14
<PAGE>

The franchise agreements limit the ability of NRT to incur indebtedness and
open new offices. These restrictions may prevent NRT from completing
acquisitions that it otherwise wishes to pursue.

NRT cannot assure that it will realize anticipated benefits from future
acquisitions

Upon completion of an acquisition, NRT encounters risks related to the
possible inability of NRT to integrate the acquired business into NRT's
operations, the possible defection of a significant number of sales associates,
the increased amortization of intangibles, the diversion of management's
attention and unanticipated problems or liabilities. These risks may adversely
affect NRT's ability to realize anticipated cost savings and revenue growth
from its acquisitions.

The program outsourcing agreement restricts NRT's ability to pursue alternative
third party purchasing and marketing programs

Under its program outsourcing agreement with Cendant, NRT has appointed
Cendant as its exclusive outsourcing agent to negotiate the terms of NRT's
participation in purchasing and marketing programs. The program outsourcing
agreement restricts the ability of NRT to pursue alternative marketing
arrangements and product and service providers. Under the program outsourcing
agreement, Cendant negotiates with third party providers fee arrangements
applicable to each program (which typically include fees payable by third
parties to Cendant), as well as the other terms of such arrangements. In
addition, Cendant may cancel or modify existing programs in its sole
discretion. The inability of NRT to pursue alternative arrangements or the
termination or modification of any program or fee arrangement could have a
material adverse effect on NRT. The terms of the programs established under the
program outsourcing agreement could be less favorable to NRT than the terms of
programs that NRT could have obtained absent the program outsourcing agreement.

The marketing agreement restricts NRT's ability to pursue alternative third
party mortgage marketing arrangements

Under its marketing agreement with Cendant Mortgage Corporation, NRT assists
in the marketing of Cendant Mortgage's mortgage origination services. The
marketing agreement restricts the ability of NRT to pursue and enter into
alternative mortgage marketing arrangements with other parties. NRT intends to
enter into a joint venture with Cendant to provide mortgage services, at which
time the marketing agreement will be terminated. The terms of the marketing
agreement (and the anticipated mortgage joint venture with Cendant that would
replace the marketing agreement) could be less favorable to NRT than the terms
of any arrangements that NRT could have obtained from third parties.

The loss of key employees and sales associates could adversely affect NRT

The ability of NRT to continue to expand its business largely depends on the
skills, experience and efforts of its key employees and sales associates. The
loss of the services of NRT's key employees or a significant number of sales
associates could have a material adverse effect on NRT's growth and
development.

Changes in government regulation could adversely affect NRT

NRT's business activities are subject to substantial regulation by
governmental authorities. The jurisdictions in which NRT does business have
established requirements governing the licensing and

15
<PAGE>

conduct of real estate brokerage and brokerage-related businesses. In addition,
the federal Real Estate Settlement Procedures Act and comparable state statutes
impose restrictions on the manner in which NRT may conduct its business. In
addition, more restrictive laws, regulations or interpretations could be
adopted in the future that could make compliance more difficult or expensive.
Furthermore, regulatory authorities have broad discretion to grant, renew and
revoke licenses and approvals and to implement regulations. Accordingly, these
regulatory authorities could prevent or temporarily suspend NRT from carrying
on some or all of its activities or otherwise penalize NRT if its practices
were found not to comply with the then current regulatory or licensing
requirements or any interpretation of these requirements by the regulatory
authority. NRT's failure to comply with any of these requirements or
interpretations could have a material adverse effect on NRT's operations and
financial performance.

Year 2000 problems could disrupt NRT's business

Many existing computer systems and software products are coded to accept only
two-digit entries in the date code field and cannot properly recognize dates in
the year 2000 and beyond. Consequently, these systems and software products
need to be either upgraded or replaced to function properly from and after
January 1, 2000.

If, due to hardware or software problems, NRT's systems were unable to
operate due to year 2000 problems, NRT would face the risks of incurring
additional costs to correct its year 2000 problems or losing revenue due to its
inability to deliver services to its customers. These costs or losses, if
incurred, could have a material adverse effect on NRT. However, NRT believes
that it is taking the necessary steps to eliminate or reduce these risks where
possible and that year 2000 issues will not have a material effect on NRT's
financial condition or results of operations. For a description of NRT's year
2000 compliance efforts, you should refer to "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Year 2000
Compliance."

NRT is speaking with third party vendors and service providers regarding
their year 2000 compliance. NRT's major software and hardware vendors and
service providers, including Cendant, have indicated that their systems
currently are or will be year 2000 compliant prior to December 31, 1999. NRT is
in the process of contacting all of its other major vendors and service
providers, including multiple listing service providers, to confirm their
systems will be year 2000 compliant in a timely manner. NRT expects to have
this assessment completed and a contingency plan in place by the end of the
third quarter of 1999. However, NRT cannot assure that the systems of those
companies will be converted in a timely manner or that the third parties will
mitigate the effects of noncompliance. Any failure by NRT's third party vendors
and service providers to convert in a timely manner could have an adverse
effect on NRT's operations.

The terms of NRT's bank credit facility restrict NRT's business activities

The terms and conditions of NRT's bank credit facility restrict NRT's ability
to incur debt, pay dividends and other distributions, create liens, sell assets
and make investments. The terms of the bank credit facility also require NRT to
maintain specified financial ratios. These provisions will

16
<PAGE>

limit NRT's ability to obtain additional funds for its operations or future
acquisitions and pay dividends, which could have a material adverse effect on
NRT's operations and acquisition strategy and the rights of holders of NRT's
common stock.

The absence of a trading market for the common stock could make it difficult
for investors to resell their shares at or above the initial public offering
price

Prior to the offering, there has been no trading market for the common stock.
Although NRT's common stock has been approved, subject to notice of issuance,
for quotation on the Nasdaq National Market, NRT does not know whether a liquid
trading market for the common stock will develop. Investors may not be able to
resell their shares at or above the initial public offering price. The initial
public offering price for the shares of common stock will be determined through
negotiations among NRT, Apollo, Cendant and representatives of the
underwriters. The initial public offering price may be higher than the market
price of the common stock after the offering.

New investors will experience immediate and substantial dilution

The initial public offering price of the common stock will be substantially
higher than the pro forma net tangible book value per share of the outstanding
common stock. As a result, NRT currently expects that new investors will
experience immediate dilution of $17.37 per share in the net tangible book
value per share of the common stock from the initial public offering price,
assuming an initial public offering price of $16 per share, the mid-point of
the estimated range of initial public offering price per share. If NRT issues
additional shares of common stock in the future, investors may experience
further dilution. In addition, NRT has outstanding options which, if exercised,
could result in further dilution. Any dilution could adversely affect the price
of NRT's common stock.

NRT does not expect to pay dividends on its common stock

NRT does not anticipate paying any cash dividends on its common stock in the
foreseeable future. Any payment of future dividends and the amounts thereof
will depend upon NRT's earnings, financial requirements and other factors
deemed relevant by NRT's Board of Directors. Future dividends will be subject
to the terms of NRT's bank credit facility, which restricts NRT's ability to
pay dividends on its common stock. In addition, NRT's franchise agreements
prevent NRT from incurring indebtedness to pay dividends and prohibit the
payment of extraordinary dividends unless financial ratio tests are satisfied.
The terms of NRT's preferred stock also restrict the ability of NRT to pay
dividends on its common stock. Although NRT declared and paid in 1999 a $45
million cash dividend on its common stock to Apollo, NRT does not expect to pay
dividends on its common stock in the foreseeable future.

NRT's relationship with Apollo and Cendant could result in potential conflicts
of interest

The ownership of NRT's capital stock by Apollo and Cendant, the ownership of
Cendant's common stock or options to purchase Cendant's common stock by
directors and officers of NRT and the service by directors of NRT as directors
or officers of both NRT and Apollo or Cendant could

17
<PAGE>

result in potential conflicts of interest when those directors and officers are
faced with decisions that could have different implications for NRT and Apollo
or Cendant. Such decisions could impact:

.potential acquisitions;

.the issuance of additional securities;

.the entry into or modification of contractual or other arrangements;

.the election of directors; and

.the payment of dividends by NRT.

NRT has not instituted any formal plan or arrangement to address potential
conflicts of interest that may arise among NRT, Apollo, Cendant and their
affiliates. However, under Delaware law, officers and directors of NRT owe
fiduciary duties to NRT and its stockholders.

NRT has entered into agreements with Cendant, including the following:

.the franchise agreements;

.the stockholders agreement (to which Apollo is also a party);

.the acquisition cooperation agreement (to which Apollo is also a party);

.the program outsourcing agreement;

.the marketing agreement;

.the acquisition services agreement;

.lease agreements; and

.the support agreement.

These agreements were entered into when Cendant and Apollo owned all of NRT's
outstanding capital stock. NRT and Cendant also intend to implement a joint
venture that will provide mortgage services, at which time the marketing
agreement will be terminated. NRT and Cendant may enter into additional
agreements or arrangements in the future. The terms of these agreements may be
less favorable to NRT than the terms that could have been obtained absent the
stock ownership by Cendant and Apollo.

Cendant's discovery of accounting irregularities could adversely affect NRT

After discovering accounting irregularities in the former CUC International
Inc. business units of Cendant, Cendant restated its earnings for 1998 and
prior years and experienced a significant decline in its market capitalization.
In addition, lawsuits have been filed against Cendant, its predecessor, HFS
Incorporated, their current and former officers and directors and others,
including Bear, Stearns & Co. Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, asserting claims under the federal securities laws and state
common and statutory law. If, as a result of its accounting irregularities, the
resulting decline in its market capitalization or an adverse outcome in the
pending lawsuits, Cendant is unable to perform its obligations under its
agreements with NRT, including its obligations under the acquisition
cooperation agreement, its failure to perform could have a material adverse
effect on NRT's operations and financial performance, including NRT's ability
to implement its growth strategy.

18
<PAGE>

The control of NRT by Apollo and Cendant could reduce the ability of other
stockholders to influence NRT

Immediately following the offering, assuming the repurchase by NRT of 725.4
shares of Series B convertible preferred stock held by Cendant after the
closing of the offering and the conversion of all of the Series B convertible
preferred stock then held by Cendant into shares of common stock:

. Apollo will beneficially own 39.6% of NRT's common stock (35.3% if the
underwriters' over-allotment option is exercised in full);

. Cendant will beneficially own 19.0% of NRT's common stock (17.2% if the
underwriters' over-allotment option is exercised in full); and

. NRT's other stockholders will beneficially own 41.3% of NRT's common
stock (47.5% if the underwriters' over-allotment option is exercised in
full).

As a result, Apollo and Cendant, acting together, will have the power to elect
the entire Board of Directors of NRT and approve other matters submitted to a
vote of NRT's stockholders, including extraordinary corporate matters. In
addition, under the stockholders agreement, NRT's Board of Directors will
consist of twelve directors, including:

.five directors nominated by Apollo;

.five directors nominated by Cendant; and

.two directors nominated by a majority of the Board of Directors.

Apollo and Cendant have agreed to vote all of their shares in favor of the
other's director nominees. As a result of these agreements, the restrictions
imposed by NRT's franchise agreements on acquisitions of shares by third
parties, and the exclusivity provisions of the program outsourcing agreement
and the marketing agreement, Apollo and Cendant will likely continue to
exercise substantial influence over NRT and its operations for the foreseeable
future. As a result, the ability of other stockholders to influence NRT could
be reduced. The interests of NRT's public stockholders may be different from
the interests of Apollo and Cendant.

The availability of a significant number of shares for future sale by Apollo
and Cendant could adversely affect the market price of the common stock

Subject to applicable federal securities laws, the transfer restrictions of
the stockholders agreement and restrictions contained in the underwriting
agreement with the underwriters, Apollo and Cendant may sell any or all of the
shares of common stock (or, in the case of Cendant, convertible preferred
stock) owned by them. In addition, under the stockholders agreement, Apollo and
Cendant have registration rights with respect to the shares of common stock and
convertible preferred stock owned by them, which would facilitate any future
disposition. Sales in the public market of substantial amounts of common stock,
or the perception that such sales could occur, could cause the prevailing
market prices for the common stock to fall. NRT cannot predict the period of
time during which Apollo and Cendant will maintain their ownership of common
stock following the offering.

Provisions of NRT's charter and by-laws and agreements with Cendant and Apollo
could deter takeover attempts

Following the offering, provisions of NRT's certificate of incorporation and
by-laws could delay or impede the removal of incumbent directors or discourage
a third party from attempting to acquire

19
<PAGE>

control of NRT. Similarly, the stockholders agreement limits Apollo's ability
to transfer its shares of common stock to persons that Cendant believes may
have an intent to acquire or influence control of NRT. In addition, NRT's
franchise agreements include as an event of default the acquisition by any
person or group, other than Apollo and Cendant, of over 30% of the outstanding
common stock generally. The franchise agreements provide that damages based on
lost future royalties would be payable by NRT if any person or group acquired
beneficial ownership of over 30%. As a result, in addition to effectively
restricting a third party from acquiring over 30% of NRT's outstanding common
stock generally, the franchise agreements could effectively restrict Apollo's
ability to transfer significant amounts of its shares of common stock to
parties other than Cendant. These provisions could adversely effect the amount
that potential acquirors might be willing to pay in an acquisition of NRT's
common stock or the price that investors might be willing to pay in the future
for shares of NRT's common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial
risks and uncertainties. These statements may be found under "Prospectus
Summary," "Risk Factors," "Unaudited Pro Forma Condensed Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business." Forward-looking statements contain the
words "believes," "anticipates," "expects" and words of similar import. Because
these statements involve risks and uncertainties, actual results could differ
materially from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Factors
that could cause these differences include those discussed under "Risk Factors"
in this prospectus. The forward-looking statements are made as of the date of
this prospectus.

20
<PAGE>

USE OF PROCEEDS

NRT estimates the net proceeds to NRT from the offering, after deducting
applicable underwriting discounts and commissions and estimated offering
expenses payable by NRT, to be approximately $137.0 million. NRT expects that:

. approximately $88.2 million of the net proceeds from the offering will
be used to redeem all of the outstanding shares of Series C junior
preferred stock of NRT held by Apollo, including a redemption premium of
$16.2 million;

. approximately $10.7 million of the net proceeds from the offering will
be used to repurchase 725.4 shares of Series B convertible preferred
stock of NRT held by Cendant, plus accrued dividends; and

. the remainder of the net proceeds of the offering to NRT will be used
for general corporate purposes, which may include acquisitions of real
estate brokerages and their related service businesses. NRT does not
currently have any specific plans for the use of these proceeds.

NRT will not receive any proceeds from the sale of shares by the selling
stockholders.

DIVIDEND POLICY

NRT does not anticipate paying cash dividends to its common stockholders in
the foreseeable future after the offering. The timing, amount and form of any
dividends will be at the discretion of NRT's Board of Directors and will depend
on NRT's results of operations, financial condition, cash requirements and
other factors considered relevant by the Board of Directors. NRT's ability to
pay dividends is restricted under its franchise agreements, the terms of its
preferred stock and its bank credit facility.

NRT has paid dividends to Cendant as the sole holder of NRT's Series A senior
preferred stock and Series B convertible preferred stock and to Apollo as the
sole holder of NRT's Series C junior preferred stock and common stock. Through
March 31, 1999, NRT has paid a total of $20.2 million of dividends on its
Series A senior preferred stock, $1.7 million of dividends on its Series B
convertible preferred stock and $19.2 million of dividends on its Series C
junior preferred stock. NRT declared and paid in 1999 a $45.0 million cash
dividend on its common stock held by Apollo. This dividend is not indicative of
the dividends, if any, that may be paid by NRT in the future.

NRT intends to continue to pay regularly scheduled quarterly dividends on its
Series A senior preferred stock at the annual rate of 9.00% of its then face
amount (or $14.5 million per year based on the current amount outstanding) and
its Series B convertible preferred stock at the annual rate of 5.00% of its
then face amount (or $1.2 million per year based on the current amount
outstanding).

21
<PAGE>

DILUTION

At March 31, 1999, the net tangible book value of NRT, after giving effect to
the intended 1.875-for-1 stock split, was approximately $(74.3) million, or
$(2.95) per share. Net tangible book value is defined as the book value of all
assets of NRT, less all liabilities and intangible assets. NRT's intangible
assets consist primarily of goodwill, pending real estate contracts and real
estate listing contracts. Without taking into account any changes in net
tangible book value after March 31, 1999, other than to give effect to the
offering, the application of the estimated net proceeds and the repurchase of
574,575 shares of common stock from Apollo, the pro forma net tangible book
value of NRT's common stock as of March 31, 1999 would have been approximately
$(46.9) million, or $(1.38) per share. The following table gives effect to the
offering as if it had occurred on March 31, 1999 at an assumed initial public
offering price of $16 per share (the mid-point of the estimated range of
initial public offering price per share). The table illustrates the immediate
increase in net tangible book value of $1.57 per share to NRT's existing
stockholders and an immediate dilution of $17.38 per share to new investors:

<TABLE>
<S> <C> <C>
Public offering price per share............................ $16.00
Net tangible book value per share as of March 31, 1999..... ($2.95)
Increase in net tangible book value per share attributable
to the offering........................................... 1.57
------
Pro forma net tangible book value per share as of March 31,
1999, after giving effect to the offering................. (1.38)
------
Immediate dilution per share to new investors.............. $17.38
======
</TABLE>

The calculations in the table above include 6,473,503 shares issuable upon
conversion of the convertible preferred stock held by Cendant after the
repurchase by NRT of 725.4 shares of convertible preferred stock from Cendant,
but exclude 3,399,141 shares reserved for issuance as of March 31, 1999 under
NRT's 1997 Equity Participation Plan.

The following table presents as of March 31, 1999, on a pro forma basis after
giving effect to the offering, the positions of existing common stockholders
assuming the conversion of Cendant's convertible preferred stock, the
repurchase of 574,575 shares of common stock from Apollo and the repurchase of
725.4 shares of convertible preferred stock from Cendant, and new investors
with respect to the number of shares of common stock purchased from NRT, the
total consideration paid and the average price paid per share, at an assumed
initial public offering price of $16 per share (the mid-point of the estimated
range of initial public offering price per share).

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
--------------------- ------------------- Price per
Number Percentage Amount Percentage Share
---------- ---------- -------- ---------- ---------
(dollars in
thousands, except
per share amounts)
<S> <C> <C> <C> <C> <C>
New investors........... 14,062,500 41.3 % $225,000 90.8 % $16.00
Existing common
stockholders........... 19,961,428 58.7 22,673 9.2 1.14
---------- ----- -------- -----
Total................. 34,023,928 100.0 % $247,673 100.0 %
========== ===== ======== =====
</TABLE>

22
<PAGE>

CAPITALIZATION

The following table sets forth NRT's cash and cash equivalents, short-term
debt and capitalization as of March 31, 1999 on an actual basis and on a pro
forma basis after giving effect to:

.the offering and the application of the estimated net proceeds;

. the repurchase by NRT on April 6, 1999 of 574,575 shares of common stock
from Apollo and the repurchase by NRT following the closing of the
offering of 725.4 shares of convertible preferred stock from Cendant;
and

. the amendment and restatement of NRT's certificate of incorporation
before the closing of the offering.

You should read this table together with the consolidated financial statements
and the related notes, "Unaudited Pro Forma Condensed Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
As of March 31, 1999
-----------------------
Actual Pro Forma
---------- -----------
(in thousands)
<S> <C> <C>
Cash and cash equivalents.............................. $ 22,008 $ 49,373
========== ==========
Restricted cash(a)..................................... $ 93,561 $ 93,561
========== ==========
Short-term debt:
Cash secured bank loans(a)........................... $ 93,561 $ 93,561
Mortgage warehousing loans(b)........................ 12,668 12,668
Other................................................ 10,528 10,528
---------- ----------
Total short-term debt.............................. $ 116,757 $ 116,757
========== ==========
Long-term debt(c)...................................... $ 42,735 $ 42,735
Redeemable preferred stock, $0.01 par value, 405,000
shares authorized (actual); 5,000,000 shares authorized
(pro forma):
9.00% Series A Cumulative Senior Redeemable Preferred
Stock, 157,591 shares issued and outstanding........ 164,763 164,763
5.00% Series B Cumulative Convertible Redeemable
Preferred Stock, 24,000 shares issued and
outstanding (actual); 23,275 shares outstanding (pro
forma).............................................. 24,604 23,879
18.00% Series C Cumulative Junior Redeemable
Preferred Stock, net, 68,510 shares issued and
outstanding (redemption value of $88,185)........... 71,991 --
---------- ----------
Total redeemable preferred stock................... 261,358 188,642
---------- ----------
Stockholders' deficit:
Common stock, $0.01 par value, 50,000,000 shares
authorized (actual); 100,000,000 shares issued and
outstanding (pro forma); 18,750,000 shares issued
and outstanding (actual); 27,550,425 shares issued
and outstanding (pro forma)(d)...................... 188 276
Additional paid-in capital........................... -- 99,993
Accumulated deficit.................................. (134,601) (134,601)
---------- ----------
Total stockholders' deficit........................ (134,413) (34,332)
---------- ----------
Total capitalization............................... $ 169,680 $ 197,045
========== ==========
</TABLE>
- ---------------------
(a) Restricted cash, which represents proceeds from cash secured bank loans, is
invested in cash equivalents and cannot be used for purposes other than to
repay the cash secured bank loans.
(b) Mortgage warehousing loans are collaterized by mortgage loans held for sale
and are generally repaid within 60 days.

(c) Long-term debt as of March 31, 1999 includes notes payable of $12.7 million
and $30.0 million drawn under NRT's credit facility.
(d) Actual and pro forma gives effect to the intended 1.875-for-1 stock split
to be effected before the closing of the offering.

23
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial
information of NRT presents the unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1998 and the three
months ended March 31, 1998 and March 31, 1999 and the pro forma condensed
consolidated balance sheet as of March 31, 1999.

The unaudited pro forma condensed consolidated statements of operations for
the year ended December 31, 1998 and the three months ended March 31, 1999 and
March 31, 1998 give effect to the following transactions as if they occurred on
January 1, 1998: the offering at an assumed offering price per share of $16,
the mid-point of the estimated range of the initial public offering price per
share; the payment in 1999 of a $45 million cash dividend on NRT's common stock
to Apollo; the application of the estimated net proceeds from the offering; the
additional royalties payable to NRT's franchisors following the closing of the
offering; and the effect of the following acquisitions during 1998 of
brokerages with annual gross commission income in excess of $5 million.

.Buckhead Brokers of Georgia, Inc. .Joseph J. Murphy Realty, Inc.
.Burnet Financial Group .Moore and Company
.Carriage Properties, Ltd. .O'Conor, Piper & Flynn, Inc.
.Coker Ewing Cook & Cook .Pardoe Real Estate, Inc.
.1st American Realtors, L.L.C. .Polley, Polley & Madsen, Inc.
.Gimelstob Realty, Inc. .Premier Van Schaak, Inc. (Denver
.Graham Realty, Inc. operations)
.Higgins & Heath, Inc. .Steve Schmidt & Co.
.Hunneman Real Estate Corporation .TAM-BAY Realty, Inc.

.Waterside Property Sales, Inc.
The pro forma statements of operations do not give effect to the interest
income that would have been earned on proceeds of the offering that are not
used by NRT or the initial capitalization of NRT had such transactions occurred
on January 1, 1998.

The unaudited pro forma condensed consolidated balance sheet as of March 31,
1999 gives effect to the following transactions as if they occurred on March
31, 1999:

.the receipt of the estimated net proceeds to NRT from the offering;

.the redemption of all outstanding shares of NRT's Series C junior preferred
stock; and

. the repurchase by NRT on April 6, 1999 of 574,575 shares of common stock
from Apollo and the repurchase by NRT after the closing of the offering of
725.4 shares of Series B convertible preferred stock from Cendant.

24
<PAGE>

NRT's acquisitions have been accounted for using the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed have been
recorded at their estimated fair values, which are subject to further
refinement, including appraisals and other analyses. Management does not expect
that the final allocations of the purchase prices for the acquisitions will
differ materially from the preliminary allocations. NRT has also completed
smaller transactions that did not have a material effect on NRT's financial
condition or results of operations and are not reflected in the unaudited pro
forma condensed consolidated statements of operations.

The pro forma adjustments reflect NRT's determination of all adjustments
necessary to present fairly NRT's pro forma financial position and results of
operations. These adjustments are based on available information and
assumptions NRT considers reasonable under the circumstances. The unaudited pro
forma condensed consolidated financial information is provided for
informational purposes only. This information is not necessarily indicative of
the financial position or the results of operations of NRT had the transactions
referred to above occurred on the dates specified. In addition, this
information is not necessarily indicative of the financial condition or results
of operations which may exist in the future. You should read the unaudited pro
forma condensed consolidated financial information together with the historical
consolidated financial statements of NRT, its predecessors and acquired
companies and the related notes included elsewhere in this prospectus.

25
<PAGE>

NRT INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1998
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Pro Forma
Before Pro Forma
Pro Forma Offering Offering
Acquisition Related Related
Historical Acquisitions Adjustments Adjustments Adjustments Pro Forma
---------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Real estate commissions.... $2,010,123 $293,875 $ 11,369 (a) $2,315,367 $2,315,367
Other revenues............. 110,879 36,023 146,902 146,902
---------- -------- -------- ---------- -------- ----------
Total revenues............ 2,121,002 329,898 11,369 2,462,269 2,462,269
EXPENSES:
Commissions and royalties.. 1,482,719 230,497 8,709 (a) 1,737,337 $ 24,000 (b) 1,761,337
15,412 (c)
Selling, general and
administrative............ 571,938 74,626 646,564 646,564
Amortization of goodwill... 3,403 867 (d) 4,270 4,270
Acquisition related costs.. 61,150 5,197 (d) 66,347 66,347
---------- -------- -------- ---------- -------- ----------
Operating income (loss)... 1,792 24,775 (18,816) 7,751 (24,000) (16,249)
Interest expense, net...... (1,819) 753 (1,066) (1,066)
Provision (benefit) for
income taxes.............. 2,302 9,729(e) (7,620)(e) 4,411 (9,720)(e) (5,309)
---------- -------- -------- ---------- -------- ----------
Net income (loss)......... $ 1,309 $ 14,293 $(11,196) $ 4,406 $(14,280) $ (9,874)
========== ======== ======== ========== ======== ==========
Per share information:
Loss per common share:
basic and diluted......... $ (1.88) $ (0.89)(f)
Weighted average shares
outstanding:
basic and diluted......... 18,750 28,416 (f)
</TABLE>

See notes to unaudited pro forma condensed consolidated statements of
operations.

26
<PAGE>

NRT INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 1998
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Pro Forma
Before Pro Forma
Pro Forma Offering Offering
Acquisition Related Related
Historical Acquisitions Adjustments Adjustments Adjustments Pro Forma
---------- ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Real estate commissions.... $330,241 $81,269 $ 11,369 (a) $422,879 $422,879
Other revenues............. 15,434 5,000 20,434 20,434
-------- ------- -------- -------- ------- --------
Total revenues............ 345,675 86,269 11,369 443,313 443,313
EXPENSES:
Commissions and royalties.. 237,284 54,133 8,709 (a) 304,098 $ 6,000 (b) 310,098
3,972 (c)
Selling, general and
administrative............ 115,805 33,548 149,353 149,353
Amortization of goodwill... 1,083 358 (d) 1,441 1,441
Acquisition related costs.. 34,266 24,432 (d) 61,730 61,730
3,032 (d)
-------- ------- -------- -------- ------- --------
Operating income (loss)... (42,763) (1,412) (29,134) (73,309) (6,000) (79,309)
Interest expense, net...... (868) 227 (641) (641)
Benefit for income taxes... (16,758) (664)(e) (11,799)(e) (29,221) (2,430)(e) (31,651)
-------- ------- -------- -------- ------- --------
Net loss.................. $(25,137) $ (975) $(17,335) $(43,447) $(3,570) $(47,017)
======== ======= ======== ======== ======= ========
Per share information:
Loss per common share:
basic and diluted......... $ (1.82) $ (1.79)(f)
Weighted average shares
outstanding:
basic and diluted......... 18,750 28,416 (f)
</TABLE>

See notes to unaudited pro forma condensed consolidated statements of
operations.

27
<PAGE>

NRT INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 1999
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Pro Forma
Before Pro Forma
Pro Forma Offering Offering
Acquisition Related Related
Historical Adjustments Adjustments Adjustments Pro Forma
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES:
Real estate commissions.... $469,596 $469,596 $469,596
Other revenues............. 31,289 31,289 31,289
-------- -------- -------- ------- --------
Total revenues............ 500,885 500,885 500,885
EXPENSES:
Commissions and royalties.. 345,380 345,380 $ 6,000 (b) 351,380

Selling, general and
administrative............ 164,904 164,904 164,904
Amortization of goodwill... 1,610 1,610 1,610
Acquisition related costs.. 5,618 $ (4,742)(d) 876 876
-------- -------- -------- ------- --------
Operating loss............ (16,627) (4,742) (11,885) (6,000) (17,885)
Interest expense, net...... 568 568 568
Provision (benefit) for
income taxes.............. (6,772) 1,921 (e) (4,851) (2,430)(e) (7,281)
-------- -------- -------- ------- --------
Net income (loss)......... $(10,423) $ 2,821 $ (7,602) $(3,570) $(11,172)
======== ======== ======== ======= ========
Per share information:
Loss per common share:
basic and diluted......... $ (1.05) $ (0.55)(f)
Weighted average shares
outstanding:
basic and diluted......... 18,750 28,416 (f)
</TABLE>

See notes to unaudited pro forma condensed consolidated statements of
operations.

28
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

(a) Reflects adjustments to recognize revenue and the related commission and
royalty expense upon the closing of real estate transactions for acquired
companies that recognized revenue on a different basis prior to being acquired.

(b) Reflects adjustment to give effect to additional royalties payable to
NRT's franchisors following the closing of the offering. These additional
royalties are equal to:

. approximately 1.1% of NRT's monthly gross commission income, subject to
an annual maximum currently estimated at $22.1 million; plus

. $156,250 per month.

(c) Reflects adjustment to give effect to royalties payable to NRT's
franchisors under the franchise agreements as if the acquired companies were
subject to such agreements from January 1, 1998 through their dates of
acquisition. Under the franchise agreements, royalties are payable by NRT based
upon a percentage of NRT's gross commission income (6% for all of NRT's
offices, other than NRT's CENTURY 21(R) offices in Northern California for
which NRT currently pays 4.89%). All of NRT's acquired brokerages are
franchised under one of the franchisors' franchised brand names and are
required to pay the applicable royalties.

(d) Reflects the additional amortization of intangible assets that would have
been recognized had the acquisitions occurred on January 1, 1998. The
amortization period and pro forma adjustments are summarized as follows
(dollars in thousands):

<TABLE>
<CAPTION>
Pro Forma Adjustment
----------------------------
Three Months
Year Ended Ended March 31,
Amortization December 31, ---------------
Intangible assets Period 1998 1998 1999
- ----------------- ------------ ------------ ------- -------
<S> <C> <C> <C> <C>
Pending real estate contracts...... 3 months $2,829 $21,160 $(2,872)
Real estate listing contracts...... 6 months 2,368 3,272 (1,870)
------ ------- -------
Intangible assets, excluding
goodwill........................ $5,197 $24,432 $(4,742)
====== ======= =======
Excess of cost over fair value of
net assets acquired............... 40 years $ 867 $ 358 $ --
====== ======= =======
</TABLE>

In connection with NRT's acquisitions, conversion costs relating primarily to
signage changes, name change advertising and other transitional costs are
incurred and expensed evenly over a short period of time after the date of
acquisition. The $3.0 million adjustment reflects the incurrence of such costs
as if all acquisitions had occurred on January 1, 1998 and the related
conversion costs would have been incurred shortly thereafter.

(e) The tax rate applied to the pro forma adjustments consists of the federal
statutory rate, adjusted for state taxes net of federal benefit. The adjustment
applies a provision for taxes for acquired company operations, the majority of
which operated as S corporations.

29
<PAGE>

(f) Pro forma loss per share gives effect to the 1998 acquisitions by NRT,
additional royalties that will be payable to NRT's franchisors following the
closing of this offering and the shares which would be required to be issued
(at an assumed offering price of $16 per share, the mid-point of the estimated
range of the initial public offering price per share) to replace capital which
has been or will be repurchased or redeemed. The reconciliation of historical
loss per share to pro forma loss per share is as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) ....................................... $ 1,309 $(11,183)(i) $ (9,874)
Dividends on Series A and Series B preferred stock....... (29,910) 14,472(ii) (15,438)
Accretion of Series C preferred stock discount and
redemption premium...................................... (6,708) 6,708(ii) --
-------- -------- --------
Loss applicable to common shareholders................... $(35,309) $ 9,997 $(25,312)
======== ======== ========
Weighted average shares outstanding:
basic and diluted ...................................... 18,750 9,666(iii) 28,416
Loss per common share:
basic and diluted ...................................... $ (1.88) $ (0.89)

<CAPTION>
Three Months Ended March 31, Three Months Ended March 31,
1998 1999
------------------------------------ ------------------------------------
Pro Forma Pro Forma
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net loss ............... $(25,137) $(21,880)(i) $(47,017) $(10,423) $ (749)(i) $(11,172)
Dividends on Series A
and Series B preferred
stock.................. (7,255) 3,409(ii) (3,846) (7,627) 3,074(ii) (4,553)
Accretion of Series C
preferred stock
discount and redemption
premium................ (1,654) 1,654(iii) -- (1,654) 1,654(iii) --
-------- -------- -------- -------- -------- --------
Loss applicable to
common shareholders.... $(34,046) $(16,817) $(50,863) $(19,704) $ 3,979 $(15,725)
======== ======== ======== ======== ======== ========
Weighted average shares
outstanding:
basic and diluted ..... 18,750 9,666(iii) 28,416 18,750 9,666(iii) 28,416
Loss per common share:
basic and diluted ..... $ (1.82) $ (1.79) $ (1.05) $ (0.55)
</TABLE>

(i) Represents the net effect of all pro forma adjustments included in the
pro forma condensed consolidated statement of operations for the year ended
December 31, 1998 and the three months ended March 31, 1998 and March 31, 1999.

(ii) Reflects adjustment to give effect to the redemption of the Series C
junior preferred stock as if the redemption took place on January 1, 1998.
Accordingly, historical dividends declared and accretion of stock discount and
the redemption premium on the Series C junior preferred stock during the
respective periods have been eliminated. The pro forma adjustments exclude the
one-time impact related to the redemption premium on the Series C junior
preferred stock as if the redemption took place on January 1, 1998.

<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
Redemption value of cumulative junior preferred stock.......... $88,185
Carrying value of cumulative junior preferred stock as of
January 1, 1998............................................... 56,267
-------
$31,918
=======
</TABLE>

30
<PAGE>

(iii) Reflects adjustments to give effect to the shares that are assumed to
be issued (at an assumed offering price of $16 per share, the mid-point of the
estimated range of initial public offering price per share) to fund the
repurchase of common stock from Apollo, the $45 million cash dividend paid to
Apollo, the repurchase of Series B convertible preferred stock from Cendant and
the redemption of the Series C junior preferred stock held by Apollo.

31
<PAGE>

NRT INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1999
(in thousands)

<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................... $ 22,008 $137,000 (a) $ 49,373
(88,185)(b)
(10,725)(c)
(10,725)(d)
Restricted cash............................. 93,561 93,561
Commissions and accounts receivable, net.... 33,191 33,191
Mortgage loans held for sale................ 13,057 13,057
Other current assets........................ 39,531 39,531
-------- -------- --------
Total current assets.................... 201,348 27,365 228,713
Property and equipment, net................. 94,700 94,700
Goodwill and other intangibles, net......... 201,239 201,239
Other assets................................ 10,706 10,706
-------- -------- --------
Total assets............................ $507,993 $ 27,365 $535,358
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Accounts payable and accrued expenses....... $175,239 $175,239
Restricted cash bank loans.................. 93,561 93,561
Mortgage warehousing loan................... 12,668 12,668
Notes payable, current portion.............. 10,528 10,528
-------- --------
Total current liabilities............... 291,996 291,996
Deferred revenues........................... 26,705 26,705
Notes payable .............................. 12,735 12,735
Borrowings under credit facility............ 30,000 30,000
Other liabilities .......................... 19,612 19,612
Redeemable preferred stock, net:
9.00% Series A Cumulative Senior Redeem-
able Preferred........................... 164,763 164,763
5.00% Series B Cumulative Convertible
Redeemable Preferred..................... 24,604 (725)(d) 23,879
18.00% Series C Cumulative Junior
Redeemable Preferred..................... 71,991 (71,991)(b) --
-------- -------- --------
Total redeemable preferred stock, net... 261,358 (72,716) 188,642
-------- -------- --------
Stockholders' deficit
Common stock.............................. 188 94 (a) 276
(6)(c)
Additional paid-in capital................ -- 136,906 (a) 99,993
(16,194)(b)
(10,719)(c)
(10,000)(d)
Accumulated deficit....................... (134,601) (134,601)
-------- -------- --------
Total stockholders' deficit ............ (134,413) 100,081 (34,332)
-------- -------- --------
Total liabilities and stockholders' deficit
........................................... $507,993 $ 27,365 $535,358
======== ======== ========
</TABLE>

See notes to unaudited pro forma condensed consolidated balance sheet.

32
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(a) Reflects the receipt of the estimated net proceeds to NRT from the
offering at an assumed initial public offering price of $16 per share, the mid-
point of the estimated range of the initial public offering price per share,
less estimated fees and expenses of $13.0 million to be paid by NRT, and the
issuance of common stock in the offering.

(b) Reflects the redemption of all outstanding shares of NRT's Series C
junior preferred stock, including the redemption premium, upon the closing of
the offering.

(d) Represents the repurchase by NRT following the closing of the offering of
725.4 shares of Series B convertible preferred stock from Cendant for $10.7
million, which includes the excess of the repurchase price over the cost basis
of such shares.

33
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data as of December 31, 1994 and for the
year ended December 31, 1994 are derived from unaudited financial statements of
Coldwell Banker Residential Brokerage Corporation. The selected consolidated
financial data presented below as of December 31, 1995, 1996, 1997 and 1998 and
for the year ended December 31, 1995, the five-month period ended May 31, 1996,
the seven-month period ended December 31, 1996, the eight-month period ended
August 31, 1997, the four-month period ended December 31, 1997 and the year
ended December 31, 1998 are derived from the audited consolidated financial
statements of NRT and its predecessors, Coldwell Banker Residential Brokerage
Corporation and National Realty Trust. The selected consolidated financial data
as of March 31, 1999 and for the three months ended March 31, 1998 and 1999 are
derived from the unaudited consolidated financial statements of NRT.

The operating results of NRT and its predecessors include the results of
operations of companies that were acquired in 1996, 1997 and 1998 and accounted
for by the purchase method of accounting. Accordingly, the results of
operations of the acquired companies have been included in the consolidated
operating results of NRT only from their dates of acquisition. The consolidated
financial statements of Coldwell Banker Residential Brokerage Corporation have
been prepared from separate records maintained by Coldwell Banker Residential
Brokerage Corporation and from the records of Coldwell Banker Corporation.
These financial statements are not necessarily indicative of the conditions
that would have existed if Coldwell Banker Residential Brokerage Corporation
had operated as an independent entity.

You should read the financial data presented below together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of NRT and its
predecessors and the related notes appearing elsewhere in this prospectus.

34
<PAGE>

<TABLE>
<CAPTION>
Predecessors
----------------------------------------------------------
Coldwell Banker Residential
Brokerage National Realty Trust NRT Incorporated
---------------------------------- ----------------------- ------------------------------------------------
Three Three
Five Seven Eight Four Months Months
Months Months Months Months Year Ended Ended
Year Ended Year Ended Ended Ended Ended Ended Ended March 31, March 31,
December 31, December 31, May 31, December 31, August 31, December 31, December 1998 1999
1994 1995 1996 1996 1997 1997 31, 1998 (unaudited) (unaudited)
------------ ------------ -------- ------------ ---------- ------------ ---------- ----------- -----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Real estate
commissions..... $526,229 $540,302 $228,005 $400,076 $570,150 $446,134 $2,010,123 $330,241 $469,596
Other revenues... 17,620 16,042 7,810 12,101 14,636 17,380 110,879 15,434 31,289
-------- -------- -------- -------- -------- -------- ---------- -------- --------
Total revenues.. 543,849 556,344 235,815 412,177 584,786 463,514 2,121,002 345,675 500,885
Commissions and
royalties....... 322,694 333,869 141,404 276,364 393,235 330,169 1,482,719 237,284 345,380
Selling, general
and
administrative.. 198,907 212,013 93,532 119,862 168,863 124,785 571,938 115,805 164,904
Amortization of
goodwill........ -- 532 482 104 1,162 637 3,403 1,083 1,610
Acquisition
related costs... -- 4,240 26 22,188 10,735 78,462 61,150 34,266 5,618
-------- -------- -------- -------- -------- -------- ---------- -------- --------
Operating income
(loss)......... 22,248 5,690 371 (6,341) 10,791 (70,539) 1,792 (42,763) (16,627)
Interest expense,
net............. (686) (137) 11 44 117 (2,843) (1,819) (868) 568
Provision
(benefit) for
income taxes.... 4,796 2,459 156 -- 4,432 (25,453) 2,302 (16,758) (6,772)
-------- -------- -------- -------- -------- -------- ---------- -------- --------
Net income
(loss)......... $ 18,138 $ 3,368 $ 204 $ (6,385) $ 6,242 $(42,243) $ 1,309 $(25,137) $(10,423)
======== ======== ======== ======== ======== ======== ========== ======== ========
Net loss applicable to
common shareholders......................................................... $(54,232) $ (35,309) $(34,046) $(19,704)
======== ========== ======== ========
Loss per common share:
basic and diluted........................................................... $ (2.89) $ (1.88) $ (1.82) $ (1.05)
</TABLE>

<TABLE>
<CAPTION>
Predecessors NRT Incorporated
------------------------ -------------------------------
As of As of
As of December 31, December 31, March 31,
------------------------ ------------------ 1999
1994 1995 1996 1997 1998 (unaudited)
-------- ------- ------- -------- -------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 1,202 $ 89 $11,087 $165,360 $ 52,701 $ 22,008
Total assets............ 119,999 65,519 71,296 416,671 530,712 507,993
Long-term debt.......... 843 785 1,152 4,844 16,791 42,735
Redeemable preferred
stock.................. -- -- -- 237,858 252,047 261,358
Stockholders' equity
(deficit).............. 21,278 24,646 (1,385) (34,232) (69,541) (134,413)
</TABLE>

35
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with the
consolidated financial statements and related notes appearing elsewhere in
this prospectus.

General

In May 1996, Cendant acquired Coldwell Banker Corporation and contributed
the real estate brokerage operations of Coldwell Banker Residential Brokerage
Corporation to National Realty Trust. Cendant retained ownership of all
trademarks utilized in connection with the transferred real estate brokerage
operations and licensed the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) brand
names owned by it to National Realty Trust. NRT was formed in August 1997.
Shortly after its formation, NRT acquired the real estate brokerage operations
owned by National Realty Trust.

NRT earns real estate commissions for providing brokerage services to
customers in the purchase and sale of new and existing homes. Real estate
commissions typically range from approximately 5% to 7% of the sales price.
When NRT acts as a broker on one side of a transaction (either the buying side
or the selling side) and a third-party broker acts as a broker on the other
side of the transaction, NRT generally must share with the other broker 50% of
the sales commission. When NRT is the sole broker, NRT generally receives 100%
of the sales commission.

In addition to real estate brokerage services, NRT generates revenues
through:

. mortgage marketing services provided under a marketing agreement with
Cendant Mortgage Corporation;

. title services for which NRT receives a fee from title insurance
underwriters;

. escrow and other closing services for which NRT typically receives a fee
from home buyers;

. relocation services through an arrangement with Cendant Mobility Services
Corporation, for which NRT receives fees from Cendant Mobility, and
through NRT's own relocation company, for which NRT receives fees from
customers; and

. a variety of other brokerage-related services through marketing and
purchasing programs established by Cendant with leading service
providers, including home warranties, home security systems, temporary
housing, temporary storage, moving truck rentals and telephone services,
for which NRT generally receives fees.

Real estate commissions are recorded as revenues and the related sales
associate commissions and franchise royalty fees are recorded as expenses upon
the closing of the home sale transaction. Revenues derived from NRT's
brokerage-related services are recorded as revenue at the time that the
services are performed.

36
<PAGE>

Commissions and royalties payable by NRT include commissions paid to NRT's
sales associates and royalties paid to its franchisors. Commissions paid to
sales associates have averaged 60% to 67% of real estate commissions in recent
years. Because the commissions paid to sales associates vary by region and by
office, the average commission rate paid to NRT's sales associates is affected
by NRT's acquisitions. NRT's royalty expenses are 6% of gross commission income
(currently 4.89% for NRT's CENTURY 21(R) offices in Northern California), plus
$166,667 per month. In February 1999, NRT entered into new franchise agreements
with its franchisors, which require NRT to pay additional royalties of:

.$156,250 per month following the closing of the offering;

.until the closing of the offering, a monthly royalty which has averaged
$273,900 per month for the first three months of 1999;

.upon the closing of the offering, approximately 1.1% of NRT's monthly
gross commission income, subject to an annual maximum currently estimated
at $22.1 million; and

.0.15% of NRT's total revenue per quarter for each quarter (up to a total
of 20 quarters) in which NRT's EBITDA for the prior twelve months exceeds
$225 million.

Selling, general and administrative expenses consist primarily of employee
compensation, advertising and marketing, occupancy costs, general office
expenses and depreciation of property and equipment.

Acquisition related costs consist of office conversion costs and amortization
of pending real estate sales contracts and real estate listing contracts of
acquired brokerages. Office conversion costs include primarily signage change,
name change advertising and other transitional costs. NRT amortizes the
acquired companies' pending real estate sales contracts over a three-month
period and real estate listing contracts over a six-month period, reflecting
the respective periods over which NRT estimates that such contracts will result
in closed real estate transactions.

NRT believes that pending real estate sales contracts are an indicator of
revenues to be recognized in the near future. Pending real estate sales
contracts represent transactions in which a binding contract of sale has been
signed, but the home sale has not yet closed. NRT considers real estate
contracts to be binding only after any rescission period expires, a good faith
deposit is placed in escrow and the only remaining significant conditions are
financing and property inspection. Historically, an average of approximately
13% of NRT's pending real estate sales contracts have failed to close.

NRT's real estate brokerage business is subject to seasonal fluctuations.
Historically, revenues have been strongest in the second and third quarters of
the calendar year. While commissions are paid to sales associates only upon the
sale of a home, many of NRT's other expenses, such as rent and personnel, are
fixed. As a result, the relationship between NRT's expenses and revenues is
subject to significant fluctuation on a quarter-to-quarter basis.

37
<PAGE>

Results of Operations

The following table presents statement of operations and other data for the
periods indicated.

<TABLE>
<CAPTION>
Predecessors
-----------------------------------
Coldwell
Banker
Residential
Brokerage National Realty Trust NRT Incorporated
----------- ----------------------- -------------------------------------------------
Seven Eight Four Three Three
Five Months Months Months Months Year Months Months
Ended Ended Ended Ended Ended Ended March Ended March
May 31, December 31, August 31, December 31, December 31, 31, 1998 31, 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------ ---------- ------------ ------------ ----------- -----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate commissions..... $228,005 $400,076 $570,150 $ 446,134 $2,010,123 $330,241 $469,596
Other revenues.............. 7,810 12,101 14,636 17,380 110,879 15,434 31,289
-------- -------- -------- --------- ---------- -------- --------
Total revenues........... 235,815 412,177 584,786 463,514 2,121,002 345,675 500,885
Commissions and royalties... 141,404 276,364 393,235 330,169 1,482,719 237,284 345,380
Selling, general and
administrative expenses.... 93,532 119,862 168,863 124,785 571,938 115,805 164,904
Amortization of goodwill.... 482 104 1,162 637 3,403 1,083 1,610
Acquisition related costs... 26 22,188 10,735 78,462 61,150 34,266 5,618
-------- -------- -------- --------- ---------- -------- --------
Operating income (loss).. 371 (6,341) 10,791 (70,539) 1,792 (42,763) (16,627)
Interest expense, net....... 11 44 117 (2,843) (1,819) (868) 568
Provision (benefit) for
income taxes............... 156 -- 4,432 (25,453) 2,302 (16,758) (6,772)
-------- -------- -------- --------- ---------- -------- --------
Net income (loss)........ $ 204 $ (6,385) $ 6,242 $ (42,243) $ 1,309 $(25,137) $(10,423)
======== ======== ======== ========= ========== ======== ========
Loss applicable to common
shareholders............... $ (54,232) $ (35,309) $(34,046) $(19,704)
========= ========== ======== ========
Loss per common share:
basic and diluted.......... $ (2.89) $ (1.88) $ (1.82) $ (1.05)
Weighted average shares
outstanding:
basic and diluted.......... 18,750 18,750 18,750 18,750
EBITDA(a)................... $ 4,691 $ 16,341 $ 24,293 $ 2,992 $ 68,257 $(17,646) $ (2,671)
Net cash provided by (used
in) operating activities... 4,855 29,810 20,625 9,527 31,977 (36,872) (7,264)
Net cash used in investing
activities................. (18,420) (14,770) (44,795) (107,475) (186,651) (54,365) (9,506)
Net cash provided by (used
in) financing activities... 14,577 (3,953) 30,759 263,308 42,015 (15,212) (13,923)
</TABLE>

38
<PAGE>

(a) EBITDA is defined as operating income (loss) plus depreciation and
amortization of goodwill and other intangibles. EBITDA is calculated as
follows:

<TABLE>
<CAPTION>
Coldwell
Banker
Residential National
Brokerage Realty Trust NRT Incorporated
----------- ------------------------- -------------------------------------------------
Three Three
Five Seven Eight Four Months Months
Months Months Months Months Year Ended Ended
Ended Ended Ended Ended Ended March 31, March 30,
May 31, December 31, August 31, December 31, December 31, 1999 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------- ----------- ------------ ------------ ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss).... $ 371 $(6,341) $10,791 $(70,539) $ 1,792 $(42,763) $(16,627)
Depreciation and
amortization.............. 3,812 1,129 3,026 2,998 18,909 3,733 7,036
Amortization of goodwill... 482 104 1,162 637 3,403 1,083 1,610
Amortization of pending
real estate contracts and
real estate listing
contracts................. 26 21,449 9,314 69,896 44,153 20,301 5,310
------ ------- ------- -------- ------- -------- -----------
EBITDA..................... 4,691 16,341 24,293 2,992 68,257 (17,646) (2,671)
Office conversion costs.... -- 739 1,421 8,566 16,997 13,965 308
------ ------- ------- -------- ------- -------- -----------
EBITDA before office
conversion costs.......... $4,691 $17,080 $25,714 $11,558 $85,254 $ (3,681) $ (2,363)
====== ======= ======= ======== ======= ======== ===========
</TABLE>

Management believes that EBITDA is a widely accepted financial indicator
used by investors and analysts to analyze and compare companies. Management
uses EBITDA as a supplementary tool to measure NRT's ability to generate
operating cash flow. Management also uses EBITDA to establish performance
goals and related bonuses for its employees. EBITDA is not intended to
represent cash flows for the periods presented, nor has it been presented
as an alternative to operating income or as an indicator of operating
performance. EBITDA should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. NRT understands that, while
EBITDA is frequently used by securities analysts in the evaluation of
companies, EBITDA is not necessarily comparable to other similarly titled
measures of other companies due to potential inconsistencies in the methods
of calculation.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998

Revenues. Total revenues for the three months ended March 31, 1999 increased
44.9% to $500.9 million from $345.7 million for the three months ended March
31, 1998. Total revenues include revenues from real estate commissions
generated by existing operations and by operations acquired during 1999 and
1998 from their respective dates of acquisition. Real estate commissions
increased 42.2% to $469.6 million for the three months ended March 31, 1999
from $330.2 million for the three months ended March 31, 1998. Other revenues
increased to $31.3 million for the three months ended March 31, 1999 from $15.4
million for the three months ended March 31, 1998. This increase of $15.9
million consists of $5.5 million of revenues from title, escrow and other
closing services, $4.5 million of revenues from mortgage marketing services and
$5.9 million of revenues from relocation and other brokerage-related services.
In addition to the revenues generated by acquired operations in 1999 and 1998,
NRT's revenues benefitted from a strong residential real estate market
throughout the United States, from its mortgage marketing agreement with
Cendant Mortgage Corporation and from NRT's focus on deriving other brokerage-
related revenues from its real estate sales transactions.

Commissions and Royalties. Commissions and royalties as a percentage of total
revenues increased to 69.0% for the three months ended March 31, 1999 from
68.6% for the three months ended March 31, 1998. This increase was due
primarily to acquired operations that pay a higher percentage of the real
estate commission to sales associates, partially offset by increases in other
revenues from operations that pay a lower commission percentage to sales
associates.

39
<PAGE>

Selling, General and Administrative. Selling, general and administrative
expenses were $164.9 million for the three months ended March 31, 1999 as
compared to $115.8 million for the three months ended March 31, 1998. These
expenses include the expenses of NRT's existing operations and of acquired
operations from their respective dates of acquisition. As a percentage of total
revenues, selling, general and administrative expenses decreased to 32.9% for
the three months ended March 31, 1999 from 33.5% for the three months ended
March 31, 1998, reflecting savings realized as the result of combining branch
locations and eliminating duplicative administrative functions to the extent
possible.

Amortization of Goodwill. Amortization of goodwill for the three months ended
March 31, 1999 was $1.6 million as compared to $1.1 million for the three
months ended March 31, 1998. Goodwill recognized in connection with
acquisitions is being amortized over 40 years.

Acquisition Related Costs. Acquisition related costs were $5.6 million for
the three months ended March 31, 1999 as compared to $34.3 million for the
three months ended March 31, 1998. These amounts reflect the volume and timing
of acquisitions during the respective periods. At March 31, 1999, NRT had $1.1
million of unamortized pending real estate sales contracts and real estate
listing contracts of acquired brokerages, which will be fully amortized by
August 31, 1999.

Income Taxes. NRT's effective income tax benefit was 39.4% for the three
months ended March 31, 1999 and 40.0% for the three months ended March 31,
1998. This change in the rate reflects the effect of non-deductible expenses.

Net Loss. NRT had a net loss of $10.4 million for the three months ended
March 31, 1999 as compared to a net loss of $25.1 million for the three months
ended March 31, 1998. Net losses for these periods are due primarily to the
seasonal nature of NRT's business and acquisition related costs of $5.6 million
for the three months ended March 31, 1999 as compared to $34.3 million for the
three months ended March 31, 1998.

Pending Real Estate Sales Contracts. At March 31, 1999, NRT had pending real
estate sales contracts representing approximately 62,577 sides, reflecting an
increase of 20.7% from the 51,844 sides represented by NRT's pending real
estate contracts at March 31, 1998. NRT's pending real estate sales contracts
at March 31, 1999 represented approximately $448.4 million of real estate
commissions, reflecting an increase of 25.3% from the $357.8 million of real
estate commissions represented by NRT's pending real estate sales contracts at
March 31, 1998. These increases reflect the effects of NRT's acquisitions, the
continued strength of the residential real estate market throughout the United
States and an increase in NRT's average home sales price.

Year Ended December 31, 1998

Revenues. Total revenues were $2,121.0 million for the year ended December
31, 1998. Total revenues for the year ended December 31, 1998 include real
estate commissions of $2,010.1 million generated by NRT's existing operations
and by operations acquired during 1998 from their respective dates of
acquisition. Other revenues of $110.9 million include $77.7 million of revenues
from title, escrow and other closing services, $11.2 million of revenues from
mortgage marketing services and $22.0 million of revenues from relocation and
other brokerage-related services. In addition to the

40
<PAGE>

revenues generated by operations acquired in 1998, NRT's revenues benefitted
from the continued strength of the residential real estate market throughout
the United States, from its mortgage marketing agreement with Cendant Mortgage
Corporation and from its focus on deriving increasing brokerage-related
revenues from its real estate sales transactions.

Commissions and Royalties. Commissions and royalties were $1,482.7 million,
or 69.9% of total revenues, for the year ended December 31, 1998.

Selling, General and Administrative. Selling, general and administrative
expenses were $571.9 million, or 27.0% of total revenues, for the year ended
December 31, 1998. These expenses include the expenses of NRT's existing
operations and of acquired operations from their respective dates of
acquisition. Selling, general and administrative expenses also reflect savings
realized as the result of combining branch locations and eliminating
duplicative administrative functions to the extent possible.

Amortization of Goodwill. Amortization of goodwill was $3.4 million for the
year ended December 31, 1998. Goodwill recognized in connection with NRT's
acquisitions is being amortized over 40 years.

Acquisition Related Costs. Acquisition related costs were $61.2 million for
the year ended December 31, 1998, including $17.0 million of office conversion
costs and $44.2 million of amortization of pending real estate sales contracts
and real estate listing contracts of acquired brokerages. Amortization included
$3.5 million of amortization of real estate listing contracts capitalized in
connection with NRT's acquisition of the assets of National Realty Trust.
Acquisition related costs are fully recognized within six months of the
respective acquisitions. At December 31, 1998, NRT had $5.7 million of
unamortized pending real estate sales contracts and real estate listing
contracts of acquired brokerages, which will be fully amortized by May 31,
1999.

Income Taxes. NRT's effective income tax rate was 63.7% for the year ended
December 31, 1998, reflecting the effect of non-deductible expenses.

Net Income. Net income was $1.3 million for the year ended December 31, 1998,
reflecting NRT's strong operations during the period, offset by acquisition
related costs of $17.0 million recognized in connection with NRT's acquisitions
in 1998.

Pending Real Estate Sales Contracts. At December 31, 1998, NRT had pending
real estate sales contracts representing approximately 52,300 sides, reflecting
an increase of 94.4% from the 26,900 sides represented by NRT's pending real
estate contracts at December 31, 1997. NRT's pending real estate sales
contracts at December 31, 1998 represented approximately $349.9 million of real
estate commissions, reflecting an increase of 97.2% from the $177.4 million of
real estate commissions represented by NRT's pending real estate sales
contracts at December 31, 1997. These increases reflect the effects of NRT's
acquisitions, the continued strength of the residential real estate market
throughout the United States and an increase in NRT's average home sales price.

41
<PAGE>

Four Months Ended December 31, 1997

Revenues. Total revenues were $463.5 million for the four months ended
December 31, 1997. Total revenues include real estate commissions of $446.1
million generated by existing operations and by operations acquired during the
period from their respective dates of acquisition. Other revenues of $17.4
million include $14.0 million of revenues from title, escrow and other closing
services, $0.7 million of revenues from marketing related fees and $2.7 million
of revenues from relocation and other brokerage-related services.

Commissions and Royalties. Commissions and royalties were $330.2 million, or
71.2% of total revenues, for the four months ended December 31, 1997.
Generally, real estate commissions are higher at the end of the year as the
percentage of NRT's real estate commissions shared with sales associates
increases based on closing volume on a calender year basis.

Selling, General and Administrative. Selling, general and administrative
expenses were $124.8 million, or 26.9% of total revenues, for the four months
ended December 31, 1997. These expenses include the expenses of acquired
operations from their respective dates of acquisition. Selling, general and
administrative expenses also reflect savings realized as the result of
combining branch locations and eliminating duplicative administrative functions
to the extent possible.

Acquisition Related Costs. Acquisition related costs were $78.5 million for
the four months ended December 31, 1997, including $8.6 million of office
conversion costs and $69.9 million of amortization of pending real estate sales
contracts and real estate listing contracts of acquired brokerages.
Amortization included $52.3 million of amortization of real estate listing
contracts capitalized in connection with NRT's acquisition of the assets of
National Realty Trust.

Income Taxes. NRT's effective income tax benefit was 37.6% for the four
months ended December 31, 1997. This rate varies from the statutory rate due to
the effect of non-deductible expenses and limitations on the carryforward of
losses for state tax purposes.

Net Loss. NRT had a net loss of $42.2 million for the four months ended
December 31, 1997, resulting primarily from acquisition related costs of $78.5
million, partially offset by earnings from total revenues less commissions,
royalties and selling, general and administrative expenses.

Eight Months Ended August 31, 1997

Revenues. Total revenues for the eight months ended August 31, 1997 were
$584.8 million. Total revenues include real estate commissions of $570.2
million generated by existing operations and by operations acquired during the
period from their respective dates of acquisition. Other revenues of $14.6
million include $12.7 million of title, escrow and other closing services and
$1.9 million of relocation and other brokerage-related services.

Commissions and Royalties. Commissions and royalties were $393.2 million, or
67.2% of total revenues, for the eight months ended August 31, 1997.

Selling, General and Administrative. Selling, general and administrative
expenses were $168.9 million, or 28.9% of total revenues, for the eight months
ended August 31, 1997.

42
<PAGE>

Acquisition Related Costs. Acquisition related costs were $10.7 million for
the eight months ended August 31, 1997, including $1.4 million of office
conversion costs and $9.3 million of
amortization of pending real estate sales contracts and real estate listing
contracts of acquired brokerages.

Income Taxes. NRT's effective income tax rate was 41.5% for the eight months
ended August 31, 1997, reflecting the effect of non-deductible expenses.

Net Income. Net income of $6.2 million for the eight months ended August 31,
1997 resulted primarily from total revenues less commissions, royalties and
selling, general and administrative expenses, partially offset by acquisition
related costs of $10.7 million.

Seven Months Ended December 31, 1996

Revenues. Total revenues were $412.2 million for the seven months ended
December 31, 1996, resulting primarily from real estate commissions of $400.1
million generated by existing operations. Other revenues of $12.1 million for
the seven months ended December 31, 1996 include $10.6 million of revenues from
title, escrow and other closing services and $1.5 million of revenues from
relocation and other brokerage-related services.

Commissions and Royalties. Commissions and royalties totaled $276.4 million,
or 67.0% of total revenues, for the seven months ended December 31, 1996.

Selling, General and Administrative. Selling, general and administrative
expenses were $119.9 million, or 29.1% of total revenues, for the seven months
ended December 31, 1996.

Acquisition Related Costs. Acquisition related costs were $22.2 million for
the seven months ended December 31, 1996, including $0.7 million of office
conversion costs and $21.5 million of amortization of pending real estate sales
contracts and real estate listing contracts of acquired brokerages.
Amortization includes $18.2 million of amortization of real estate listing
contracts capitalized in connection with the contributions of Coldwell Banker
Corporation's residential real estate brokerage operations to National Realty
Trust.

Income Taxes. National Realty Trust recorded a valuation reserve for its
income tax benefit associated with losses experienced during this period.
Accordingly, no tax benefit was realized.

Net Loss. A net loss of $6.4 million for the seven months ended December 31,
1996 resulted primarily from acquisition related costs of $22.2 million
partially offset by earnings from total revenues less commissions, royalties
and selling, general and administrative expenses.

Five Months Ended May 31, 1996

Revenues. Total revenues for the five months ended May 31, 1996 were $235.8
million, resulting primarily from real estate commissions of $228.0 million
generated by existing operations. Other revenues of $7.8 million for the five
months ended May 31, 1996 include $5.8 million of revenues from title, escrow
and other closing services and $2.0 million of revenues from relocation and
other brokerage-related services.

Commissions and Royalties. Commissions and royalties were $141.4 million, or
60.0% of total revenues, for the five months ended May 31, 1996. Coldwell
Banker Residential Corporation had no royalty expense for the five months ended
May 31, 1996.

43
<PAGE>

Selling, General and Administrative. Selling, general and administrative
expenses were $93.5 million, or 39.7% of total revenues, for the five months
ended May 31, 1996.

Income Taxes. NRT's effective income tax rate was 43.3% for the five months
ended May 31, 1996 reflecting the effect of non-deductible expenses.

Net Income. Net income was $204,000 for the five months ended May 31, 1996,
reflecting the lower volume of real estate closings typically experienced
during this period of the year.

Liquidity and Capital Resources

NRT's operating cash requirements consist principally of working capital
requirements, capital expenditures, acquisitions and dividends payable on its
preferred stock. NRT currently believes that cash flows from operating
activities will be adequate to meet NRT's working capital, capital expenditure
and dividend requirements.

Net cash provided by operating activities was $4.9 million for the five
months ended May 31, 1996, $29.8 million for the seven months ended December
31, 1996, $20.6 million for the eight months ended August 31, 1997, $9.5
million for the four months ended December 31, 1997 and $32.0 million for the
year ended December 31, 1998. The increase in cash flows provided by operating
activities during the year ended December 31, 1998 compared to the four months
ended December 31, 1997 and the eight months ended August 31, 1997 was due
primarily to cash flows generated by NRT's acquisitions, offset by the funding
of mortgage loans held for sale and cash used to fund liabilities in connection
with NRT's acquisitions. The decrease in net cash provided by operating
activities for the eight months ended August 31, 1997 and the four months ended
December 31, 1997 as compared to the five months ended May 31, 1996 and the
seven months ended December 31, 1996 was due to the payment of royalties for
only seven months during the period ended December 31, 1996 as compared to a
full year of royalty payments in 1997.

Net cash used in operating activities for the three months ended March 31,
1999 was $7.3 million as compared to $36.9 million for the three months ended
March 31, 1998. During the three months ended March 31, 1999, NRT received $30
million from Cendant in connection with the acquisition services agreement.

Net cash used in investing activities was $18.4 million for the five months
ended May 31, 1996, $14.8 million for the seven months ended December 31, 1996,
$44.8 million for the eight months ended August 31, 1997, $107.5 million for
the four months ended December 31, 1997 and $186.7 million for the year ended
December 31, 1998. Cash paid for acquisitions was $0.2 million for the five
months ended May 31, 1996, $13.5 million for the seven months ended December
31, 1996, $25.2 million for the eight months ended August 31, 1997, $86.3
million for the four months ended December 31, 1997 and $97.1 million for the
year ended December 31, 1998. Additional net investments in restricted cash
were $14.9 million for the five months ended May 31, 1996 as compared to a
decrease in investments in restricted cash of $3.8 million for the seven months
ended December 31, 1996. Investments in restricted cash were $14.4 million for
the eight months ended August 31, 1997 and $14.6 million for the four months
ended December 31, 1997. Additional net restricted cash investments were $53.6
million for the year ended December 31, 1998.

44
<PAGE>

This cash can only be used to repay loans entered into to fund the restricted
cash. Capital expenditures were $3.4 million for the five months ended May 31,
1996, $5.0 million for the seven months ended December 31, 1996, $5.2 million
for the eight months ended August 31, 1997, $6.7 million for the four months
ended December 31, 1997 and $36.2 million for the year ended December 31, 1998.
This increase is due to investments to improve operations, new information
technology systems and the replacement of personal computers.

Net cash used in investing activities was $9.5 million for the three months
ended March 31, 1999 and $54.4 million for the three months ended March 31,
1998. Payments made for NRT's acquisitions for the three months ended March 31,
1999 were $2.2 million as compared to $56.1 million for the three months ended
March 31, 1998. Decrease in investments in restricted bank loans was $0.3
million for the three months ended March 31, 1999 and $7.4 million for the
three months ended March 31, 1998. Capital expenditures were $7.7 million for
the three months ended March 31, 1999 as compared to $6.1 million for the three
months ended March 31, 1998. This increase is due to investments to improve
operations, new information technology systems and the replacement of personal
computers.

Net cash inflows from financing activities were $14.6 million for the five
months ended May 31, 1996 as compared to net cash outflows of $4.0 million for
the seven months ended December 31, 1996. Net cash inflows from financing
activities were $30.8 million for the eight months ended August 31, 1997,
$263.3 million for the four months ended December 31, 1997 and $42.0 million
for the year ended December 31, 1998. Cash from financing activities for the
periods ended May 31, 1996 and December 31, 1996 were due primarily to changes
in restricted cash bank loans. For the eight months ended August 31, 1997,
Cendant made an advance of $20.0 million to National Realty Trust and Coldwell
Banker Residential Brokerage Corporation, which is being forgiven over a 40-
year period. During the four month period ended December 31, 1997, NRT was
funded with $255.6 million in capital contributions from its stockholders,
which were used to fund NRT's acquisitions in this period. Also during this
period, NRT had net cash inflows of $14.6 million from restricted cash bank
loans from financial institutions. During the year ended December 31, 1998, net
cash inflows from restricted cash bank loans were $53.6 million. These loans
are secured by and payable from investments of restricted cash described above.
Additionally, during the year ended December 31, 1998, NRT paid $22.1 million
in dividends on its preferred stock and received $17.9 million under its
mortgage warehousing loan to fund mortgage loans held for sale.

Net cash used in financing activities for the three months ended March 31,
1999 were $13.9 million as compared to $15.2 million for the three months ended
March 31, 1998. Net decrease in secured bank loans was $0.3 million for the
three months ended March 31, 1999 as compared to $7.4 million for the three
months ended March 31, 1998. Dividends paid on common stock during the three
months ended March 31, 1999 were $30.0 million and dividends paid on preferred
stock during the three months ended March 31, 1998 were $7.2 million.

NRT had restricted cash totaling $40.3 million at December 31, 1997, $93.9
million at December 31, 1998 and $93.6 million at March 31, 1999, which can be
used only to repay loans entered into to fund investments by NRT. These loans
are included with the current portion of notes payable.

NRT believes that it will have sufficient capital resources over both the
long and short term to facilitate its acquisition strategy. These resources
include cash generated from operations, proceeds

45
<PAGE>

from the offering, NRT's bank credit facility, future public offerings or
private placements of equity or debt securities and Cendant's participation in
acquisitions under the acquisition cooperation agreement.

As a result of an amendment to the calculation of the purchase price payable
by Cendant under the acquisition cooperation agreement, the percentage of the
total purchase price payable by Cendant in NRT's future brokerage acquisitions
is likely to be lower than in the past. This may adversely affect NRT's ability
to find acquisition candidates on terms acceptable to NRT and to finance and
complete such transactions.

NRT is party to a $100 million bank credit facility. Borrowings may be used
for NRT's general working capital needs in the ordinary course of business and
permitted acquisitions. NRT is seeking to expand the available borrowing
capacity under this facility.

Upon its formation, NRT issued senior preferred stock and convertible
preferred stock to Cendant and junior preferred stock to Apollo. Each class of
preferred stock is mandatorily redeemable. NRT intends to use approximately
$88.2 million of the net proceeds of the offering to redeem all outstanding
shares of the junior preferred stock held by Apollo and $10.7 million to
repurchase 725.4 shares of convertible preferred stock from Cendant. In
addition, on April 6, 1999, NRT repurchased 574,575 shares of common stock from
Apollo for $10.7 million.

In February 1999, NRT received a $30.0 million advance in connection with
entering into an acquisition services agreement with Cendant. Under the terms
of this agreement, NRT will provide advisory services to Cendant relating to
the identification of potential acquisition candidates, the negotiation of
agreements and other services in connection with future brokerage acquisitions
in which Cendant participates. NRT will earn fees under the agreement based on
the size of the brokerage acquisitions.

NRT declared a $45 million cash dividend on its common stock to Apollo, of
which $30 million was paid during the first quarter of 1999 and $15 million was
paid during the second quarter of 1999.

Market Risk

In connection with its mortgage banking operations, NRT grants mortgage loans
and holds the loans until sale to third parties. These loans are funded through
a mortgage warehousing loan, which represents borrowings under a $25 million
line of credit with a commercial bank. Borrowings under the line of credit bear
interest at the prime rate and are collateralized by mortgage loans held for
sale. The fair values of mortgage loans held for sale and the mortgage
warehousing loan fluctuate with changes in interest rates. However, mortgage
loans are only granted after NRT has a binding commitment to sell the loan to a
third party on a servicing released basis. Mortgage loans held for sale are
generally sold within 60 days and the proceeds from the sale are then used to
repay the related mortgage warehousing loans. Based on this relatively short
time frame, a near-term change in interest rates would not materially affect
NRT's consolidated financial position, results of operations or cash flows.

NRT enters into restricted cash bank loans which are invested in cash
equivalents and cannot be used other than to repay the related loans. Both the
loans and the related investments have fixed rates of interest and mature
monthly. Based on the short time frame of these loans and investments, near-
term changes in interest rates would not materially affect NRT's consolidated
financial position, results of operations or cash flows.

46
<PAGE>

NRT is party to a $100 million credit facility. At the option of NRT, each
individual borrowing under the credit facility may be designated and maintained
as either a base rate loan or a Eurodollar loan. Interest accrues on base rate
loans at a rate equal to 0.75% plus the higher of the federal funds rate plus
0.5% and the prime lending rate. Interest accrues on Eurodollar loans at a rate
equal to 1.75% plus the British Bankers' association interest settlement rate
(or if not available, by reference to the London interbank market rate).
Assuming that the $100 million credit facility was fully drawn, a 100 basis
point change in the 6.75% annual interest rate in effect at March 31, 1999
would result in a corresponding change in interest expense of $1,000,000 on an
annual basis.

Year 2000 Compliance

Many existing computer systems and software products are coded to accept only
two digit entries in the date code field and cannot properly recognize dates in
the year 2000 and beyond. Consequently, these systems and software products
need to be either upgraded or replaced to function properly from and after
January 1, 2000. NRT has established a year 2000 program to evaluate, confirm
compliance and identify any necessary changes to its information technology and
other systems. In 1997, NRT evaluated the information technology systems
acquired from National Realty Trust for the ability to meet the future needs of
NRT. NRT determined that the existing systems did not contain the features and
capacity necessary to implement its business plan. Accordingly, during 1998 NRT
replaced all of its significant information technology systems. The hardware
and software related to the new systems are year 2000 compliant.

NRT is in the process of assessing and inventorying the year 2000 compliance
of its non-critical information technology and other systems. NRT has
identified certain of these systems which are not year 2000 compliant and plans
to correct these systems before September 30, 1999. NRT believes the total
costs associated with correcting these systems will be less than $5 million,
consisting mostly of computer hardware and system software.

NRT is in the process of contacting third party vendors and service providers
on whom it relies, including Cendant and multiple listing service providers, to
confirm that their systems will be year 2000 compliant in a timely manner. NRT
expects to have this assessment complete and a contingency plan in place by the
end of the third quarter of 1999. However, NRT cannot assure that the systems
of third parties upon which it relies will be year 2000 compliant in a timely
manner or that third parties' contingency plans will mitigate the effects of
non-compliance.

Based upon the progress of its comprehensive plan, NRT expects that it will
not experience a disruption of its operations as a result of year 2000 issues.
In a reasonable worst case scenario, the failure by NRT or a third party vendor
or service provider to be year 2000 compliant on a timely basis could
negatively impact NRT's ability to market homes and offer brokerage-related
services and require NRT to devote more resources and capital to resolve year
2000 problems.

In connection with each of NRT's acquisitions, NRT evaluates the systems of
the acquired company to determine whether its systems are year 2000 compliant.
If an acquired company's systems are not year 2000 compliant, NRT will prepare
a plan to bring the systems into compliance. While NRT cannot guarantee that
all acquired companies will be year 2000 compliant on a timely basis, the cost
of bringing such companies into compliance is not expected to have a material
adverse effect on NRT's financial condition or results of operations.

47
<PAGE>

Impact of New Accounting Pronouncements

NRT adopted Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income, on January 1, 1998. SFAS 130 requires that all items
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. NRT does not have any
comprehensive income components requiring separate disclosure.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the way companies report information about
operating segments in annual financial statements. It also establishes
standards for related disclosure about products and services, geographic areas
and major customers. NRT conducts its business activity in a single operating
segment. Brokerage operations comprised approximately 97% of total revenues
during 1996, 97% of total revenues during 1997 and 95% of total revenues during
1998. Operations related to ancillary real estate services amounted to 3% of
total revenues during 1996, 3% of total revenues during 1997 and 5% of total
revenues during 1998.

Impact of Inflation

Generally, inflation causes the value of residential real estate to increase.
While increases in the value of residential real estate typically lead to
corresponding increases in NRT's commissions, inflation could also cause
interest rates to increase. Higher interest rates tend to reduce sales of
existing single family homes, which may offset NRT's increased commission
revenues.

48
<PAGE>

BUSINESS

Company Overview

NRT is the largest residential real estate brokerage company in the United
States based on home sales volume. NRT operates approximately 710 full service
real estate brokerage offices nationwide. As a full service brokerage, NRT
offers, either directly or through third party arrangements, a wide variety of
homeowner services in addition to traditional real estate brokerage services,
including mortgage, title, escrow and relocation services, home warranties,
home security systems and other services.

. NRT is approximately five times larger than its next largest competitor,
based on home sales volume.

. NRT operates in 19 of the 30 largest domestic markets measured by
population and NRT believes that it has a leading market presence in
each of the markets in which it operates.

. NRT is the only national residential real estate brokerage company.

. NRT markets more homes on the internet than any other residential real
estate brokerage company based on the number of homes listed with NRT,
all of which are listed on the internet.

NRT operates all of its brokerage offices under the COLDWELL BANKER(R),
ERA(R) and CENTURY 21(R) brand names under franchise agreements with
subsidiaries of Cendant. NRT operates approximately 85% of its offices under
the COLDWELL BANKER(R) brand name, 13% of its offices under the ERA(R) brand
name and 2% of its offices under the CENTURY 21(R) brand name. NRT operates its
COLDWELL BANKER(R) offices throughout the country, its ERA(R) offices in New
Jersey and the Mid-Atlantic region and its CENTURY 21(R) offices in Northern
California. NRT believes that the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R)
brand names provide NRT with consumer recognition and credibility on a national
and international basis. Based on publicly available information, COLDWELL
BANKER(R), ERA(R) and CENTURY 21(R) are three of the five largest national real
estate franchise systems in the United States, measured by the number of
franchised real estate brokerage offices.

Shortly after its formation in August 1997, NRT acquired the assets of
National Realty Trust, which included the former real estate brokerage
operations of Coldwell Banker Corporation. Although NRT had only recently been
formed, the operations acquired from National Realty Trust provided NRT with a
strong core operating business. NRT has grown rapidly, completing 84
acquisitions through April 30, 1999, representing a total of over 500 brokerage
offices. NRT's larger acquisitions to date include the following:

. Jon Douglas Real Estate Services Group, Inc., the third largest
residential real estate brokerage company;

. Burnet Financial Group, the fourth largest residential real estate
brokerage company;

. Hunneman Real Estate Corporation, the ninth largest residential real
estate brokerage company;

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<PAGE>

. Cornish & Carey Residential, Inc., the tenth largest residential real
estate brokerage company; and

. O'Conor, Piper & Flynn, Inc., the fifteenth largest residential real
estate brokerage company.

Rankings are based on home sales volume during the last completed calendar year
prior to being acquired by NRT, as reported by Real Facts. Cendant has
participated in each of these transactions pursuant to the acquisition
cooperation agreement (or its predecessor) with NRT.

The Industry

Recent years have been among the strongest ever for existing home sales.
Based on information reported by the National Association of Realtors and the
United States Census Bureau:

. NRT estimates that the 1998 domestic residential real estate brokerage
industry generated over $50 billion of gross commission income, based on
approximately $940 billion in home sales and assuming an average
commission rate of 5.5%.

. Existing home sales in the United States have exceeded 3.5 million homes
sold every year since 1992 and over 4.0 million homes sold in each of
1996, 1997 and 1998.

. Since 1991, the number of new and existing homes sold per year in the
United States has grown at an average annual rate of 5.4%.

. The 1993-1998 period includes six of the eight strongest years on record
for annual existing home sales.

Real estate brokerage companies typically realize revenues as a commission
that is based on a percentage of the price of each home sold. As a result, the
real estate brokerage industry generally benefits from rising home prices. In
1998, the national median price for existing, single-family homes, as reported
by the National Association of Realtors, was $130,600, up 5.2% from 1997. Since
1981, median home prices have increased an average of 4.0% annually.

Rising home ownership rates have also had a positive impact on the real
estate brokerage industry. According to the United States Census Bureau, the
1998 national home ownership rate was 66.4%, the highest rate on record
(statistics have been kept since 1900). The home ownership rate is rising in
most areas of the country.

The highly fragmented real estate brokerage industry consists primarily of a
large number of relatively small brokerage companies, a small number of multi-
office regional brokerage companies and one national real estate brokerage
company, NRT. The 20 largest real estate brokerage firms included in the Real
Facts listing of the largest real estate brokerage companies in the United
States represented 8.1% of home sales volume in 1997. In addition, according to
a 1996 report of the National Association of Realtors, approximately 87% of all
real estate brokerage firms consisted of a single office.

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<PAGE>

The following table contains data for the five largest residential real
estate brokerage firms in the United States as of and for the year ended
December 31, 1997:

<TABLE>
<CAPTION>
Home Sales
Company Volume(a) Sides(a) Offices(a) Region
------- ---------- -------- ---------- ----------------------
(in
billions)
<S> <C> <C> <C> <C>
NRT Incorporated(b)..... $63.0 277,566 652 National
Weichert, Realtors...... 13.0 63,500 200 Northeast/Mid-Atlantic
Long & Foster Real
Estate, Inc. .......... 7.8 44,612 116 Mid-Atlantic
Prudential Florida
Realty(c).............. 4.9 28,982 75 Florida
Fred Sands Realtors..... 4.4 12,018 20 California
</TABLE>
- ---------------------

(a) Source: 1998 edition of Real Facts. Each real estate transaction has two
sides, the selling side and the buying side. Brokers may participate on one
or both sides of a transaction.
(b) Includes Burnet Financial Group, Hunneman Real Estate Corporation and
O'Conor, Piper & Flynn, Inc., which were acquired by NRT during 1998, but
excludes all other acquisitions by NRT in 1998. If Burnet Financial Group
were separately listed, it would be the fourth largest residential real
estate brokerage company.
(c) On July 31, 1998, Prudential Florida Realty was acquired by The St. Joe
Company. On March 1, 1999, it was renamed Arvida Realty Services, and it
currently operates as a company unaffiliated with a national brand.

NRT believes that the future of the real estate brokerage industry will be
dominated by large companies offering multiple services and smaller, niche-
oriented firms. NRT believes that larger firms, such as NRT, will benefit from
their ability to offer consumers a "full service brokerage" approach to the
complex process of purchasing or selling a home by offering home buyers and
sellers a wide variety of homeowner services.

Growth Strategy

Internal Growth Strategy

NRT will seek to expand its market presence and increase its revenues and
profitability through initiatives that are designed to:

Leverage Well Known, National Brand Names. NRT intends to capitalize on the
benefits provided by operating under the COLDWELL BANKER(R), ERA(R) and CENTURY
21(R) brand names. Such benefits include:

. the name recognition and reputation of the brands among consumers for
quality and consistency;

. access to the franchisors' sales associate training and educational
programs; and

. the approximately $65 million of annual marketing expenditures by
national advertising funds promoting the COLDWELL BANKER(R), ERA(R) and
CENTURY 21(R) brand names.

NRT believes that brand recognition is important in the real estate business
because home buyers and sellers are generally infrequent users of brokerage
services and typically rely on reputation as well as word-of-mouth
recommendations. NRT believes that brand reputation is also important to real
estate sales associates. According to a study conducted by the National
Association of Realtors, real estate sales associates believe that a brokerage
firm's image with customers is its most important attribute.

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<PAGE>

Increase Ancillary Revenues. NRT intends to capitalize on the purchasing
power of home buyers and sellers and take advantage of the relationship between
homeowners and NRT's sales associates to market a wide range of homeowner
services. NRT believes that by offering a wide range of brokerage and related
services it can improve the home purchase or sale experience, enhance its
relationship with its customers and increase its service revenues. NRT intends
to continue to broaden the range of services that it offers to strengthen NRT's
position as a full service brokerage company and to capitalize on the high
margin opportunities offered by these services.

Recruit, Retain and Develop High-Quality Sales Associates. The success of
NRT's business is largely driven by its ability to retain high-quality real
estate sales associates. NRT believes that its reputation and its ability to
provide its sales associates with extensive training and educational programs,
marketing support, sophisticated information technology and other resources
help NRT recruit, retain and develop high quality sales associates. NRT
believes its sales associates generally have a reputation for quality of
service and professionalism. While individual results vary widely, the
productivity of NRT's sales associates increased by over 25% to an average of
10.3 closed sides per sales associate in 1998 from 8.2 closed sides per sales
associate in 1996.

Enhance Productivity with Information Technology. NRT's technology-based
systems combine software applications with features such as prospective
customer management, location mapping, financial analysis, property
information, photographs and forms. NRT believes that these systems, which
provide NRT's sales associates with quick access to current market information,
are powerful productivity enhancing and marketing tools. NRT intends to
continue to upgrade its information technology and use technology to enhance
the productivity of its sales associates.

Acquisition Strategy

NRT will seek to take advantage of consolidation opportunities in the highly
fragmented real estate brokerage industry by continuing to:

Expand Within Existing Markets. NRT seeks to expand its presence within its
existing markets through acquisitions of additional local and regional
brokerages, as well as "roll-in" acquisitions of smaller firms often consisting
of a single office. NRT believes that these businesses can be integrated into
NRT's existing operations, resulting in the elimination of many duplicative
costs such as advertising, rent and administrative support. By utilizing its
existing infrastructure to support a broader network of sales associates and
revenue base, NRT believes it can enhance the profitability of its consolidated
operations. Since its formation, NRT has completed over 50 "roll-in"
acquisitions.

Enter New Markets. NRT intends to enter new markets by selectively acquiring
high-quality, leading real estate brokerage firms that it believes will enable
it to establish a strong presence in target markets. In evaluating potential
acquisitions, NRT considers financial performance, the quality of management
and sales associates, demographics and economic conditions of the new market
and competitive position of the acquisition target.

Improve Operations of Acquired Companies. NRT seeks to improve the operating
profitability of its acquired companies through the consolidation of offices,
elimination of duplicative costs, reduction in personnel and centralization of
back office functions. The limited availability of capital

52
<PAGE>

has constrained expansion and modernization at many small and mid-sized real
estate brokerage firms. NRT believes that it can increase internal growth at
many of the acquired companies through its:

.affiliation with nationally recognized brand names;

.offering of a wide range of brokerage-related services;

.improved use of information technology;

.sales associate training and educational programs;

.marketing and business promotion; and

. skilled senior management.

From September 1, 1997 through March 31, 1999, NRT completed 26 acquisitions of
brokerages which each had over $5 million of annual gross commission income.
Through March 31, 1999, NRT had taken actions to reduce the annual operating
costs of the acquired companies by an aggregate of approximately $56.8 million.

Other Growth Opportunities

NRT intends to pursue other growth opportunities and has identified the
following areas for possible expansion.

Commercial. Approximately 400 of NRT's sales associates concentrate
principally on commercial real estate sales. NRT may pursue opportunities to
expand its network of commercial real estate sales associates by making
strategic acquisitions of regional and local commercial brokerage companies.

International. NRT believes that the COLDWELL BANKER(R), ERA(R) and CENTURY
21(R) brand names are highly regarded in a number of industrialized countries,
including Canada, the United Kingdom and France, which have real estate
brokerage industries that operate in a manner similar to the real estate
brokerage industry in the United States. NRT may seek to enter such markets by:

.acquiring master franchise rights in such markets;

.entering into partnerships with brokers operating in such markets; or

.making acquisitions of brokers operating in such markets.

Acquisitions

Identification and Evaluation

NRT has a dedicated group of professionals whose function is to identify,
evaluate and complete acquisitions. In the ordinary course of business, NRT
continuously evaluates possible acquisition candidates and from time to time
conducts discussions with third parties regarding acquisitions.

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<PAGE>

NRT conducts the following analyses when evaluating potential acquisition
targets:

. financial analyses of historical performance, comparisons to peers and
NRT and potential cost reductions and synergy enhancements;

. consolidation analyses of occupancy costs, employee count, advertising
expenditures and conversion costs that an office is expected to incur in
the consolidation process;

. non-financial analyses of the quality of the target's management and
sales associates and the target's competitive positioning; and

. market analyses of the demographics and economic conditions of the
geographic market and the relative position of the acquisition target
compared to its competitors in such market.

NRT's target markets fall into the following three categories:

. Large Metropolitan Markets. NRT defines large metropolitan markets as
markets with annual gross commission income of greater than $250
million. In these markets, NRT seeks to acquire firms with strong
management and significant consolidation and cost saving opportunities.
NRT estimates that there are currently 28 markets in the United States
meeting these criteria, of which it operates in 17.

. Feeder Markets. NRT defines feeder markets as those markets that are
directly linked to NRT's large metropolitan markets. NRT seeks to make
acquisitions in these markets if they exhibit fluid population movement
and demographic strength and the acquisition targets exhibit
consolidation and cost saving opportunities. NRT currently operates in
two of these markets (and typically classifies such markets as part of
the larger market into which they are directly linked).

. Smaller Metropolitan Markets. NRT defines smaller metropolitan markets
as markets with annual gross commission income of less than $250 million
but greater than $100 million. In these markets, NRT seeks to acquire
firms that exhibit significant consolidation and cost saving
opportunities. NRT estimates that there are currently 14 markets in the
United States meeting these criteria, of which it operates in two.

Once NRT has established itself in a given market, it will then seek to make
acquisitions of regional and local firms and "roll-in" acquisitions of smaller
companies to take advantage of economies of scale and expand its market
presence. NRT believes that by segmenting and applying different criteria to
the markets that it analyzes, it can better identify and manage its
acquisition opportunities, while generating an extensive list of acquisition
targets.

Integration

Following completion of an acquisition, NRT further refines its
consolidation analysis and consolidates the newly acquired operations with its
existing operations. By consolidating operations, NRT significantly reduces or
eliminates duplicative costs, such as advertising, rent and administrative
support. By utilizing its existing infrastructure to support a broader network
of sales associates and revenue base, NRT can enhance the profitability of its
consolidated operations.

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<PAGE>

NRT also seeks to enhance the profitability of newly acquired operations by
increasing the productivity of the acquired brokerages' sales associates. NRT
provides its sales associates with specialized tools, training and resources
that are often unavailable at smaller firms, such as:

. access to sophisticated information technology and ongoing technical
support;

. increased advertising and marketing support;

. corporate relocation referrals; and

. a wide offering of brokerage-related services.

Brokerage Services

NRT provides real estate brokerage services in 19 of the 30 largest
metropolitan markets throughout the United States based on population (based on
statistics compiled by A.C. Nielsen). The following table contains data for the
10 largest markets in which NRT operates as of and for the twelve months ended
March 31, 1999 (ranked in order of gross commission income):

<TABLE>
<CAPTION>
Pro Forma(a)
----------------
Gross Commission
Offices Sales Associates Income
------- ---------------- ----------------
<S> <C> <C> <C>
Metropolitan Regions (in thousands)
San Francisco/Northern
California(b)...................... 78 3,969 $ 493,321
Los Angeles/Southern California(c).. 68 3,601 411,054
New York Metropolitan Area.......... 119 4,872 241,099
Chicago............................. 68 3,127 189,981
Washington DC/Baltimore............. 59 2,338 163,461
Minneapolis......................... 37 2,081 161,527
Denver.............................. 24 875 116,869
Boston.............................. 67 1,601 115,739
Tampa/West Central Florida(d)....... 37 1,624 103,328
Miami/Southeast Florida............. 38 1,797 97,383
</TABLE>
- ---------------------
(a) Assumes all 1998 acquisitions of brokerages with annualized gross
commission income in excess of $5 million were completed on January 1,
1998.
(b) Includes Sacramento, California.
(c) Includes San Diego, California.
(d) Includes Orlando, Florida.

In its residential real estate brokerage business, NRT provides services to
consumers in the purchase and sale of new and existing homes. When NRT assists
the seller in a real estate transaction, NRT's sales associates provide the
seller with a full service marketing program, which includes:

. developing a direct marketing plan for the property;

. assisting the seller in pricing the property and preparing it for sale;

. advertising the property, including listing it on multiple listing
services and/or websites on the internet;

. showing the property to prospective buyers;

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<PAGE>

.assisting the seller in sale negotiations; and

.assisting the seller in closing the transaction.

When NRT assists the buyer in a real estate transaction, its sales associates
provide the buyer with the following services:

. assisting the buyer in locating specific properties that meet the
buyer's personal and financial specifications;

. showing properties to the buyer;

. where permissible, assisting the buyer in negotiating the terms of the
contract to purchase;

. assisting the buyer in closing the transaction, including assisting with
mortgage qualification; and

. offering the buyer a wide range of brokerage-related services.

Commissions

In a typical brokerage transaction, NRT receives its commission upon the
closing of the transaction. Sales commissions typically range from
approximately 5% to 7% of the sales price. In transactions in which NRT is
acting as a broker on one side of a transaction (either the buying side or the
selling side) and a third-party broker is acting as broker on the other side of
the transaction, NRT generally must share with the other broker 50% of the
sales commission. In transactions in which NRT is acting as the sole broker,
NRT generally receives 100% of the sales commission.

The following table sets forth the real estate sales commissions and related
data of NRT and its predecessors during the periods indicated:

<TABLE>
<CAPTION>
Years Ended Three Months
December 31, Ended March 31,
-------------------------------- ------------------
1996 1997 1998 1998 1999
-------- ---------- ---------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Sides................... 109,994 154,066 300,229 47,732 65,471
Average sales price per
home................... $205 $239 $245 $243 $255
Average commission rate
per side............... 2.78% 2.76% 2.73% 2.84% 2.81%
Real estate sales com-
missions............... $628,081 $1,016,284 $2,010,123 $330,241 $469,596
</TABLE>

The commission earned by NRT's sales associates is based upon a percentage of
the sales commissions earned by NRT. Typically, the percentage of the real
estate commissions which is shared with NRT's sales associates will vary based
on factors including sales associate productivity and rates that are paid to
competing associates in the same local or regional market. The percentage of
total commissions which NRT has shared with sales associates has averaged
between 60% and 67% in recent years.

Sales Associates

The success of NRT's business largely depends upon its ability to recruit,
retain and develop highly motivated and well trained sales associates. NRT
believes that the reputation of particular sales associates, in addition to the
reputation of NRT's local offices and brands, is an important

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<PAGE>

factor for many consumers when choosing a brokerage. NRT currently has over
30,000 sales associates, substantially all of whom are independent contractors.
Either NRT or the sales associate can terminate the independent contractor
relationship at any time. In 1998, NRT experienced a turnover of sales
associates who collectively generated less than 10% of NRT's gross commission
income. NRT believes this level of turnover is no worse than the industry
average. NRT generally replaces departing sales associates through the
recruitment of sales associates.

NRT is dedicated to the recruitment and retention of both new and experienced
sales associates. NRT provides extensive programs aimed at improving sales
associates' marketing skills and increasing their knowledge and awareness of
the issues and laws affecting the real estate industry. While individual
results vary widely, the productivity of NRT's sales associates has increased
by 25% to an average of 10.3 closed sides per sales associate in 1998 from 8.2
closed sides per sales associate in 1996.

NRT provides extensive training programs for its sales associates in areas
such as current marketing and selling techniques and customer service. New
sales associates attend a four-week training program which prepares them for
entry into the real estate brokerage industry. Additional training is provided
after sales associates have worked in the field. Finally, more seasoned sales
associates have access to an eight-week program which is structured to improve
their business and professional skills. Sales associates are responsible for
purchasing of the marketing tools they use in their business.

There has been a significant change in the real estate industry over the last
20 years characterized by increasing productivity and professionalism of real
estate sales associates and increasing demands placed on them by consumers to
offer a greater range of services in connection with a home sale or purchase.
In order to meet the increasing demands of customers and the needs of NRT's
sales associates, NRT has diversified its offering of services. NRT believes
that by offering a broad range of services, in addition to the marketing and
technological assistance and training programs provided to sales associates,
NRT will be able to continue to attract and retain productive, full-time real
estate sales professionals.

Referral Network

Within its 19 markets, NRT has established an informal network of referral
associates who refer home buyers and sellers to other sales associates of NRT.
Referral associates generally are non-practicing, licensed real estate agents
who pay NRT an annual membership fee to participate in NRT's referral network.
By referring a home buyer or seller to the referral network, the referral
associate earns a portion of the commission earned by NRT.

Marketing and Information Technology

NRT markets its real estate services and specific real estate listings
through major area and local newspapers, the internet, real estate
publications, magazines, luxury homes divisions of the brands, television,
radio and outdoor advertising. NRT's newspaper advertising includes both
traditional classified advertising to market each of NRT's listings and full-
page advertisements with descriptions of selected homes in the market,
typically with photographs of the properties. In addition to

57
<PAGE>

newspaper advertising, NRT publishes and distributes Buyers Guides, which
display selected listings by region. NRT also markets its properties through a
direct mail program implemented at the local level. NRT's sales associates may
supplement NRT's direct mail programs with specialized programs that they fund
on their own. NRT provides its sales associates with promotional materials
which can be customized for those sales associates who choose to utilize this
opportunity.

NRT also participates in luxury marketing programs established by its
franchisors, such as Coldwell Banker Previews, Century 21 Fine Homes & Estates
and ERA International Collection. These programs provide special services for
buyers and sellers of luxury homes. NRT has sales associates who specialize in
marketing these homes. Properties covered in these programs are listed
separately through:

. newspaper advertisements;

. in quarterly mailings to a qualified list of prospective purchasers
throughout the metropolitan areas in which NRT operates; and

. relocation companies for use by potential transferees to the area.

In addition to NRT's direct expenditures on marketing, NRT contributes a
portion of its gross commission income to segregated national advertising funds
maintained by its franchisors. The national advertising funds collect marketing
contributions from all of their franchisees and allocate such funds, together
with funds contributed by the franchisors, for national media purchases and
brand awareness and positioning campaigns. In 1998, the national advertising
funds' expenditures on advertising promoting the COLDWELL BANKER(R), ERA(R) and
CENTURY 21(R) brand names totaled approximately $65 million.

NRT believes that the use of information technology as a marketing tool will
continue to increase. Accordingly, NRT has sought to become a leader among
residential real estate brokerage firms in the use and application of
information technology. Key features of NRT's information technology include:

.access to information from any location;

. integration of NRT's information systems with multiple listing services
to provide information covering a large number of properties, including
current prices, color photographs, on-line updates and a property tax
database;

. comparative market analyses;

. mapping and preparation of property tours;

. desktop publishing for personalized feature sheets and marketing
materials; and

. customized forms and contracts.

NRT's internet presence features NRT's entire listing inventory in its
regional and national markets, plus community profiles, home buying and selling
advice, relocation tips and mortgage financing information. Customers are able
to check NRT's listings by providing search parameters. A list of all available
properties conforming to the user's search criteria is then generated with

58
<PAGE>

information relating to each property, including a photograph. In addition, the
customer can contact NRT interactively as to his or her particular interest.
NRT's internet presence enables its customers to familiarize themselves with
NRT's sales associates, local markets and information on available homes from
anywhere in the world prior to their arrival in a local market for a home
search.

Office Management

NRT operates its brokerage offices in a decentralized manner, which permits
significant marketing flexibility and management control at the local level.
NRT believes that local management is better situated to understand local
markets and is best able to tailor its services to those markets. Following an
acquisition, NRT seeks to centralize the acquired company's finance,
accounting, payroll, human resources and legal support functions, thereby
eliminating duplicative operations and realizing economies of scale. By
centralizing these functions, NRT is able to utilize its existing
infrastructure to support an increased level of revenues without a
corresponding increase in expenses.

Mortgage Services

NRT markets mortgage origination services to its customers under its
marketing agreement with Cendant Mortgage Corporation, the tenth largest
mortgage originator in the United States. Cendant Mortgage provides mortgage
services through a centralized inbound telemarketing mortgage origination
service in most of NRT's offices and through loan officers located in other
offices. This service includes providing the prospective home buyer with an
immediate mortgage preapproval with respect to an anticipated home purchase.
NRT believes that obtaining this mortgage preapproval makes the prospective
home buyer more attractive to the seller. NRT earns fees for the services it
provides under the marketing agreement. NRT's agreement with Cendant Mortgage
provides it with access to a nationwide mortgage underwriter believed to be
well suited to provide mortgage services to clients of a large, geographically
dispersed network of real estate offices. NRT intends to enter into a joint
venture with Cendant to provide mortgage services, at which time the marketing
agreement will be terminated.

Title, Escrow and Other Closing Services

NRT operates full service title insurance agencies which provide real estate
closing and title insurance services in a number of NRT's markets. NRT conducts
title searches, updates abstracts, records closing documents, conducts closings
and performs other services on behalf of the underwriters of the title
insurance policy and issues title insurance for third party title insurance
companies. As a title agent in such transactions, NRT does not underwrite the
insurance, but retains a significant portion of the title insurance premium in
consideration of the services it provides.

NRT owns an escrow services company which is licensed as a full service
escrow company in Southern California and provides a range of real estate
closing services to home buyers and sellers. These services include escrowing
funds and processing closing documentation. Revenues are generated by
transaction fees, which tend to fluctuate with NRT's brokerage revenues.

59
<PAGE>

Additional Services

Brokerage-Related Services

NRT offers, either directly or through marketing and purchasing arrangements
with or established by Cendant under the program outsourcing agreement,
brokerage-related services, including home warranties, home security systems,
temporary housing, temporary storage and utility services. NRT generally earns
fees for the marketing of such services. NRT believes that its offering of a
wide range of brokerage-related services at competitive prices provides it with
a significant point of differentiation from most other brokerages, which
typically do not offer such services.

Relocation Management

NRT also offers relocation services to its customers either directly or
through an arrangement with Cendant Mobility Services Corporation, the
country's largest relocation company. Relocation services generally include:

.home sale and marketing assistance programs; .mortgage services;

.property rental management; .expense management;

.closing services; .policy counseling;

.home finding assistance; .consulting services; and

.moving services; .group move management.

.rental assistance;

NRT also provides relocation services that focus on smaller and mid-size
companies that can benefit from the services provided by a full service
relocation company, yet may not be large enough to contract with Cendant
Mobility or other large relocation company. When NRT provides its own
relocation services, it receives fees from the client for its relocation
services in addition to the commissions generated on the sale and/or purchase
of the transferee's property.

In addition, NRT has an arrangement with Cendant Mobility under which NRT
provides its brokerage services to relocating employees of the clients of
Cendant Mobility, which typically are large corporations and governmental
agencies.

When receiving a referral from Cendant Mobility, NRT seeks to assist the
buyer in completing a home sale. Upon completion of a home sale, NRT receives a
commission on the purchase or sale of the property but is obligated to pay
Cendant Mobility a portion of such commission as a referral fee. NRT believes
that these fees are comparable to the fees charged by other relocation
companies.

Competition

The residential real estate brokerage industry is highly competitive,
particularly in the densely populated metropolitan markets in which NRT
operates. In addition, the industry has relatively low barriers to entry for
new participants, including participants pursuing non-traditional methods of
marketing real estate, such as internet-based listing services. Companies
compete for sales and

60
<PAGE>

marketing business primarily on the basis of services offered, reputation,
personal contacts, and, to a lesser extent, brokerage commissions. NRT competes
primarily with:

. franchisees of local and regional real estate franchisors;

. franchisees of its franchisors and other national real estate
franchisors, such as RE/MAX, Prudential Real Estate and Better Homes and
Gardens;

. regional independent real estate organizations, such as Weichert,
Realtors, Long & Foster and Fred Sands Realtors; and

.smaller niche companies competing in local areas.

Government Regulation

NRT's businesses are subject to governmental regulation. The residential real
estate brokerage business is subject to regulatory and licensing requirements
of government agencies. As a result, NRT must be licensed as a broker and its
sales associates must be licensed as sales associates in each state in which
they operate. State statutes contain general standards for and prohibitions on
the conduct of real estate brokers and sales associates and set standards in
the areas of:

. disclosure when acting in an agency and dual agency (representing a
seller and a buyer in a transaction) capacity;

. commission collection;

. continuing broker and sales associate education;

. administration of trust funds;

. advertising; and

. disclosure of information in real estate forms.

Under state law, a real estate broker such as NRT has a duty to supervise and
is responsible for the conduct of its sales associates.

NRT is subject to the Real Estate Settlement Procedures Act, a federal law
that requires timely disclosure of the relationships or financial interests
between providers of real estate settlement services and fees and prohibits
referral fees between providers of settlement services. NRT is also subject to
similar state laws as well as other state laws and industry standards which
impose additional restrictions or requirements on the manner in which NRT may
conduct its business.

NRT's title and escrow services businesses are regulated by state regulatory
authorities that possess broad powers relating to the granting and revocation
of licenses. These state authorities also regulate insurance rates and the form
of the policies.

NRT's business depends on the validity of, and NRT's continued good standing
under, the licenses and approvals under which it operates, and NRT's compliance
with pertinent regulations. NRT therefore devotes a significant amount of
effort toward maintaining its licenses and ensuring compliance with applicable
regulations.

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<PAGE>

Employees and Sales Associates

As of April 30, 1999, NRT had over 4,000 full-time employees and over 31,000
sales associates (substantially all of whom are independent contractors). None
of NRT's employees or sales associates is covered by a collective bargaining
agreement. Management believes that NRT's relations with its employees and
sales associates are good.

Properties

NRT's principal executive offices are located in Parsippany, New Jersey,
where NRT leases approximately 7,500 square feet from Cendant. NRT also leases
approximately 35,000 square feet of office space from Cendant in Mission Viejo,
California. NRT owns 11 of its approximately 710 brokerage offices. Owned
offices represent a total of approximately 56,000 square feet of office space.
NRT leases all remaining properties, which represent representing a total of
approximately 3.4 million square feet. NRT believes that its present facilities
are adequate for its current level of operations. NRT intends to move its
principal executive offices to a different location in Parsippany, New Jersey
and expects to enter into a lease with Cendant for the new offices.

NRT's office leases generally have initial terms of five years with an option
to extend the lease for additional periods. The leases generally require NRT to
pay for property taxes, utilities and maintenance.

Legal Proceedings

In the ordinary course of business, NRT is involved in legal proceedings
incident to its operations. In the opinion of management, NRT is not currently
involved in any legal proceeding which it believes would have a material
adverse effect on the operations or financial condition of NRT taken as a
whole.

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<PAGE>

MANAGEMENT

Directors and Executive Officers

The following table sets forth information concerning the executive officers
and directors of NRT as of April 30, 1999. There are no family relationships
among any of NRT's executive officers and directors.

<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Robert M. Becker........ 57 President, Chief Executive Officer and Director
Chandler B. Barton...... 65 Chairman of the Board and Director
Michael R. Good......... 49 Executive Vice President
Gregory W. Hunt......... 42 Senior Vice President, Chief Financial Officer and Treasurer
Steven L. Barnett....... 34 Senior Vice President, General Counsel and Secretary
Ralph W. Burnet......... 53 Senior Vice President--Central Region
Larry Knapp............. 52 Senior Vice President--Western Region
R. Scott Webber......... 45 Senior Vice President--Southeast Region
Bruce G. Zipf........... 42 Senior Vice President--Northeast Region
Terence W. Edwards...... 43 Director
Joshua J. Harris........ 34 Director
David M. Johnson........ 38 Director
Samuel L. Katz.......... 33 Director
Marc J. Rowan........... 36 Director
Richard A. Smith........ 45 Director
Michael L. Tarnopol..... 62 Director
Michael D. Weiner....... 46 Director
</TABLE>

The following biographical information of NRT's executive officers and
directors is based on information provided by them.

Robert M. Becker has been President and Chief Executive Officer of NRT since
August 1997. Mr. Becker served as President and Chief Executive Officer of
National Realty Trust from May 1997 to August 1997 and President and Chief
Executive Officer of Coldwell Banker from May 1996 to May 1997. From 1994 to
May 1996, Mr. Becker served as President and Chief Operating Officer of
Coldwell Banker Schlott Realtors, a subsidiary of Coldwell Banker Corporation
and one of the largest real estate brokerages in the United States with over
100 offices in New Jersey, Connecticut and Westchester County, New York and
over 3,500 sales associates. Mr. Becker served as General Sales Manager of
Coldwell Banker Schlott Realtors from February 1990 (when it was acquired by
Coldwell Banker Corporation ) to 1994 and served in a similar capacity at the
predecessor to Coldwell Banker Schlott Realtors from 1980 to February 1990.

Chandler B. Barton has been Chairman of the Board and a director of NRT since
August 1997. Mr. Barton served as Chairman of National Realty Trust from May
1996 to August 1997 and

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<PAGE>

President and Chief Executive Officer of Coldwell Banker Corporation from
January 1989 to May 1996. Before October 1993, Mr. Barton also served as
Chairman of the Board of Coldwell Banker Corporation. Mr. Barton was Executive
Vice President of Coldwell Banker Corporation from 1988 to January 1989, Chief
Executive Officer and a director of the mortgage, relocation, title and escrow
companies owned by Coldwell Banker Corporation from 1986 to 1988 and Senior
Vice President of Coldwell Banker Corporation's southeast region residential
operations from 1982 to 1986. Mr. Barton joined Coldwell Banker Corporation in
1979 as part of its acquisition of Barton and Ludwig, at that time one of the
largest real estate brokerage companies in the southern United States.

Michael R. Good has been Executive Vice President of NRT since August 1998.
Mr. Good was Senior Vice President--Southeastern Region of NRT from August 1997
to August 1998. Mr. Good served as Senior Vice President--Southeastern Region
of National Realty Trust from June 1997 to August 1997. Before serving as an
officer of National Realty Trust, Mr. Good served as President of Coldwell
Banker Corporation's operations in West Central Florida from 1987 to 1997, with
the exception of 1991 and 1992, during which he served as Vice President of
Coldwell Banker Corporation. Mr. Good has been associated with Coldwell Banker
Corporation since 1981 when his real estate brokerage was acquired by Coldwell
Banker Corporation.

Gregory W. Hunt has been Senior Vice President and Chief Financial Officer of
NRT since January 1998 and Treasurer since September 1998. Before joining NRT,
Mr. Hunt served as Managing Director for the CEENIS Property Fund, a venture
capital and property investment fund, from September 1996 to December 1997.
From August 1995 to August 1996, Mr. Hunt was Vice President, Finance and Chief
Financial Officer of Culligan Water Technologies, Inc. He served as Vice
President, Treasurer and Chief Financial Officer of Astrum International Corp.,
the holding company for Culligan Water Technologies, Inc., McGregor Corporation
and Samsonite Corporation, from January 1991 to August 1995.

Steven L. Barnett has been Senior Vice President, General Counsel and
Secretary of NRT since April 1998. From May 1997 to April 1998, Mr. Barnett
served as Associate General Counsel for Venator Group, Inc. From October 1989
to May 1997, Mr. Barnett was a mergers and acquisitions associate with the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP in New York.

Ralph W. Burnet has been Senior Vice President--Central Region of NRT since
February 1998. Mr. Burnet was the founder and owner of Burnet Realty, the
largest residential real estate brokerage in Minnesota and one of the largest
residential real estate brokerages in the country, which was acquired by NRT in
February 1998. Before joining NRT, Mr. Burnet served as Chairman and Chief
Executive Officer of Burnet Realty from 1990 to February 1998 and as Eastern
Region President for Merrill Lynch Realty Associates following its purchase of
Burnet Realty from 1982 to 1990.

Larry Knapp has been Senior Vice President--Western Region of NRT since
August 1997. Mr. Knapp served as Senior Vice President--Western Region of
National Realty Trust from June 1997 to August 1997 and as the President of
Coldwell Banker Corporation's Northern California operations from 1985 to June
1997. From 1981 to 1985, Mr. Knapp served as Senior Vice President and Regional
Manager for Coldwell Banker Corporation's Sacramento operations.

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<PAGE>

R. Scott Webber has been Senior Vice President--Southeast Region of NRT since
October 1998. Mr. Webber was the owner of Coldwell Banker Van Schaak and
Company from March 1994 to October 1998. From October 1989 to October 1998, Mr.
Webber was President of Premier Van Schaak, which includes Coldwell Banker
Premier Realty in Salt Lake City and Las Vegas and Coldwell Banker Van Schaak
in Denver. From October 1988 to October 1989, Mr. Webber served as Senior Vice
President of the Rocky Mountain Region for Coldwell Banker Residential Real
Estate.

Bruce G. Zipf has been Senior Vice President--Northeast Region of NRT since
August 1997 and President and Chief Operating Officer of the Metro New York
Region of NRT from August 1997 through November 1998. Mr. Zipf served as Senior
Vice President--Northeast Region and President of the Metro New York Region of
National Realty Trust from June 1996 to August 1997 and as Senior Vice
President--Northeast Region and President and Chief Operating Officer of the
Metro New York Region of National Realty Trust from May 1996 to August 1997.
From 1994 to May 1996, Mr. Zipf was Senior Vice President of Finance and
Administration for Schlott Realtors and served in a variety of senior
management positions with Schlott Realtors after joining Schlott Realtors as
Controller in 1986.

Terence W. Edwards has been a director of NRT since September 1997. Mr.
Edwards has been President and Chief Executive Officer of Cendant Mortgage (and
its predecessor PHH Mortgage Services Corporation) since February 1996. Mr.
Edwards was Vice President, Investor Relations and Treasurer of PHH Corporation
from June 1995 to February 1996 and Senior Vice President, Secondary Marketing
of PHH Mortgage from 1990 to February 1996, Vice President of PHH Mortgage from
1987 to 1990 and Director of Mortgage Finance of PHH Mortgage from 1984 to
1987. Mr. Edwards served as Treasury Operations Analyst of PHH Corporation from
1980 to 1984.

Joshua J. Harris has been a director of NRT since August 1997. Mr. Harris is
a principal of Apollo Management, L.P. and has served as an officer of certain
affiliates of Apollo Management, L.P. since 1990. Mr. Harris also is a director
of Alliance Imaging, Inc., Converse Inc., Florsheim Group Inc., Quality
Distribution, Inc. and SMT Health Services Inc.

David M. Johnson has been a director of NRT since December 1998. Mr. Johnson
has served as Senior Executive Vice President and Chief Financial Officer of
Cendant since November 1998. He was Executive Vice President-Finance of Cendant
from April 1998 to November 1998. From July 1986 to April 1998, Mr. Johnson
worked in the Investment Banking group of Merrill Lynch & Co., Inc., most
recently as a Managing Director.

Samuel L. Katz has been a director of NRT since August 1997. Mr. Katz has
served as Executive Vice President, Strategic Development of Cendant since
April 1998 and was Senior Vice President--Acquisitions of Cendant (and its
predecessor HFS Incorporated) from January 1996 to April 1998. From June 1993
to December 1995, Mr. Katz was Vice President of Dickstein Partners Inc., a
private investment firm. Mr. Katz is a director of Specialty Catalog Corp.

Marc J. Rowan has been a director of NRT since September 1997. Mr. Rowan is
one of the founding principals of Apollo Management, L.P. and has been a
principal of Apollo Management, L.P. and an officer of certain affiliates of
Apollo Management, L.P. since 1990. Mr. Rowan is a director of Samsonite
Corporation, Quality Distribution, Inc. and Vail Resorts, Inc.

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<PAGE>

Richard A. Smith has been a director of NRT since September 1997. Mr. Smith
has been Chairman and Chief Executive Officer of the Real Estate Division of
Cendant (and its predecessor HFS Incorporated) since October 1996 and served as
Executive Vice President of Operations of HFS Incorporated from February 1992
to October 1996. Before joining HFS, Mr. Smith held various management
positions at Days Inns of America ("Days Inns") over a period of 13 years,
including corporate director of risk management, vice president of personnel,
senior vice president of human resources and senior vice president of
administration and also served as a member of the operating committee of Days
Inns.

Michael L. Tarnopol has been a director of NRT since September 1997 and was a
trustee of National Realty Trust from May 1996 to July 2, 1997. Mr. Tarnopol
has been Vice Chairman of Bear, Stearns & Co., Inc. since 1997, a Senior
Managing Director of Bear, Stearns & Co. Inc. since 1985 and Chairman of the
Investment Banking Division of Bear, Stearns & Co. Inc. since 1987.
Mr. Tarnopol is also a director of Avis Rent A Car, Inc. and Planet Hollywood
International Inc.

Michael D. Weiner has been a director of NRT since September 1997. Mr. Weiner
has been an officer of certain affiliates of Apollo Management, L.P. since
1992. Before 1992, Mr. Weiner was a partner in the law firm of Morgan, Lewis &
Bockius LLP. Mr. Weiner is also a director of Alliance Imaging, Inc.,
Continental Graphics Holdings, Inc., Converse Inc., Florsheim Group Inc.,
Quality Distribution, Inc., SMT Health Services Inc. and WMC Finance Co.

Under the terms of the stockholders agreement to be in effect upon the
closing of the offering, Apollo and Cendant have agreed to vote their shares of
NRT's voting stock in favor of a twelve-member Board of Directors consisting of
five directors nominated by Apollo, five directors nominated by Cendant and two
directors nominated by a majority of the Board. NRT's Board of Directors
currently consists of ten directors, including four directors (Joshua J.
Harris, Marc J. Rowan, Michael L. Tarnopol and Michael D. Weiner) nominated by
Apollo, four directors (Terence W. Edwards, David M. Johnson, Samuel L. Katz
and Richard A. Smith) nominated by Cendant, and two directors (Chandler B.
Barton and Robert M. Becker) jointly nominated by Apollo and Cendant. Before
the closing of the offering, a majority of the Board of Directors will nominate
two additional directors who are "independent directors" (within the meaning of
the rules of Nasdaq or other interdealer quotation system on which NRT's common
stock is listed). Before the closing of the offering, the Board of Directors
will be divided into three classes of directors, each of which will be elected
for a staggered term of three years. The initial term of the Class I directors
will expire at the annual meeting of stockholders of NRT in 2000, the term of
the Class II directors will expire in 2001 and the term of the Class III
directors will expire in 2002. Messrs. Edwards and Tarnopol and the two
independent directors will be Class I directors, Messrs. Johnson, Rowan, Smith
and Weiner will be Class II directors and Messrs. Barton, Becker, Harris and
Katz will be Class III directors.

Officers of NRT are elected at the first meeting of the Board of Directors
held each year following the annual meeting of stockholders and serve at the
discretion of the Board.

Committees of the Board of Directors

NRT's Board of Directors currently has three standing committees, a
compensation and human resource committee, an audit committee and an executive
committee.

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<PAGE>

NRT's compensation and human resource committee administers NRT's 1997 Equity
Participation Plan and reviews and makes recommendations to the Board of
Directors with respect to NRT's compensation and hiring programs and policies.
The current members of the compensation committee are Messrs. Harris, Katz,
Rowan and Smith.

NRT's audit committee recommends the annual appointment of NRT's auditors,
with whom the Audit Committee reviews the scope of audit and non-audit
assignments and related fees, accounting principles used by NRT in financial
reporting, internal auditing procedures, and the adequacy of NRT's internal
control procedures. The current members of the audit committee are Messrs.
Harris and Katz. It is expected that the audit committee will be reconstituted
prior to the closing of the offering to consist solely of independent directors
of the Board.

NRT's executive committee has certain selected powers and rights to exercise
the authority of the Board of Directors between meetings of the Board of
Directors. The current members of the executive committee are Messrs. Becker,
Harris and Katz.

NRT may establish other committees to facilitate the management of NRT.

Compensation of Directors

Directors of NRT who are also employees receive no additional compensation
for their service as a director. Non-employee directors receive, as
compensation for their service as directors:

. an annual retainer of $30,000, plus $4,000 for serving as chairman (if a
chairman has been selected) of a committee and $2,000 for serving as a
member of a committee other than as chairman;

. $1,000 for each Board meeting attended and $500 ($1,000 for committee
chairmen) for each Board committee meeting if held on the same day as a
Board meeting and $1,000 ($2,000 for committee chairmen) for each Board
committee meeting attended on a day on which there is no Board meeting;
and

. reimbursement for expenses incurred in attending meetings of the Board of
Directors and committees.

Under NRT's 1997 Equity Participation Plan, each non-employee director of NRT
was granted options on December 13, 1998 to purchase 56,250 shares of common
stock at an exercise price equal to $10.67 per share (with the exception of Mr.
Katz, whose options, which were granted on September 6, 1997, have an exercise
price of $0.01 per share). With the exception of options to purchase 56,250
shares of common stock granted to Michael P. Monaco, who served as a director
of NRT from September 1997 to December 1998, all of which are fully vested, all
options granted to non-employee directors vest one-third on the date of grant,
one-third on September 6, 1999 and the balance on September 6, 2000.

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<PAGE>

Executive Compensation

Summary Compensation Table

The following table sets forth the compensation earned by the Chief Executive
Officer of NRT and the four other most highly paid executive officers of NRT
who served as executive officers of NRT as of December 31, 1998, for the fiscal
year ended December 31, 1998 and for NRT's first fiscal year, which commenced
on September 1, 1997 and ended on December 31, 1997.

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Securities
---------------------- Underlying All Other
Name and Position Year Salary Bonus Options(1) Compensation(2)
- ----------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert M. Becker.......... 1998 $337,994 $260,000 93,750 $ --
President and Chief 1997
Executive Officer $108,336 $ 83,333 375,000 $ --
Chandler B. Barton........ 1998 $249,988 $312,500 -- $ 4,000
Chairman of the Board 1997 $ 83,328 $104,167 140,625 $ 1,250
Gregory W. Hunt........... 1998 $243,435 $156,250 281,250 $ --
Senior Vice President, 1997 -- -- -- $ --
Chief Financial Officer
and Treasurer
Michael R. Good........... 1998 $217,917 $138,021 46,875 $52,856
Executive Vice President 1997 $ 63,333 $ 35,417 93,750 $ 1,250
Bruce G. Zipf............. 1998 $190,000 $125,000 -- $12,592
Senior Vice President-- 1997
Northeast Region $ 62,864 $ 36,458 93,750 $ 3,937
</TABLE>
- ---------------------
(1) Includes options to acquire shares of common stock of NRT. Option figures
have been adjusted to give effect to the 1.875-for-1 split of the common
stock which will occur prior to the closing. In addition to the options
listed above, options to acquire 480,260 shares of common stock of Cendant
were granted to Mr. Becker on April 30, 1997 for his services as an
employee of Cendant.
(2) Includes matching contributions by NRT (based on NRT's current estimates)
on behalf of the named executive officers under NRT's 401(k) savings plan
as follows: Mr. Barton ($4,000 for 1998 and $1,250 for 1997); Mr. Good
($4,000 for 1998 and $1,250 for 1997); and Mr. Zipf ($4,000 for 1998 and
$1,073 for 1997). Also included are car allowances of $8,592 for 1998 and
$2,864 for 1997 for Mr. Zipf and a moving allowance and tax gross-up
payment totalling $48,856 for 1998 for Mr. Good.

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<PAGE>

Options Granted in Last Fiscal Year

The following table sets forth information concerning stock options which
were granted during the fiscal year ended December 31, 1998 to the executive
officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Percent of Assumed
Total Annual Rates
Number of Options of Stock Price
Securities Granted to Appreciation for
Underlying Employees Exercise or Option Term(3)
Options in Fiscal Base Price Per Expiration -------------------
Name Granted(1) Year Share(2) Date 5% 10%
- ---- ---------- ---------- -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Becker........ 93,750 6.6% $10.67 9/01/08 $628,895 $1,593,742
Chandler B. Barton...... -- -- -- -- -- --
Gregory W. Hunt......... 168,750 11.9% $ 4.16 1/12/08 554,685 1,405,681
56,250 4.0% $ 9.60 1/12/08 377,336 956,245
56,250 4.0% $10.67 12/13/08 377,336 956,245
Michael R. Good......... 46,875 3.3% $10.67 10/01/08 314,447 796,871
Bruce G. Zipf........... -- -- -- -- -- --
</TABLE>
- ---------------------
(1) Represents options granted under NRT's 1997 Equity Participation Plan, the
terms of which are described under "--Equity Participation Plan." The
number of options has been adjusted to give effect to the 1.875-for-1
split of the common stock that will occur prior to the closing of the
offering.
(2) Exercise prices have been adjusted to give effect to the 1.875-for-1 split
of the common stock that will occur prior to the closing of the offering.
On September 28, 1998, NRT's Board of Directors approved adjustments to
the exercise price of each option under the Equity Participation Plan
outstanding as of such date to give effect to:

. the payment of a $30 million dividend to Apollo; and

. specified payments to NRT's franchisors under the franchise agreements.

In no event, however, may the exercise price for such options be adjusted
to less than $0.01 per share. Of the options reflected in the above table,
225,000 of the options granted to Mr. Hunt are subject to, and their
exercise prices give effect to the adjustments.

(3) The amounts shown in these two columns represent the potential realizable
values using the options granted and the exercise price. The assumed rates
of stock price appreciation are set by the Securities and Exchange
Commission's executive compensation disclosure rules and are not intended
to forecast the future appreciation of the common stock.

69
<PAGE>

Options Exercised in Last Fiscal Year; Fiscal Year End Option Values at Year
End

No options were exercised during the year ended December 31, 1998. The
following table presents information on the value of options held by the
executive officers named in the Summary Compensation Table as of December 31,
1998.

<TABLE>
<CAPTION>
Fiscal Year End Option Values(1)
------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Options at In-the-Money Options
Fiscal Year End (#) at Fiscal Year End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Robert M. Becker......... 37,500/431,250 $599,625/$5,896,625
Chandler B. Barton....... 14,062/126,562 224,851/2,023,742
Gregory W. Hunt.......... 0/281,250 0/2,658,000
Michael R. Good.......... 9,375/131,250 149,906/1,599,000
Bruce G. Zipf............ 9,375/84,375 149,906/1,349,156
</TABLE>
- ---------------------

(1) Figures shown give effect to the 1.875-for-1 split of the common stock that
will occur prior to the closing of the offering and the adjustment set
forth in footnote (2) to the table under "Options Granted in Last Fiscal
Year." Represents options to acquire shares of common stock granted under
NRT's 1997 Equity Participation Plan. Fiscal year end option values are
based on the difference between $16 (the mid-point of the estimated range
of initial public offering price per share) and the exercise price of each
option. In addition to the options listed above, at December 31, 1998,
options to acquire shares of Cendant common stock were held by the named
executive officers in connection with their former employment by Cendant as
follows: Mr. Becker (374,940 shares); Mr. Good (24,031 shares); and Mr.
Zipf (9,612 shares).
(2) Upon the closing of the offering, the number of exercisable options will
double as a result of the conversion of performance-vesting options into
time-vesting options.

Employment Agreements

NRT does not have any employment or severance agreements with any of the
executive officers named in the Summary Compensation Table.

Equity Participation Plan

General

The 1997 Equity Participation Plan authorizes an aggregate of 4,687,500
shares of common stock for awards (after giving effect to the 1.875-for-1 split
of the common stock), of which 3,399,141 shares of common stock will be subject
to options upon the closing of the offering. The primary purpose of the Equity
Participation Plan is to provide an additional incentive to key employees,
consultants and non-employee directors of NRT and its subsidiaries to further
the growth, development and financial success of NRT and to enable NRT to
obtain and retain the services of its employees, consultants and directors. The
Equity Participation Plan is intended to qualify for the performance-based
exclusion from the deduction limitation of Section 162(m) of the Internal
Revenue Code of 1986, as amended.

Administration

The Equity Participation Plan is administered by the Compensation Committee
of the Board of Directors. The Compensation Committee selects the recipients of
awards under the Equity Participation Plan and makes determinations with
respect to the participation of employees, consultants and non-employee
directors in the Equity Participation Plan and the terms and conditions of all
awards granted, including vesting schedules, performance criteria and post-
termination exercise provisions. The Compensation Committee also interprets the
provisions of the Equity Participation Plan.

70
<PAGE>

Awards

The Equity Participation Plan provides for a variety of awards, including:

.stock options;

.stock appreciation rights;

.restricted stock;

.dividend equivalents; and

.other equity-based awards.

Stock options granted under the Equity Participation Plan may be incentive
stock options or non-qualified stock options within the meaning of Section 422
of the Internal Revenue Code.

The exercise price of each stock option granted under the Equity
Participation Plan is fixed by the Compensation Committee (or the Board of
Directors, in the case of options granted to non-employee directors), subject
to the following limitations:

. in the case of incentive stock options and options intended to be
performance based compensation under Section 162(m)(4)(C) of the
Internal Revenue Code, the exercise price may not be less than 100% of
the fair market value of the common stock on the date the option is
granted.

. in the case of incentive stock options granted to an individual then
owning over 10% of the total combined voting power of NRT's capital
stock, the exercise price may not be less than 110% of the fair market
value of the common stock on the date of grant.

The Compensation Committee may, in its discretion, permit the exercise of stock
options granted under the Equity Participation Plan on a cashless basis. The
term of each stock option granted under the Equity Participation Plan is set by
the Compensation Committee (or the Board in the case of options granted to non-
employee directors). However, the term may not be more than ten years from the
date of grant, or five years from the date of grant in the case of an incentive
stock option granted to an individual owning more than 10% of the total
combined voting power of all classes of NRT's stock. No participant in the
Equity Participation Plan may receive awards in any year with respect to more
than 562,450 shares of common stock.

As of the date of this prospectus, outstanding awards under the Equity
Participation Plan consist solely of stock options with respect to 3,399,141
shares of common stock, with a weighted average exercise price of $4.85 (after
giving effect to the 1.875-for-1 stock split and to the adjustment to the
option exercise price shown above). In general:

. upon the closing of the offering, all of the options granted to
employees will be time vesting options that vest in equal installments
over a five-year period and are fully exercisable at the end of the
five-year period; and

. options held by employees of NRT will become fully vested following a
change in control if such employees are terminated within 12 months
after the change in control without cause or in connection with the
change in control.

71
<PAGE>

Each non-employee director of NRT was granted options on December 13, 1998 to
purchase 56,250 shares of common stock at an exercise price (after giving
effect to the 1.875-for-1 split of the common stock) equal to $10.67 per share
(other than Mr. Katz, whose options were granted on September 6, 1997 and have
an exercise price of $0.01 per share). With the exception of an option to
purchase 56,250 shares of common stock granted to Michael P. Monaco, who served
as a director of NRT from September 1997 to December 1998 and whose options are
fully vested, all options granted to non-employee directors vest as follows:

.one-third on the date of grant;

.one-third on September 6, 1999; and

. one-third on September 6, 2000.

All options held by non-employee directors will become fully vested upon a
change in control of NRT occurring after the offering.

Amendment/Termination

The Board of Directors of NRT may amend or terminate the Equity Participation
Plan, except that the consent of each participant is required for any amendment
or termination that adversely affects the rights of the participant. In
addition, to the extent required by any law, regulation or stock exchange rule,
no amendment will be effective without the approval of NRT's stockholders.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors currently consists of
Messrs. Harris, Katz, Rowan and Smith. Mr. Katz was President of NRT and Mr.
Harris was Vice President and Treasurer of NRT at the time of NRT's formation
in August 1997.

72
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The table below presents information regarding the beneficial ownership of
the common stock as of April 30, 1999 by:

. each person known by NRT to be the beneficial owner of five percent or
more of its outstanding common stock and convertible preferred stock;

.each of the executive officers of NRT listed in the Summary Compensation
Table above;

.each of the directors of NRT; and

. all directors and executive officers of NRT as a group.

Unless otherwise indicated, NRT believes that each beneficial owner below
has sole voting and investment power over such shares. The figures shown with
respect to the common stock assume the conversion of all outstanding shares of
convertible preferred stock held by Cendant.

<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership Beneficial Ownership of
of Common Stock of Common Stock Convertible Preferred
Before the Offering After the Offering(1) Stock(1)
---------------------- Shares of --------------------- ---------------------------
Number Common Number of Number Percentage
of Shares Percentage Stock Being Shares of Percentage of of
Name of Class(2) of Class Offered Class of Class Shares Class
---- ----------- ---------- ----------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Apollo Investment Fund
III, L.P.,
Apollo Overseas Partners
III, L.P. and Apollo
(UK) Partners III, L.P.
c/o Apollo Management,
L.P.(3)
1301 Avenue of the
Americas
38th Floor
New York, New York
10019................... 18,175,425 72.1% 4,687,500 13,487,925 39.6% -- --
Cendant Operations, Inc.
c/o Cendant
Corporation(4)
9 West 57th Street
New York, New York
10019................... 7,048,078 27.9% -- 6,473,503 19.0% 23,275 100%
Robert M. Becker........ 75,000 * -- 75,000 * -- --
Chandler B. Barton...... 28,125 * -- 28,125 * -- --
Gregory W. Hunt......... 45,000 * -- 45,000 * -- --
Michael R. Good......... 18,750 * -- 18,750 * -- --
Bruce G. Zipf........... 18,750 * -- 18,750 * -- --
Terence W. Edwards(5)... 18,750 * -- 18,750 * -- --
Joshua J. Harris(6)..... 18,750 * -- 18,750 * -- --
David M. Johnson(5)..... 18,750 * -- 18,750 * -- --
Samuel L. Katz(5)....... 18,750 * -- 18,750 * -- --
Marc J. Rowan(6)........ 18,750 * -- 18,750 * -- --
Richard A. Smith(5)..... 18,750 * -- 18,750 * -- --
Michael L. Tarnopol(7).. 18,750 * -- 18,750 * -- --
Michael D. Weiner(6).... 18,750 * -- 18,750 * -- --
All executive officers
and directors as a
group (17 persons)..... 424,687 1.7% 424,687 1.2% -- --
</TABLE>

(footnotes on following page)

73
<PAGE>

(continued from previous page)
* Less than one percent.
(1) Beneficial ownership of common stock after the offering and beneficial
ownership of convertible preferred stock give effect to the repurchase of
725.4 shares of convertible preferred stock held by Cendant. After giving
effect to the offering, but before giving effect to the repurchase, Cendant
would beneficially own 20.7% of the outstanding common stock.
(2) Includes options to acquire shares of common stock which are exercisable
within 60 days following the closing of the offering as follows:

<TABLE>
<S> <C> <C>
. Mr. Becker (75,000) . Mr. Knapp (23,437) . Mr. Katz (18,750)
. Mr. Barton (28,125) . Mr. Zipf (18,750) . Mr. Rowan (18,750)
. Mr. Good (18,750) . Mr. Webber (0) . Mr. Smith (18,750)
. Mr. Barnett (18,750) . Mr. Edwards (18,750) . Mr. Tarnopol (18,750)
. Mr. Burnet (28,125) . Mr. Harris (18,750) . Mr. Weiner (18,750)
. Mr. Hunt (45,000) . Mr. Johnson (18,750)
</TABLE>

(3) Beneficial ownership of common stock before the offering includes
16,569,195 shares held by Apollo Investment Fund III, L.P., 992,073 shares
held by Apollo Overseas Partners III, L.P. and 614,157 shares held by
Apollo (UK) Partners III, L.P., each of which is a private investment fund
managed by Apollo Management, L.P. Beneficial ownership of common stock
after the offering includes 12,295,947 shares held by Apollo Investment
Fund III, L.P., 736,214 shares held by Apollo Overseas Partners III, L.P.
and 455,764 shares by Apollo (UK) Partners III, L.P. Under a participation
agreement, dated as of August 11, 1997, Bear, Stearns & Co. Inc. is
entitled to a 49% non-voting equity participation in Apollo's investment in
NRT. Bear, Stearns & Co. Inc. is entitled to receive its pro rata share of
any amounts received by Apollo in respect of the investment, including the
proceeds to Apollo from the sale of shares of common stock in the offering.
Bear, Stearns & Co. Inc. expressly disclaims beneficial ownership of the
shares held by Apollo.

If the shares of common stock issuable upon conversion of the convertible
preferred stock held by Cendant were not included in the calculation of
beneficial ownership of common stock, Apollo Investment Fund III, L.P.,
Apollo Overseas Partners III, L.P. and Apollo (UK) Partners III, L.P. would
beneficially own 100% of the common stock before the offering and 49% of
the common stock after the offering.

(4) Cendant Operations, Inc. is a wholly owned subsidiary of Cendant
Corporation. Cendant, Apollo and NRT have agreed that if the underwriters'
over-allotment option is exercised, up to 468,750 shares subject to the
over-allotment option will be sold by Cendant and any remaining over-
allotment shares will be sold 10% by Cendant and 90% by Apollo. If the
underwriters' over-allotment option is exercised in full, Cendant would
beneficially own approximately 17.2% of the outstanding common stock and
Apollo would beneficially own approximately 35.3% of the outstanding common
stock after the offering.
(5) Messrs. Edwards, Johnson, Katz and Smith are officers of Cendant and
expressly disclaim beneficial ownership of any shares of NRT's capital
stock owned by Cendant.
(6) Messrs. Harris, Rowan and Weiner are affiliated with Apollo Management,
L.P. and expressly disclaim beneficial ownership of any shares of common
stock owned by Apollo.
(7) Mr. Tarnopol is Vice Chairman and a Senior Managing Director of Bear,
Stearns & Co. Inc. and expressly disclaims beneficial ownership of any
shares of common stock beneficially owned by Bear, Stearns & Co. Inc. See
Note 3 above.

74
<PAGE>

RELATED PARTY TRANSACTIONS

Immediately prior to the offering, Apollo beneficially owns 72.1% and Cendant
beneficially owns 27.9% of the issued and outstanding shares of common stock,
assuming the conversion of all outstanding shares of convertible preferred
stock held by Cendant into common stock. Immediately following the offering and
after giving effect to the repurchase by NRT of 725.4 shares of convertible
preferred stock from Cendant following the offering and the conversion of all
other outstanding shares of convertible preferred stock held by Cendant into
common stock:

. Apollo will beneficially own approximately 39.6% (35.3% if the
underwriters' over-allotment option is exercised in full); and

. Cendant will beneficially own approximately 19.0% (17.2% if the
underwriters' over-allotment option is exercised in full) of the
outstanding shares of common stock.

Cendant was formed through the merger of HFS Incorporated and CUC
International Inc. in December 1997. Within its four principal divisions--real
estate related services, travel related services, alliance marketing related
services and other consumer and business services--Cendant is a global provider
of consumer and business services. The real estate related services division
assists in employee relocation, provides home buyers with mortgages and
franchises real estate brokerage businesses; the travel related services
division facilitates vacation timeshare exchanges, manages corporate and
government vehicle fleets and franchises car rental and hotel businesses; the
alliance marketing related services division provides an array of value driven
products and services and the other consumer and business services division
offers tax preparation services, information technology services, car park
services and vehicle emergency support and rescue services in the United
Kingdom, credit information services, financial products and other consumer-
related services. Headquartered in New York, New York, Cendant has more than
35,000 employees and operates in over 100 countries.

Apollo comprises a number of private securities investment funds managed by
Apollo Management, L.P., which, together with its affiliates, manages a
portfolio of investments currently valued in excess of $8 billion.

Apollo, Cendant, the franchisors and NRT have entered or will enter into
agreements and arrangements setting forth their on going rights and
responsibilities regarding the matters outlined below. Apollo, Cendant, the
franchisors and NRT may from time to time modify these agreements and
arrangements or enter into new agreements and arrangements in the future. The
agreements summarized below are included as exhibits to the Registration
Statement that contains this prospectus. The following summaries do not contain
all of the information contained in the exhibits.

Franchise Agreements

NRT's status as a franchisee is governed by its franchise agreements with its
franchisors, Coldwell Banker Real Estate Corporation, ERA Franchise Systems,
Inc. and Century 21 Real Estate Corporation, each of which is a wholly owned
subsidiary of Cendant. Under the franchise agreements, NRT has the non-
exclusive right to operate under the COLDWELL BANKER(R), ERA(R) and

75
<PAGE>

CENTURY 21(R) real estate franchise systems at listed locations. Under a
related license agreement, NRT has the right to operate under the trade names
and trademarked operating names acquired by Cendant in acquisitions in which
Cendant participates. On February 9, 1999, NRT entered into new franchise
agreements with each of its franchisors. The new agreements superseded the
franchise agreements then in effect. The following is a summary of the material
terms of the new franchise agreements.

General

The franchise agreements impose restrictions on the business and operations
of NRT and require NRT to comply with the operating standards set forth in the
franchisors' operating manuals. NRT's failure to comply with these restrictions
and standards could result in a termination of the franchise agreement. The
franchise agreements also provide that NRT is entitled to participate in the
programs established by its franchisors for the benefit of their franchisees,
including:

.marketing programs;

.relocation services;

.referral systems; and

.orientation and training programs.

Each of the franchise agreements has a 50-year term expiring on February 9,
2049. The initial term may be extended at NRT's option for an additional 50-
year term on the same terms, so long as NRT is not then in violation of the
terms of the franchise agreement.

Royalties

Under the franchise agreements, NRT has agreed to pay the franchisors a
monthly royalty of 6% of NRT's gross commission income (with the exception of
NRT's CENTURY 21(R) offices in Northern California, for which NRT is currently
required to pay a royalty fee of 4.89% (subject to adjustment for acquisitions)
of the gross commission income from such offices) plus $166,667. If NRT
acquires or opens additional offices, NRT will generally be required to pay
royalties for revenues generated by the additional offices at the 6% royalty
rate. However, if NRT acquires offices in a transaction in which Cendant does
not participate under the acquisition cooperation agreement after NRT has
requested Cendant to participate, the franchise royalty rate will be between 2%
and 4%, depending on the acquired brokerage's gross commission income for the
twelve months prior to its acquisition by NRT. If the acquired brokerage
operates in a territory in which NRT then operates, the franchise royalty rate
will be either 2% or 3% depending on the acquired brokerage's gross commission
income for the twelve months prior to its acquisition.

Upon exhaustion of the amounts Cendant has agreed to provide for NRT's
acquisitions under the acquisition cooperation agreement, the franchise royalty
rate for brokerages acquired without Cendant's participation will be either 3%
or 4% depending on the acquired brokerage's gross commission income for the
twelve months prior to its acquisition and whether the acquired brokerage
operates in a territory in which NRT then has operations.

Under the franchise agreements, NRT is also required to pay the following
additional royalties:

.$156,250 per month;

76
<PAGE>

. if Cendant acquires the stock of the brokerage being acquired by NRT and
then sells the brokerage assets to NRT under the acquisition cooperation
agreement, a monthly royalty equal to one-tenth of the federal income tax
payable by Cendant on the sale of the assets to NRT in the acquisition,
divided by 12, as payment to Cendant for the stepped-up tax basis
received by NRT for the assets acquired;

. until the closing of the offering, a royalty that has averaged $273,900
per month over the first three months of 1999;

. following the closing of the offering, a royalty equal to approximately
1.1% of NRT's monthly gross commission income, subject to a maximum of
approximately $22.1 million per year (which maximum may decrease in any
year in which NRT's gross commission income falls below specified
threshold amounts); and

. 0.15% of NRT's total revenue per quarter payable for each quarter (up to
a total of 20 quarters) in which NRT's EBITDA for the preceding twelve
months exceeds $225 million.

NRT paid franchise royalties to its franchisors totaling approximately $24.0
million during 1996 (from May 31, 1996), $57.7 million during 1997, $121.3
million during 1998 and $27.5 million for the three months ended March 31,
1999. If the additional royalties described in the first and fourth bullets
above had been incurred by NRT during the year ended December 31, 1998, NRT's
royalties for that year would have increased by approximately $24.0 million.

Additional Offices

Under the franchise agreements, NRT is required to give Cendant prior notice
before opening or acquiring new brokerage offices. The franchisors may prevent
the opening or acquisition of such new brokerage offices if:

.the opening or acquisition would have an adverse impact on other existing
franchisees of NRT's franchisors;

. the opening or acquisition would result in the franchisor being in
violation of any agreement with its other franchisees; or

. the office proposed to be acquired was previously affiliated with a
Cendant-owned real estate brand.

To compensate the franchisors for any actual administrative costs incurred in
connection with the acquisition process and for the benefits to be received by
NRT resulting from newly acquired or opened offices, NRT is required to pay the
franchisors, subject to a maximum of $100,000 per acquisition:

. an initial fee of $4,000 for each newly acquired or opened office not
previously affiliated with the franchisors; and

. with respect to each brokerage acquisition in which Cendant's franchise
sales force is involved, NRT is required to pay Cendant an additional fee
of $3,500 per office acquired.

Each acquired office is required to be operated under one of the franchisor's
brands, unless the office is closed within one year of its acquisition under
the terms of the franchise agreement. NRT has incurred approximately $1.5
million in initial office fees payable to Cendant for new offices opened since
August 1997, of which Cendant has provided $1.0 million pursuant to the
acquisition cooperation agreement.

77
<PAGE>

Office Closings

In the event that NRT wishes to sell or close one or more of its real estate
brokerage offices, it will be required to obtain the franchisor's consent prior
to the intended closure. However, NRT has the right to close the following
offices without the franchisor's consent:

. offices acquired by NRT from National Realty Trust, which represent a
total of no more than $150 million of annual gross commission income;

. offices closed within one year of being acquired by NRT, if the offices
were identified to Cendant at the time of acquisition and were not
operating under any of the franchisors' brands at any time; and

. other offices to the extent that the total gross commission income for
the 12-month period prior to closure for those offices closed (excluding
offices otherwise permitted to be closed) does not exceed the sum of 3%
of NRT's aggregate gross commission income for the preceding calendar
year (pro forma for new offices opened and office closings) and any
unused amounts under this 3% cap for the two prior years (commencing in
August 1997).

NRT may close offices under the previous sentence only if all fees payable to
the franchisors have been paid, the franchise for the closed offices is not
being assigned and the closure does not reduce any of the brands' market share
for the applicable market by more than 10%.

Advertising

NRT is required to make monthly contributions to national advertising funds
maintained by its franchisors for the creation and development of advertising,
public relations and programs promoting the franchisors' brands. Under the
CENTURY 21(R) and ERA(R) franchise agreements, NRT is required to pay a monthly
fee of 2.0% of NRT's gross commission income. Under the COLDWELL BANKER(R)
franchise agreement, NRT is required to pay a monthly fee of 2.5% of NRT's
gross commission income. Under each agreement, however, these fees are subject
to minimum and maximum advertising fees per brokerage office. In addition, the
fees payable under the COLDWELL BANKER(R) franchise agreement are subject to
temporary abatement for acquired offices with gross commission income of over
$750,000. As a result of the maximum advertising fee limitation, NRT paid an
average of 0.33% in 1997 and 0.27% in 1998 of its gross commission income to
the national advertising funds. NRT contributed to these advertising funds a
total of $1.4 million during 1996 (from May 31, 1996), $3.4 million during
1997, $5.5 million during 1998 and $1.5 million for the three months ended
March 31, 1999. Cendant has informed NRT that substantially all amounts
contributed to the national advertising funds maintained by the franchisors
have been spent on the franchisors' marketing and advertising programs.

Indemnification

NRT has agreed to indemnify the franchisors and their subsidiaries,
affiliates, parents, directors, officers and employees and all of their other
franchisees against liabilities arising out of the operation of NRT's business
under the franchise agreements. However, no indemnification is required for
liabilities arising out of the affirmative acts of the franchisors or their
employees or for matters that do not arise out of the operation of NRT's
business, including those that arise out of disputes under any agreement
between Cendant and NRT (other than disputes involving successful claims for
indemnification under the franchise agreements).

78
<PAGE>

Change in Control of NRT

Each franchise agreement provides that the franchisor's consent will be
required for any issuance or transfer of NRT's voting stock that results in any
person or group acquiring beneficial ownership of more than 30% of the
outstanding common stock and/or securities convertible into or exercisable for
shares of common stock. Any transfer which is made without first obtaining the
franchisor's consent will result in an event of default under the franchise
agreement (unless caused by Cendant) which could result in NRT being required
to pay damages based on the franchisor's lost future royalties.

Limitations on Indebtedness and Dividends

Under the franchise agreements, NRT is not permitted to incur indebtedness
(including acquired indebtedness) if the incurrence would cause NRT's pro forma
ratio of debt to EBITDA for the preceding 12-month period to exceed 2.0 to 1.
NRT is permitted, however, to incur:

. loans from financial institutions that are secured by and payable from
the proceeds of the loans in the ordinary course of business;

. working capital revolving loans equal to or less than 2% of gross
commission income for the preceding 12-month period;

. letters of credit and hedging obligations in the ordinary course of
business;

. indebtedness to refinance existing debt no greater than the debt being
refinanced; and

. other debt equal to or less than 1% of gross commission income over the
preceding 12-month period.

The maximum permitted ratio of debt to EBITDA will increase to 3.0 to 1 from
2.0 to 1 if the amounts that Cendant has agreed to provide under the
acquisition cooperation agreement have been provided in full, so long as
Cendant has not then agreed to provide additional funds on substantially
similar economic terms. Immediately prior to incurring any debt, NRT is
required to furnish Cendant with a certificate to the effect that the
incurrence would not be in violation of the maximum ratio of debt to EBITDA and
that the ratio of debt to EBITDA would not reasonably be expected to exceed 2.0
to 1 or 3.0 to 1, as applicable, for the following 12 months.

Under the franchise agreements, debt includes redeemable preferred stock but
does not include:

. pay-in-kind preferred stock that does not require NRT to make any cash
payments (other than upon liquidation) or include sanctions for the non-
payment of cash;

. perpetual preferred stock that pays cash dividends and does not impose
penalties for the non-payment of required amounts other than the right to
elect with all other preferred stock no more than two directors of NRT,
so long as the annual dividend rate on such preferred stock does not
exceed 13% and, at the time of issuance, NRT would have been permitted to
incur debt with fixed charges equal to the fixed charges of the preferred
stock; and

. NRT's existing preferred stock (including any shares issued as dividends
on the preferred stock).

In addition, NRT's franchise agreements prohibit NRT from incurring debt to
finance the payment of dividends on its common or preferred stock. NRT is also
prohibited from declaring or paying any dividend that exceeds 20% of NRT's net
income for the year in which declared or paid

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(less any dividends paid during such period) and is not a regularly scheduled
quarterly dividend consistent with past practice, unless NRT's ratio of debt to
EBITDA is 1.0 to 1 or less.

Termination

The franchise agreements may be terminated, either in their entirety or with
respect to specific offices, upon mutual consent of the parties or by the
franchisors upon the occurrence of one of the following events (subject to
notice and an opportunity to cure):

. a material violation by NRT of the terms of the franchise agreements
(including those violation set forth under "--Termination Damages"
below);

. the suspension or revocation of NRT's real estate brokerage license;

. NRT's failure to conduct its business in accordance with applicable
ethical standards;

. NRT's failure to produce gross commission income per office during any
six-month period equal to at least 50% of the average gross commission
income per office generated by all franchisees during any six-month
period in the same local area;

. insolvency or bankruptcy events involving NRT; and

. a change in control of NRT.

Termination Damages

The franchise agreements provide that NRT must pay its franchisors damages
upon the occurrence of an early termination of the franchise agreements by the
franchisors due to:

. a change in control of NRT (other than a change in control caused by
Cendant);

. the affiliation by NRT with another real estate brokerage franchisor
that is not an affiliate of the franchisors;

. the failure of NRT to operate one or more of its offices under one of
its franchisors' brands or the closing of any offices in willful
violation of the franchise agreements (or if 20 or more offices are
involved, regardless of whether such violation was willful);

. any payment default under the franchise agreements; and

. any other breach of any of the franchise agreements by NRT that has a
material adverse effect on, or which is reasonably expected to have a
material adverse effect on, the relevant franchisor's brand, in each
case after notice and an opportunity to cure.

The damages payable in the event of a termination described above are equal
to the franchisor's lost future royalties, based on the average monthly royalty
payments paid by NRT, for up to 25 years. In addition, any damages with respect
to any failure to operate one or more offices under any of the franchisors'
brands or closure in violation of the franchise agreements will be limited to
the lost future royalties relating to the offices involved. In case of any
other breaches of the franchise agreements by NRT, the franchisors are entitled
to seek other forms of legal and equitable relief.

Acquisition Cooperation Agreement

On February 9, 1999, NRT and Cendant entered into an acquisition cooperation
agreement relating to the funding of NRT's brokerage acquisitions in which
Cendant agrees to participate, which superseded the provisions of a
stockholders agreement then in effect. Under the acquisition cooperation
agreement, Cendant agreed, subject to its approval of each brokerage
acquisition in

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which it participates, to purchase the trade names, trademarked operating names
and, so long as the marketing agreement is in effect, any mortgage operations
of the brokerage being acquired by NRT. Cendant pays a substantial portion of
the purchase price that would otherwise be payable by NRT. NRT purchases all
other assets of the acquired brokerage. Cendant is not required to participate
in any brokerage acquisition.

NRT has agreed to operate each office that it acquires (with or without
Cendant's participation) under one of its existing franchisors' real estate
brokerage franchise systems at the royalty rates set forth in the franchise
agreements. If Cendant does not participate in a brokerage acquisition in which
NRT has requested Cendant to participate, NRT will have the right to complete
the brokerage acquisition without Cendant's participation, subject to Cendant's
right to prohibit the transaction based on a determination that the acquisition
will adversely affect other franchisees. The franchise royalty rate with
respect to any such acquired brokerage will be lower than the 6% royalty rate
that generally applies to NRT's offices.

When NRT was formed in August 1997, Cendant agreed to provide approximately
$446 million for NRT's brokerage acquisitions (all of which had been provided
at April 30, 1999). Cendant has agreed to provide an additional $1 billion for
future brokerage acquisitions in which Cendant agrees to participate under the
acquisition cooperation agreement. The first $500 million of Cendant's
additional $1 billion commitment is currently available (of which $41 million
has been provided through April 30, 1999). The second $500 million will be
available after the first $500 million has been contributed by Cendant but
in no case earlier than February 9, 2004, unless Cendant agrees otherwise.

Brokerage acquisitions in which Cendant agrees to participate under the
acquisition cooperation agreement generally are completed in one of two ways:

. If NRT elects to acquire a brokerage directly through the purchase of
assets, Cendant purchases the trade names, trademarked operating names
and any mortgage operations of the acquired brokerage in exchange for a
cash payment either to the seller of the brokerage or to NRT.

. In other brokerage acquisitions, Cendant (rather than NRT) purchases a
brokerage from the seller and immediately sells to NRT the acquired
brokerage's assets other than trade names, trademarked operating names
and any mortgage operations.

Purchases and sales of assets between NRT and Cendant are typically completed
under one or more purchase and sale agreements between NRT and Cendant.

Under the acquisition cooperation agreement, Cendant's portion of the total
acquisition cost is equal to 100% (or 125% with respect to Cendant's original
commitment of approximately $446 million) of the additional royalty fees that
would have been payable to NRT's franchisors during the prior 12 months had the
acquisition occurred at the beginning of the period, multiplied by an
acquisition multiple.

. The acquisition multiple is calculated by dividing the cost of the
acquisition by the acquired brokerage's pro forma EBITDA before
anticipated cost savings and before royalty payments.

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. Cendant's share of the acquisition cost is subject to an adjustment
based on the amount of EBITDA (after deducting interest expense)
generated by the acquired brokerage's mortgage operations for the twelve
months prior to the acquisition. If the mortgage operations' EBITDA is
greater than $1 million, Cendant's acquisition cost will be increased
(or decreased if the following amount is negative) by an amount equal to
the acquisition multiple multiplied by the difference between the
mortgage operations' EBITDA and the product of $58.37 and the number of
the acquired brokerage's closed transaction sides for the twelve months
prior to the acquisition.

. Cendant's share of the acquisition cost may not exceed 90% of the total
acquisition cost of the brokerage acquisition.

From September 1, 1997 through April 30, 1999, Cendant participated in each
of NRT's 84 acquisitions. Through April 30, 1999, Cendant paid NRT or the
seller a total of approximately $487 million, and NRT paid a total of $240
million, in transactions in which Cendant has participated. If the change in
calculation of the purchase price payable by Cendant had been in effect since
September 1, 1997, Cendant would have paid a total of approximately $414
million and NRT would have paid a total of approximately $313 million in such
brokerage acquisitions.

Under the acquisition cooperation agreement, following the closing of the
offering, Cendant will have the right to pay up to 50% of its acquisition cost
by cancelling a portion of its senior preferred stock. Cendant may exercise
this right only if NRT has at least $50 million in available borrowing capacity
under the debt to EBITDA test under the franchise agreements. In addition, if
NRT does not have available funds to close the brokerage acquisition without
Cendant's participation, NRT will have the right to postpone the cancellation
of preferred stock for up to 90 days following the brokerage acquisition.
Cendant would then be required to pay its share of the acquisition cost in
cash.

Cendant has the right under the acquisition cooperation agreement, no later
than 60 days after each brokerage acquisition, to require NRT to sell to
Cendant or its designee one or more of the brokerage offices acquired by NRT
unless the offices' pro forma revenues or EBITDA before royalties over the
preceding 12-month period are greater than 5% (10% with Apollo's consent) of
the acquired brokerage's pro forma revenues or EBITDA before royalties over the
preceding 12-month period. The purchase price for any such offices will be
equal to the product of the acquisition multiple and the greater of:

. the difference between the pro forma EBITDA before royalties for the
acquired brokerage before giving effect to the sale of offices and the
pro forma EBITDA before royalties after giving effect to the sale of
offices; and

. the gross revenues of the offices to be sold multiplied by pro forma
EBITDA before royalties divided by the gross revenues of the acquired
brokerage over the preceding 12-month period.

To date, Cendant has not exercised this right.

Stockholders Agreement

When NRT was formed, NRT, Apollo and Cendant entered into a stockholders
agreement to govern the relationship among Apollo and Cendant and their
respective affiliates as stockholders of NRT. Immediately prior to the closing
of the offering, the stockholders agreement will be amended and restated. The
following is a summary of the new stockholders agreement.

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Voting Agreement

The stockholders agreement provides that Apollo and Cendant will vote all of
their voting stock of NRT in favor of a Board of Directors consisting of:

. five directors to be nominated by Cendant;

. five directors to be nominated by Apollo; and

. two directors to be nominated by the majority of the Board of Directors,
each of whom must be an "independent director" within the meaning of the
rules of Nasdaq or other interdealer quotation system on which the common
stock is listed.

One of the directors nominated by Cendant and one of the directors nominated by
Apollo must not be employees of, consultants to, or officers or directors of
Cendant, Apollo or any of their affiliates (other than NRT). Upon notice by
either stockholder that it desires to remove a director nominated by it, Apollo
and Cendant will vote all of their shares of voting stock of NRT in favor of
the removal of that director.

Registration Rights

NRT has granted to Apollo and Cendant registration rights for the
registration under the Securities Act of 1933 of the shares of common stock
owned by them or to be acquired by them upon conversion or exercise of
securities convertible into or exercisable for shares of common stock. Under
the stockholders agreement, upon Apollo's or Cendant's request, NRT is required
to use its best efforts to register the shares requested to be registered.
During the three-year period following the closing of the offering, in any
registration requested by Apollo or Cendant, Apollo will have the right to
register in such offering up to the greater of:

. 80% of the shares to be sold in the offering; and

. a number of shares such that Apollo will have sold 70% of all shares sold
by Apollo and Cendant in all offerings by Apollo and Cendant following
the offering.

After the third anniversary of the closing, each of Apollo and Cendant will
be entitled to sell 50% of the total number of shares to be sold in any
secondary offering of shares by Cendant or Apollo. If Apollo beneficially owns
less than 5% of the outstanding common stock, Cendant will have the right to
sell up to 100% of any secondary offering, subject to Apollo's reasonable
piggyback rights. In addition, during the three-year period following the
closing of the offering, Cendant may not sell shares of common stock, except
that it will have the right to demand that NRT register up to $25 million of
its common stock per quarter, but no more than $50 million of its common stock
in any twelve-month period.

Apollo and Cendant are each entitled to request four registrations. In
addition, Apollo and Cendant may request NRT to use its reasonable efforts to
register shares of common stock held by them in other registrations initiated
by NRT on its own behalf or on behalf of any other stockholder of NRT. All
reasonable out-of-pocket costs and expenses (other than underwriting discounts
and commissions) of any registration under the stockholders agreement will be
paid by NRT. The stockholders agreement also contains customary provisions with
respect to registration procedures, underwritten offerings and indemnification
and contribution rights in connection with the registration of common stock on
behalf of Apollo and Cendant.

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Restriction on Transfer of Shares Held by Apollo

Apollo has agreed under the stockholders agreement that it will not, without
Cendant's consent:

. transfer its shares of common stock, other than transfers to or among
its affiliates, if the proposed transferee would acquire beneficial
ownership of 20% or more of the common stock or securities convertible
into or exchangeable for common stock; or

. transfer beneficial ownership of 10% or more of the outstanding common
stock or securities convertible into or exchangeable for common stock to
any person or group without the consent of Cendant.

Cendant's consent to a proposed transfer may not be unreasonably withheld
unless the proposed transferee would acquire 30% or more of the common stock or
securities convertible into or exercisable for common stock (in which case
Cendant may withhold its consent in its absolute discretion). Reasonable
grounds for withholding consent include if Cendant believes that the proposed
transferee may be acquiring such securities with the purpose of acquiring,
changing or influencing control of NRT (or facilitating any such acquisition,
change or influence of control). Cendant's belief may be based on the proposed
transferee's failure to disclaim any present control intention or any previous
history or a reputation of seeking to acquire, change or influence control of a
company. Apollo will otherwise be free to transfer common stock to any person
or group if such person or group would not, as a result of such transfer,
become the beneficial owner of 30% or more of the common stock or securities
convertible into or exercisable for common stock.

Termination

Unless terminated earlier by mutual agreement of the parties, the
stockholders agreement will terminate when either Cendant or Apollo ceases to
beneficially own any shares of common stock or convertible preferred stock,
except that:

. the voting provisions of the stockholders agreement will terminate at
such time as either Cendant or Apollo owns less than 5% of the
outstanding voting stock of NRT;

. the registration rights provisions of the stockholders agreement will
terminate when neither Cendant nor Apollo owns any of the outstanding
voting stock of NRT; and

. so long as any of the franchise agreements is in place, Cendant will
continue to have the right to nominate at least one director to the
Board of Directors.

Acquisition Services Agreement

On February 9, 1999, NRT and Cendant entered into the acquisition services
agreement, under which NRT has agreed to provide advisory services to Cendant
relating to the identification of potential acquisition candidates, the
negotiation of agreements and other services in connection with future
brokerage acquisitions by NRT. In exchange for advisory services, Cendant paid
NRT $30 million as an advance against the fees that are payable to NRT under
the acquisition services agreement. The fees payable under the acquisition
services agreement are based upon the size of NRT's future brokerage
acquisitions. Cendant will not be required to pay any additional amounts to

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NRT for these advisory services. The fees advanced but not earned under the
acquisition services agreement are refundable to Cendant if services under the
acquisition services agreement are not performed. The acquisition services
agreement has a ten-year term, unless the parties agree to an earlier
termination.

Lease Agreements

NRT leases from Cendant a total of approximately 42,500 square feet of
office space for its offices in Parsippany, New Jersey and Mission Viejo,
California. Each lease has an initial term of five years commencing on
September 1, 1997, with an option exercisable by NRT to extend the term for an
additional five years upon 30 days' written notice to Cendant. Under the
leases, Cendant is responsible for property taxes, maintenance and insurance
and ancillary services. Rent is payable under each lease at a rate equal to
Cendant's total annual actual costs of operating the leased premises. In
addition, NRT is permitted to amend the lease to increase or reduce the square
footage of the premises as needed and as space becomes available, so long as
it gives 60 days' advance notice to Cendant of its intent to do so and the
rental amount is adjusted accordingly. Each lease may be terminated by either
party for any reason upon 180 days' written notice to the other party. NRT
paid Cendant a total of $529,000 during 1997, $853,000 during 1998 and
$258,000 during the three months ended March 31, 1999 under these leases. NRT
intends to move its principal executive offices to a different location in
Parsippany, New Jersey and expects to enter into a lease with Cendant relating
to the new offices.

Marketing Agreement

Under the marketing agreement, NRT markets Cendant Mortgage's mortgage
programs and products through NRT's real estate brokerage offices. NRT
receives a fee for marketing Cendant Mortgage's services. The term of the
marketing agreement is 40 years unless terminated earlier by Cendant Mortgage
for any reason or at NRT's option if Cendant Mortgage materially breaches the
marketing agreement or if a nationwide third party provider of mortgage
services meeting certain conditions offers NRT a comparable marketing
agreement on economic terms more favorable to NRT than those in the marketing
agreement and Cendant Mortgage declines to match the economic terms. During
the term of the marketing agreement, NRT may not enter into any similar
arrangement with another party. During the four-month period in 1997 when the
marketing agreement was in effect, Cendant Mortgage paid NRT a total of
$699,000 under the marketing agreement. Cendant Mortgage paid NRT a total of
$11.2 million during the year ended December 31, 1998 and $5.7 million for the
three months ended March 31, 1999 under the marketing agreement. For each of
the first four quarters of its term, the marketing agreement provided for the
payment of less than the otherwise applicable marketing fee for the quarter to
account for the phase-in of the services to be provided.

NRT intends to create a joint venture with a Cendant affiliate to provide
mortgage origination services directly to its customers, at which time the
marketing agreement will be terminated. The joint venture would provide
mortgage origination services through centralized inbound telemarketing
serving most of NRT's offices and through loan officers located in other
offices. NRT expects that the joint venture would terminate upon the
termination or expiration of the last of the franchise agreements to terminate
or expire.

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The terms of the joint venture are currently anticipated to include the
following:

. NRT would own 40% of the joint venture and Cendant would own 60% of the
joint venture.

. The joint venture would be managed by a management committee consisting
of five members, including two appointed by NRT and three appointed by
Cendant. The approval of four of the five members of the management
committee would be required for significant decisions affecting the
joint venture.

. NRT would not partner with any other company to sell or market mortgage
products.

Program Outsourcing Agreement

In order to generate additional brokerage-related service revenues and obtain
more advantageous pricing in the purchase and sale of products and services
through purchasing and marketing programs established by Cendant with third
party vendors, on February 9, 1999 NRT entered into a program outsourcing
agreement with Cendant, which supersedes a preferred alliance agreement, dated
as of August 11, 1997, between NRT and Cendant. Under the program outsourcing
agreement, NRT has appointed Cendant as NRT's exclusive outsourcing agent to
negotiate the terms of NRT's participation in purchasing relationships and
programs, including corporate purchasing relationships, with vendors and
programs through which NRT markets vendors' products or services to its
customers. NRT is generally not permitted to enter into or pursue any
purchasing relationships or marketing programs (other than the programs
established by Cendant) and is required to refer to Cendant all program
opportunities and parties with which NRT would enter into such a relationship.

NRT has agreed to participate, and to encourage its sales associates to
participate, in existing and new programs established by Cendant with vendors.
NRT has also agreed to make these programs available to its employees and sales
associates and to provide program training to its sales associates. NRT is not
required to participate in a program if:

. the program does not afford NRT terms at least as advantageous taken as
a whole as those afforded to any other franchisees of Cendant's real
estate brokerage systems; and

. NRT is already participating in a program covering a similar good or
service as a program established by Cendant.

No title insurance agency or escrow service business serving NRT will be
required to participate in any marketing program established by Cendant. In
addition, the provisions of the program outsourcing agreement will not apply to
any marketing program established by NRT relating to title insurance or escrow
services. If NRT decides to sell its title insurance agency or escrow services
businesses, it will notify Cendant and, at Cendant's election, will negotiate
exclusively with Cendant in good faith for three months to explore the sale of
the businesses to Cendant or the combination of the businesses with Cendant's
related operations. If Cendant establishes a program with a title insurance
underwriter or owns a title insurance underwriter, NRT will use the underwriter
exclusively as long as it provides service and economic terms comparable to the
terms of NRT's then current arrangements.

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NRT is permitted to enter into:

. a purchasing program if no Cendant purchasing program covers the good or
service and NRT's aggregate purchases of the good or service do not
exceed $250,000 per calendar year;

. a purchasing program covering a good or service sought by NRT if a
purchasing program exists which covers the good or service, but NRT is
not otherwise required to participate in a Cendant purchasing program;

. a marketing program in which NRT receives buyer leads, listing leads or
barter consideration and no other consideration, if the marketing program
does not conflict with any Cendant program then in effect;

. a program with respect to a good or service sought to be purchased or
marketed by NRT, if a Cendant program covering the good or service has
expired or has been terminated and Cendant has either not replaced,
renewed or extended the program;

. a program with respect to a good or service sought to be purchased or
marketed by NRT, if NRT has notified Cendant of its desire to have
Cendant implement a new program covering such good or service and Cendant
has not, within 30 days of the notice from NRT, notified NRT of its
decision to pursue such new program or has not implemented the new
program within 180 days of Cendant notifying NRT of its decision to
pursue such new program; and

. a program covering a geographic area which is not covered by a Cendant
program.

If Cendant subsequently implements a new program covering the same or a
similar product or service covered by an existing NRT program, then NRT will
terminate its program and commence participation in such new program. Any NRT
program implemented under the program outsourcing agreement must be limited to
a one-year term, without automatic renewal.

NRT has agreed under the program outsourcing agreement not to provide any of
its real estate listings and other customer data to any third party without
Cendant's consent. Under the franchise agreements, Cendant has the right to
provide to any third party the customer information provided to Cendant under
each franchise agreement.

The program outsourcing agreement terminates upon the termination or
expiration of the last of the franchise agreements to terminate or expire. The
program outsourcing agreement may be terminated by the non-breaching party in
the event of a material breach that is not cured after notice.

Relocation Management

NRT has entered into arrangements and agreements with Cendant Mobility, the
country's largest relocation company, under which NRT provides its brokerage
services to relocating employees of the clients of Cendant Mobility, which are
typically large corporations and governmental agencies. Under this arrangement,
when receiving a referral from Cendant Mobility, NRT receives a commission on
the purchase or sale of the property but is obligated to pay Cendant Mobility a
portion of such commission as a referral fee. NRT believes that such fees are
comparable to the fees charged by other relocation companies. NRT paid a total
of $6.4 million during 1997 and $11.6 million during 1998 and $3.3 million for
the three months ended March 31, 1999, in referral fees to Cendant Mobility.
The arrangements with Cendant Mobility may be subject to termination or
modification at any time.

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Support Agreement

NRT and Cendant entered into a support agreement, dated as of August 11,
1997, under which Cendant has agreed to furnish NRT with computer and data
related information services. In consideration of the provision of such
services, NRT has agreed to reimburse Cendant directly for actual costs
incurred by Cendant on behalf of NRT. In addition, NRT was required to pay
Cendant a monthly fee of $77,500 during 1997 and $41,667 during 1998 and is
required to pay a monthly fee of $12,500 during 1999. NRT paid Cendant a total
of $1.4 million during 1997, $2.0 million during 1998 and $417,000 during the
three months ended March 31, 1999 under the support agreement. The support
agreement terminates on December 31, 1999, unless earlier terminated by either
party.

Advisory Services Agreement

NRT and Apollo Management, L.P. have entered into an advisory services
agreement, dated as of August 11, 1997, under which Apollo Management, L.P. has
provided management, advisory and other services to NRT in connection with the
operation of its business. In consideration for these services, NRT is required
to pay Apollo Management a monthly fee in an amount equal to $166,667. The
advisory services agreement will terminate upon redemption of all outstanding
shares of junior preferred stock with the proceeds of the offering. NRT paid
Apollo Management, L.P. a total of $667,000 during 1997, and $2.0 million
during 1998 and $500,000 during the three months ended March 31, 1999 under the
advisory services agreement.

Development Advance

On January 14, 1997, Coldwell Banker Residential Affiliates, Inc., the
predecessor to Coldwell Banker Real Estate Corporation, made a development
advance of $20 million to National Realty Trust and Coldwell Banker Residential
Brokerage Corporation to assist National Realty Trust and Coldwell Banker
Residential Brokerage Corporation in paying operating expenses. The obligations
of National Realty Trust and Coldwell Banker Residential Brokerage Corporation
to repay the development advance were assumed by NRT in August 1997.

The advance was replaced on September 1, 1997 with an advance of $18.8
million which is being amortized over a 40-year period. Under the terms of the
advance, 1/480th of the original balance is being forgiven each month so long
as NRT is not in material breach of the terms of the franchise agreements. In
the event that NRT is determined to be in default under a material term of the
franchise agreements, the entire remaining advance will become immediately due
and payable and bear interest at the prime interest rate.

Acquisition of Burnet Financial Group

On February 13, 1998, NRT acquired Burnet Financial Group, a residential real
estate brokerage firm founded by Ralph W. Burnet, who became Senior Vice
President--Central Region of NRT following the acquisition. In connection with
the acquisition, NRT issued to Mr. Burnet notes in an aggregate principal
amount of $5.8 million, of which approximately $3.9 million is currently
outstanding.

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Acquisition of Denver Operations of Premier Van Schaak

In September 1998, NRT acquired the Denver operations of Premier Van Schaak,
a residential real estate brokerage firm then owned by R. Scott Webber, who
became Senior Vice President--Southeast Region of NRT following the
acquisition. During 1999, Mr. Webber will be entitled, subject to sales
associates meeting performance targets, to receive additional payments of up to
$500,000 from NRT in connection with such acquisition.

Special Dividend

NRT declared a $45 million cash dividend on its common stock to Apollo, of
which $30 million was paid during the first quarter of 1999 and $15 million was
paid during the second quarter of 1999.

Repurchase of Shares from Apollo and Cendant

On April 6, 1999, NRT repurchased 574,575 shares of its common stock from
Apollo for $10.7 million. NRT has agreed to purchase 725.4 shares of its
convertible preferred stock from Cendant for $10.7 million, plus accrued
dividends on such shares, after the closing of the offering.

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DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of NRT currently consists of 50,000,000 shares
of common stock and 405,000 shares of preferred stock. There currently are
18,175,425 shares of common stock issued and outstanding, all of which are held
by Apollo. Immediately prior to the closing of the offering, NRT intends to
file with the Delaware Secretary of State a restated certificate of
incorporation providing for, among other things, an increase in NRT's
authorized common stock to 100,000,000 shares and an increase in NRT's
authorized preferred stock to 5,000,000 shares. Upon the closing of the
offering,

. 27,550,425 shares of common stock will be issued and outstanding
(28,183,238 if the underwriters' over-allotment option is exercised in
full);

. 13,487,925 shares will be held by Apollo (12,011,363 if the underwriters'
over-allotment option is exercised in full);

. 14,062,500 shares will be held by NRT's public stockholders (16,171,875
if the underwriters' over-allotment option is exercised in full);

. 6,473,503 shares will be reserved for issuance upon conversion of the
convertible preferred stock held by Cendant following the repurchase of
725.4 shares of convertible preferred stock from Cendant (5,840,691 if
the underwriters' over-allotment option is exercised in full); and

. 3,399,141 shares will be reserved for issuance under the 1997 Equity
Participation Plan.

The following summary of the capital stock of NRT describes the capital stock
of NRT under, and is qualified by reference to, NRT's restated certificate of
incorporation and its amended and restated by-laws, which will become effective
prior to the closing of the offering. Forms of NRT's restated certificate of
incorporation and amended and restated by-laws are filed as exhibits to the
registration statement that includes this prospectus.

Common Stock

Voting Rights

The holders of common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders. Holders of shares of common stock are not
entitled to cumulate their votes in the election of directors or otherwise.
Generally, all matters to be voted on by shareholders must be approved by a
majority (or, in the case of election of directors, by a plurality) of the
votes entitled to be cast by all shares of common stock present in person or
represented by proxy, voting together as a single class together with the
convertible preferred stock.

Dividends

Holders of common stock are entitled to receive their pro rata share of any
dividends if, as and when declared by the Board of Directors out of funds
legally available therefor, subject to any preferential rights of any
outstanding preferred stock, including the senior preferred stock, convertible
preferred stock and junior preferred stock.

Other Rights

On liquidation, dissolution or winding up of NRT, after payment in full of
the amounts required to be paid to holders of preferred stock, if any, all
holders of common stock are entitled to receive their pro rata share of any
assets available for distribution to holders of shares of common stock after

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the payment of all debts and other liabilities of NRT. No shares of common
stock are subject to redemption or have preemptive rights to purchase
additional shares of common stock. All the outstanding shares of common stock
are fully paid and nonassessable. The rights, preferences and privileges of
holders of common stock are subject to and may be adversely affected by the
rights of holders of shares of any series of preferred stock, whether currently
outstanding or designated and issued in the future.

Preferred Stock

Under NRT's restated certificate of incorporation, the Board of Directors is
authorized, subject to any limitations prescribed by law, to provide for the
issuance of shares of preferred stock in one or more series. Because the Board
of Directors has the power to establish the preferences and rights of each
series, it may afford the holders of the preferred stock preferences, powers
and rights (including voting rights) senior to the rights of the holders of
common stock. A total of 250,101 shares of preferred stock are outstanding in
three series:

.157,591 shares of senior preferred stock;

.24,000 shares of convertible preferred stock; and

.68,510 shares of junior preferred stock.

NRT has agreed to redeem all of the outstanding shares of junior preferred
stock with a portion of the proceeds of the offering. Accordingly, following
the offering and the redemption, there will be no shares of junior preferred
stock outstanding. NRT has also agreed to repurchase 725.4 shares of
convertible preferred stock from Cendant following the closing of the offering.
Although NRT has no present plans to issue any additional shares of preferred
stock following the closing of the offering, the issuance of additional shares
of preferred stock, or the issuance of rights to purchase such shares, may have
the effect of delaying, deferring or preventing a change in control of NRT or
an unsolicited acquisition proposal.

Senior Preferred Stock

Dividends. Holders of the senior preferred stock are entitled to receive,
when, as and if dividends are declared by the Board of Directors out of funds
of NRT legally available therefor, cumulative preferential dividends at the
rate of 9% per annum on the then outstanding amount of such preferred stock,
payable quarterly in arrears on each February 15, May 15, August 15 and
November 15 (or if such date is not a business day, on the next succeeding
business day) to holders of record as of the preceding February 1, May 1,
August 1 and November 1. Dividends are payable:

. in cash, to the extent NRT has sufficient available cash in excess of
prescribed amounts; and

. by increasing the face value of the senior preferred stock, to the extent
NRT has insufficient available cash (unless the Board of Directors of
NRT, including one Cendant nominee and one Apollo nominee, elects to pay
such dividend in cash).

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stock or any other capital stock of NRT ranking junior to or on parity with the
senior preferred stock (other than the junior preferred stock on a mandatory
redemption date) may be redeemed, purchased or otherwise acquired by NRT or a
subsidiary thereof, unless full cumulative dividends on the senior preferred
stock have been paid in full.

Redemption. The senior preferred stock is redeemable at the option of NRT at
any time at a redemption price equal to 100% of the then current liquidation
preference of the senior preferred stock plus all accrued and unpaid dividends
through the redemption date. In addition, on August 29, 2004 and each August
29th thereafter until and including August 29, 2008, NRT is required to redeem
10% of the total number of shares of senior preferred stock ever issued at the
applicable redemption price. On August 29, 2009, NRT is required to redeem all
remaining outstanding shares of senior preferred stock.

Dissolution, Liquidation, Winding Up. Upon the dissolution, liquidation or
winding up of NRT, holders of the senior preferred stock are entitled to be
paid out of the assets available for distribution an amount up to the
liquidation preference of such preferred stock plus all accrued but unpaid
dividends before any payment or distribution may be made on the common stock or
capital stock ranking junior to the senior preferred stock.

Voting Rights. Although the holders of the senior preferred stock generally
do not have the right to vote on any matters presented to NRT's stockholders,
the affirmative vote or consent of holders of a majority of the shares of the
senior preferred stock is required in order for NRT to:

. authorize, create or issue any securities ranking on a parity with or
senior to the senior preferred stock (or any security convertible into
such a security), other than the convertible preferred stock;

. amend or otherwise alter the certificate of incorporation of NRT in a
manner that adversely affects the rights of holders of the senior
preferred stock;

. amend, alter, and waive the senior preferred stock's certificate of
designations in any manner (other than to cure an ambiguity, defect or
inconsistency or to make any change that would provide additional rights
or benefits to the holders of the senior preferred stock or that does
not adversely affect the rights of such holders); or

. waive any compliance with the senior preferred stock's certificate of
designations.

In addition, the consent of each holder of the senior preferred stock is
required for certain amendments or waivers of NRT's certificate of
incorporation or the senior preferred stock's certificate of designations
affecting the rights of holders of the senior preferred stock.

Convertible Preferred Stock

NRT has agreed to repurchase 725.4 shares of convertible preferred stock from
Cendant following the closing of the offering.

Dividends. Holders of the convertible preferred stock are entitled to
receive, when, as and if dividends are declared by the Board of Directors out
of funds of NRT legally available therefor, cumulative preferential dividends
at the rate of 5% per annum on the then outstanding amount of such preferred
stock, payable quarterly in arrears on each February 15, May 15, August 15 and

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November 15 (or if such date is not a business day, on the next succeeding
business day) to holders of record as of the preceding February 1, May 1,
August 1 and November 1, respectively. Dividends are payable:

. in cash, to the extent NRT has sufficient available cash in excess of
prescribed amounts; and

. by increasing the face value of the convertible preferred stock, to the
extent NRT has insufficient available cash (unless the Board of
Directors of NRT, including one Apollo nominee and one Cendant nominee,
elects to pay such dividend in cash).

So long as shares of convertible preferred stock are outstanding, no
dividends (other than a dividend payable solely in junior securities) or other
distribution on any common stock or capital stock ranking junior to the
convertible preferred stock may be declared or paid or set apart, and no common
stock or any other capital stock of NRT ranking junior to or on parity with the
convertible preferred stock (other than the junior preferred stock after a
mandatory redemption date as defined below) may be redeemed, purchased or
otherwise acquired by NRT or a subsidiary thereof, unless full cumulative
dividends on the convertible preferred stock have been paid in full.

Redemption. The convertible preferred stock is redeemable at the option of
NRT from and after the third anniversary of the closing of the offering at a
redemption price equal to the sum of all accrued and unpaid dividends through
the redemption date, plus:

. 103% of the then current face value of the convertible preferred stock
if the convertible preferred stock is redeemed on or prior to the fourth
anniversary of the closing of the offering;

. 102% of the then current face value of the convertible preferred stock
if the convertible preferred stock is redeemed on or prior to the fifth
anniversary of the closing of the offering;

. 101% of the then current face value of the convertible preferred stock
if the convertible preferred stock is redeemed on or prior to the sixth
anniversary of the closing of the offering; or

. 100% of the then current face value of the convertible preferred stock
if the convertible preferred stock is redeemed after the sixth
anniversary of the closing of the offering.

In addition, on August 29, 2012, NRT is required to redeem all remaining
outstanding shares of the convertible preferred stock at a price in cash equal
to 100% of the then current face value of the convertible preferred stock then
outstanding.

Dissolution, Liquidation, Winding Up. Upon the dissolution, liquidation or
winding up of NRT, holders of the convertible preferred stock are entitled to
be paid out of the assets available for distribution an amount up to the
liquidation preference of such preferred stock plus all accrued but unpaid
dividends before any payment or distribution may be made on the common stock or
capital stock ranking junior to the convertible preferred stock.

Conversion Rights. Holders of the convertible preferred stock have the right
to convert all shares of convertible preferred stock held by them into shares
of common stock at any time commencing immediately prior to the closing of the
offering. Holders may convert that fraction of

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each share of the convertible preferred stock then outstanding equal to the
aggregate face value of the convertible preferred stock at the time of issuance
divided by the aggregate outstanding amount of the convertible preferred stock
at the conversion rate then in effect. Initially, all 23,275 shares of
convertible preferred stock held by Cendant will be convertible into a total of
6,473,503 shares of common stock, assuming no change in the aggregate
outstanding amount of the convertible preferred stock before the time of
conversion and assuming the repurchase of 725.4 shares of convertible preferred
stock from Cendant following the closing of the offering.

Voting Rights. Upon the closing of the offering, each share of convertible
preferred stock will vote together with the common stock on all matters
submitted to a vote of the holders of the common stock and generally will be
entitled to a number of votes equal to the number of shares of common stock
into which such share is convertible, based on the conversion rate. In
addition, the affirmative vote or consent of holders of a majority of the
shares of the convertible preferred stock is required in order for NRT to:

. authorize, create or issue any securities ranking on a parity with or
senior to the convertible preferred stock (or any security convertible
into such a security), other than the senior preferred stock;

. amend or otherwise alter the certificate of incorporation of NRT in a
manner that adversely affects the rights of holders of the convertible
preferred stock;

. amend or otherwise alter the convertible preferred stock's certificate
of designations in any manner (other than to cure an ambiguity, defect
or inconsistency or to make any change that would provide additional
rights or benefits to the holders of the convertible preferred stock or
that does not adversely affect the rights of such holders); or

. waive compliance with any provision of the convertible preferred stock's
certificate of designations.

The consent of each holder of the convertible preferred stock is also required
for certain amendments or waivers of NRT's certificate of incorporation or the
convertible preferred stock's certificate of designations affecting the rights
of holders of the convertible preferred stock.

Junior Preferred Stock

NRT has agreed to redeem all of the outstanding shares of junior preferred
stock with a portion of the proceeds of the offering. The aggregate
consideration for such redemption will be calculated in accordance with the
certificate of designation for the junior preferred stock.

Dividends. Holders of the junior preferred stock are entitled to receive,
when, as and if dividends are declared by the Board of Directors out of funds
of NRT legally available therefor, cumulative preferential dividends at the
rate of 18% per annum on the then outstanding amount of such preferred stock,
payable quarterly in arrears on each February 15, May 15, August 15 and
November 15 (or if such date is not a business day, on the next succeeding
business day) to holders of record as of the preceding February 1, May 1,
August 1 and November 1, respectively. In addition, on each dividend payment
date, holders of the junior preferred stock are entitled to an

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additional dividend in an amount equal to 0.1% of the gross commission income
of NRT under the COLDWELL BANKER(R) franchise agreement for the fiscal quarter
ending immediately prior to the applicable dividend payment date divided by the
number of shares of junior preferred stock outstanding. Dividends are payable:

. in cash, to the extent NRT has sufficient available cash in excess of
prescribed amounts; and

. by increasing the face value of the convertible preferred stock, to the
extent NRT has insufficient available cash (unless the Board of
Directors of NRT, including one Cendant nominee and one Apollo nominee,
elects to pay such dividends in cash).

So long as shares of senior preferred stock are outstanding, no dividends
(other than a dividend payable solely in junior securities) or other
distribution on any common stock or capital stock ranking junior to the senior
preferred stock shall be declared or paid or set apart, and no common stock or
any other capital stock of NRT ranking junior to or on parity with the senior
preferred stock (other than the junior preferred stock after a mandatory
redemption date as described below) shall be redeemed, purchased or otherwise
acquired by NRT or a subsidiary thereof, unless cumulative dividends on the
senior preferred stock have been paid in full.

Redemption. The junior preferred stock is redeemable, at the option of NRT,
at any time prior to August 29, 2001 at a redemption price equal to the sum of
the following:

. the then current liquidation preference for such junior preferred stock;

. any accrued and unpaid dividends through the redemption date; and

. 18% of the product of the initial liquidation preference for such junior
preferred stock and the number of days from the date of issuance of such
junior preferred stock to August 29, 2001 divided by 1460.

NRT estimates that upon the closing of the offering the redemption price for
all outstanding shares of junior preferred stock will be $88.2 million.

Anti-Takeover Provisions

The restated certificate of incorporation of NRT, the amended and restated
by-laws of NRT, the franchise agreements and the General Corporation Law of the
State of Delaware contain provisions that could make more difficult the
acquisition of control of NRT. The following description is intended as a
summary only and should be read together with the restated certificate, the
restated by-laws, the stockholders agreement and the Delaware General
Corporation Law.

Classified Board of Directors; Removal of Directors

The restated certificate of incorporation provides for the Board of Directors
to be divided into three classes of directors, as nearly equal in number as is
reasonably possible, serving staggered terms so that directors' initial terms
will expire either at the 2000, 2001 or 2002 annual meeting of stockholders.
Commencing with the 2000 annual meeting of stockholders, one class of directors
will be elected each year for a three-year term. NRT believes that a classified
board of directors will help

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to assure the continuity and stability of the Board of Directors and NRT's
business strategies and policies as determined by the Board of Directors, since
a majority of the directors at any given time will have had prior experience as
directors of NRT. NRT believes that this will permit the Board of Directors to
represent more effectively the interests of stockholders. With a classified
board of directors, at least two annual meetings of stockholders, instead of
one, generally will be required to effect a change in a majority of the Board
of Directors. In addition, NRT's directors may be removed by NRT's stockholders
only for cause.

Action by Written Consent; Special Meetings of Stockholders

NRT's restated certificate of incorporation provides that no action required
or permitted to be taken by stockholders of NRT may be taken except at a
meeting of stockholders. The restated by-laws provide that special meetings may
be called only by:

. the Chairman of the Board;

.the President; or

. any three directors of the Board of Directors.

Stockholders are not permitted to call a special meeting or to require that the
Board call a special meeting of stockholders. In addition, the business
permitted to be conducted at any special meeting of stockholders is limited to
the purpose or purposes specified in the written notice of such meeting. The
provisions of the restated certificate of incorporation prohibiting action by
written consent without a meeting and the provisions of the amended and
restated by-laws governing the call of and matters to be considered at special
meetings may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting of stockholders.

Advance Notice Provisions for Stockholder Nominations and Proposals

NRT's amended and restated by-laws contain advance notice provisions with
regard to the nomination of candidates for election as directors, other than by
or at the direction of the Board, and the bringing any stockholder proposal
before any annual meeting of stockholders. The advance notice provisions
provide that business other than that proposed by the Board may be transacted
and candidates for director other than those selected by the Board may be
nominated at the annual meeting of stockholders only if the Secretary of NRT
has received a written notice identifying such business or candidates and
providing specified additional information not less than 90 nor more than 120
days before the anniversary of the prior year's annual meeting of stockholders
(or if the Board has set a different date for the annual meeting, not less than
90 nor more than 120 days before such other date, provided that if such meeting
has been called for a date that is not within 30 days of such anniversary date,
then no later than 10 days after the day on which notice of the date of such
meeting was mailed or otherwise publicly disclosed). In addition, not more than
10 days after receipt by the sponsoring stockholder of the Secretary's written
request, the sponsoring stockholder must provide the Secretary with such
additional information as the Secretary may reasonably require.

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Restrictions Imposed by Agreements

The provisions of the franchise agreements contain as an event of default the
acquisition by any person or group of beneficial ownership of over 30% of the
common stock and/or securities convertible into or exercisable for shares of
common stock. NRT could be required to pay the franchisors damages based on the
remaining term of the franchise agreements (up to 25 years) if the franchise
agreements are terminated due to a change in control. In addition, the
stockholders agreement generally prohibits Apollo from transferring without
Cendant's consent:

. shares representing over 10% of the common stock to any person or group;
or

. any shares of common stock to a person or group if such person or group
would acquire thereby beneficial ownership of over 20% of the common
stock.

Under the stockholders agreement, Cendant's consent to a proposed transfer
may not be unreasonably withheld unless the proposed transferee would acquire
30% or more the common stock or securities convertible into or exercisable for
common stock (in which case Cendant may withhold its consent in its absolute
discretion). Reasonable grounds for withholding consent include if Cendant
believes in good faith, in its sole discretion, that the proposed transferee
may be acquiring such securities with the purpose of acquiring, changing or
influencing control of NRT (or facilitating any such acquisition, change or
influence of control). In addition, the terms of NRT's bank credit facility
provide that a change in control of NRT will constitute an event of default
under its terms. These provisions may render an unsolicited takeover of NRT
more difficult or less likely to occur or might prevent such a takeover.

Delaware Business Combination Statute

Section 203 of the Delaware General Corporation Law imposes a three-year
moratorium on business combinations between a Delaware corporation and an
"interested stockholder" (in general, a stockholder owning 15% or more of a
corporation's outstanding voting stock) or an affiliate or associate thereof
unless:

. prior to an interested stockholder becoming an interested stockholder,
the board of directors of the corporation approved either the business
combination or the transaction resulting in the interested stockholder
becoming an interested stockholder;

. upon consummation of the transaction resulting in an interested
stockholder becoming an interested stockholder, the interested
stockholder owns 85% of the voting stock outstanding at the time the
transaction commenced (excluding, from the calculation of outstanding
shares, shares beneficially owned by directors who are also officers and
certain employee stock plans); or

. on or after an interested stockholder becomes an interested stockholder,
the business combination is approved by the board of directors and
holders of at least 66 2/3% of the outstanding shares (other than those
shares beneficially owned by the interested stockholder) at a meeting of
stockholders.

Section 203 of the Delaware General Corporation Law applies to any corporation
incorporated in the State of Delaware unless the corporation expressly elects
not be governed by such legislation. NRT has not made such an election and is
therefore subject to Section 203.

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Limitations on Directors' Liability

NRT's restated certificate of incorporation provides that no director of NRT
shall be liable to NRT or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability:

. for any breach of the director's duty of loyalty to NRT or its
stockholders;

. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

. in respect of unlawful dividend payments or stock redemptions or
repurchases; or

. for any transaction from which the director derived an improper personal
benefit.

The effect of those provisions is to eliminate the rights of NRT and its
stockholders (through stockholders' derivative suits on behalf of NRT) to
recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent behavior), except
in the situations described above. These provisions do not limit the liability
of directors under federal securities laws.

Listing

NRT's common stock has been approved, subject to notice of issuance, for
quotation on the Nasdaq National Market under the symbol NRTX.

Transfer Agent And Registrar

The transfer agent and registrar for the common stock is BankBoston, N.A.

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DESCRIPTION OF INDEBTEDNESS

NRT is a party to a credit facility with commercial banks. The following is a
summary of the material terms and conditions of NRT's credit facility.

The credit facility consists of a revolving credit facility of up to
$100,000,000, which will be available to NRT until May 29, 2001. NRT is seeking
to expand the available borrowing capacity under this facility. Advances may be
used for the general working capital needs of NRT in the ordinary course of
business and for permitted acquisitions.

At the option of NRT, each individual borrowing under the credit facility may
be designated and maintained as either a base rate loan or a Eurodollar loan.
Interest accrues on base rate loans at a rate equal to 0.75% plus the higher of
the federal funds rate plus 0.5% and the prime lending rate. Interest accrues
on Eurodollar loans at a rate equal to 1.75% plus the British Bankers'
Association interest settlement rate (or if not available, by reference to the
London interbank market rate).

NRT's obligations arising under the credit facility are secured by a pledge
of the capital stock of NRT's subsidiaries and are guaranteed by NRT's
subsidiaries. The guarantees are secured by a pledge of the capital stock of
the guarantors' subsidiaries.

Under the terms of the credit facility, NRT must make mandatory prepayments
following the receipt of funds from specified events. These events include:

. asset dispositions;

. permitted incurrences of additional debt or issuances of additional
preferred stock; or

. instances where NRT receives funds due to the destruction, damage,
theft, condemnation or taking of its property or assets.

The credit facility contains a number of covenants, including limitations on
changes in lines of business, acquisitions, consolidations, mergers, asset
dispositions, liquidations, dissolutions, liens, indebtedness, investments,
loans and advances, payment of dividends, voluntary payments and modifications
of other debt instruments and issuances of additional capital stock. NRT is
also required to maintain compliance with financial performance covenants,
including covenants containing a maximum total leverage ratio and a minimum
interest coverage ratio.

Events of default under the credit facility include nonpayment of principal
when due, nonpayment of interest or fees following a grace period, material
inaccuracy of representations and warranties, failure to comply with covenants,
default under other agreements, bankruptcy events, ERISA events, judgments
against NRT or its subsidiaries, the termination of or payment of liquidated
damages under the franchise agreements and a change in control of NRT (defined
to include the acquisition by any person, other than Cendant and Apollo and
certain affiliates thereof (as a group), of 25% or more of the voting and/or
economic interest in NRT's capital stock on a fully-diluted basis).

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In addition to the credit facility, in connection with NRT's acquisition of
Hunneman Real Estate Corporation, NRT assumed a line of credit, of which $22.8
million was outstanding at December 31, 1998 and $12.7 million was outstanding
at March 31, 1999. The line of credit is restricted to providing funding for
NRT's mortgage loan originations, pursuant to which NRT finances mortgage
loans. NRT draws from the line of credit up to 98% of the mortgage loan amount,
then sells such mortgage loans to third parties. Upon the sale, NRT pays off
the amount drawn, typically within 90 days of the draw.

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SHARES ELIGIBLE FOR FUTURE SALE

Immediately after the closing of the offering, NRT will have 27,550,425
shares of common stock issued and outstanding and 9,872,644 shares of common
stock issuable upon the exercise of options and the conversion of the remaining
convertible preferred stock held by Cendant after the share repurchase. All of
the shares of common stock to be sold in the offering will be freely tradeable
without restrictions or further registration under the Securities Act, except
that shares purchased by an affiliate of NRT (as that term is defined in Rule
144) will be subject to the resale limitations of Rule 144.

In general, under Rule 144, the following classes of persons may sell, within
any three-month period, no more than 1% of NRT's common stock then outstanding
or the average weekly trading volume in the common stock during the four
calendar weeks preceding the date on which the required notice of such sale was
filed, whichever is greater:

. any person, or persons whose shares are required to be aggregated, who
owns shares of common stock which have been held for at least one year
since such shares were sold by NRT or by an affiliate of NRT in a
transaction or chain of transactions not involving a public offering; or

. any affiliate of NRT who holds shares of common stock that are not
restricted securities.

Sales under Rule 144 are also subject to provisions relating to the manner and
notice of sale and availability of current public information about NRT.
Affiliates of NRT must comply with the requirements of Rule 144, including the
one-year holding period requirement, to sell shares of common stock that are
restricted securities. If at least two years has elapsed from the date
restricted securities were acquired from NRT or an affiliate of NRT, a holder
of such restricted securities who is not an affiliate of NRT at the time of the
sale and has not been an affiliate of NRT at any time during the three months
prior to such sale would be entitled to sell such shares without regard to the
volume limitation and other conditions described above.

Each of NRT, its executive officers and directors, Apollo and Cendant has
agreed not to offer, sell or otherwise dispose of any shares of common stock,
other than in the offering, or any security convertible into or exchangeable or
exercisable for shares of common stock, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation on behalf of the
underwriters for a period of 180 days after the date of this prospectus, unless
such offer, sale or disposition is expressly permitted by the underwriting
agreement. In addition, transfers of shares of common stock by Apollo and
Cendant are also restricted by the provisions of the stockholders agreement.

Prior to the offering, there has been no public market for common stock.
Although NRT can make no prediction as to the effect, if any, that sales of
shares of common stock by Apollo or Cendant would have on the market price
prevailing from time to time, sales of substantial amounts of common stock or
the availability of such shares for sale could adversely affect prevailing
market prices.

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UNITED STATES FEDERAL TAX
CONSIDERATIONS RELATING TO NON-U.S. HOLDERS

The following is a general discussion of certain United States federal income
and estate tax considerations with respect to the ownership and disposition of
common stock applicable to Non-U.S. Holders (as defined below) who hold the
common stock as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code. In general, a "Non-U.S. Holder" is any holder other
than:

. a citizen or resident of the United States;

. a corporation created or organized in the United States or under the
laws of the United States or of any state;

. an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source; or

. a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.

This discussion is based on current law, which is subject to change (possibly
with retroactive effect), and is for general information only. This discussion
does not address aspects of United States federal taxation other than income
and estate taxation and does not address all aspects of income and estate
taxation or any aspects of state, local or non-United States taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder. In addition, persons that hold the common stock through
entities that are classified differently for United States federal income tax
purposes than for tax purposes in other jurisdictions may be subject to special
rules and may not be entitled to the benefits of a U.S. income tax treaty.
Accordingly, prospective investors are urged to consult their tax advisors
regarding the United States federal, state, local and non-United States income
and other tax considerations of holding and disposing of shares of common
stock.

For purposes of the discussion below, dividends and gain on the sale,
exchange or other disposition of common stock will be considered to be "U.S.
trade or business income" if such income or gain is:

. effectively connected with the conduct of a U.S. trade or business; or

. in the case of a treaty country resident, attributable to a permanent
establishment (or, in the case of an individual, a fixed base) in the
United States.

Dividends

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable income tax treaty) of the gross amount unless the dividends are
effectively connected to a U.S. trade or business income. Dividends that are
U.S. trade or business income generally will not be subject to United States
withholding tax if the Non-U.S. Holder files required forms, including Internal
Revenue Service Form 4224, with the payor of the dividend, but rather will be
subject to United States federal income tax on a net income basis,

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in the same manner as if the Non-U.S. Holder were a resident of the United
States. A Non-U.S. Holder that is a corporation may be subject to an additional
branch profits tax at a rate of 30% (or such lower rate as may be specified by
an applicable income tax treaty). To determine the applicability of a tax
treaty providing for a lower rate of withholding under the currently effective
United States Treasury Department regulations, dividends paid to an address in
a foreign country are presumed to be paid to a resident of that country absent
knowledge to the contrary.

Under the final United States Treasury Department regulations issued on
October 6, 1997 generally effective for payments made after December 31, 1998,
a Non-U.S. Holder (including in the case of Non-U.S. Holders that are fiscally
transparent entities, the owner or owners of such entity) will be required to
provide to the payor documentation showing that such Non-U.S. Holder (or the
owner or owners of such fiscally transparent entities) is a foreign person in
order to claim a reduced rate of withholding pursuant to an applicable income
tax treaty. In addition, if the common stock ceases to be actively traded, then
a Non-U.S. Holder claiming the benefits of a treaty may also be required to
provide a U.S. taxpayer identification number and a certificate of residence in
the foreign country (or other acceptable proof of such residence). Under the
final regulations, persons claiming that dividends are U.S. trade or business
income will generally be required to provide a Form W-8, including a taxpayer
identification number, certifying that the income is U.S. trade or business
income.

Gain on Sale or Other Disposition of Common Stock

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's shares of common stock unless:

. the gain is U.S. trade or business income;

. the Non-U.S. Holder is an individual who holds shares of common stock as
a capital asset and is present in the United States for 183 days or more
in the taxable year of disposition, and other tests are met;

. the Non-U.S. Holder is subject to tax pursuant to the provisions of the
U.S. tax law applicable to former citizens and residents of the United
States; or

. NRT is or has been a United States real property holding corporation for
United States federal income tax purposes (which NRT does not believe
that it is or is likely to become) at any time within the shorter of the
five year period preceding such disposition or such Non-U.S. Holder's
holding period.

If NRT were or were to become a United States real property holding corporation
at any time during this period, gains realized upon a disposition of common
stock by a Non-U.S. Holder which did not directly or indirectly own more than
5% of the common stock during this period generally would not be subject to
United States federal income tax, provided that the common stock was regularly
traded on an established securities market.

Estate Tax

Common stock owned or treated as owned by an individual who is not a citizen
or resident (as defined for United States federal estate tax purposes) of the
United States at the time of death will be

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<PAGE>

includible in the individual's gross estate for United States federal estate
tax purposes unless an applicable estate tax treaty provides otherwise, and
therefore may be subject to United States federal estate tax.

Backup Withholding, Information Reporting and Other Reporting Requirements

NRT must report annually to the Internal Revenue Service and to each Non-U.S.
Holder the amount of dividends paid to, and the tax withheld with respect to,
each Non-U.S. Holder. These reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies of
this information also may be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the Non-
U.S. Holder resides or is established.

Under the current regulations, United States backup withholding tax (which
generally is imposed at the rate of 31% on certain payments to persons that
fail to furnish the information required under the United States information
reporting requirements) and information reporting requirements (other than
those discussed above under "--Dividends") generally will not apply to
dividends paid on common stock to a Non-U.S. Holder at an address outside the
United States. Backup withholding and information reporting generally will
apply, however, to dividends paid on shares of common stock to a Non-U.S.
Holder at an address in the United States, if such holder fails to establish an
exemption or to provide certain other information to the payor.

Under the current regulations, the payment of proceeds from the disposition
of common stock to or through a United States office of a broker will be
subject to information reporting and backup withholding unless the beneficial
owner, under penalties of perjury certifies, among other things, its status as
a Non-U.S. Holder or otherwise establishes an exemption. The payment of
proceeds from the disposition of common stock to or through a non-U.S. office
of a non-U.S. broker generally will not be subject to backup withholding and
information reporting except as noted below. In the case of proceeds from a
disposition of common stock paid to or through a non-U.S. office of a broker
that is:

. a United States person;

. a "controlled foreign corporation" for United States federal income tax
purposes; or

. a foreign person 50% or more of whose gross income from certain periods
is effectively connected with a United States trade or business,
information reporting (but not backup withholding) will apply unless the
broker has documentary evidence in its files that the owner is a Non-
U.S. Holder (and the broker has no actual knowledge to the contrary).

Under the final regulations, the payment of dividends or the payment of
proceeds from the disposition of common stock to a Non-U.S. Holder may be
subject to information reporting and backup withholding unless such recipient
provides to the payor certain documentation as to its status as a Non-U.S.
Holder or otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
Internal Revenue Service in a timely manner.

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<PAGE>

UNDERWRITING

On the terms and conditions contained in the underwriting agreement, dated as
of , 1999, the underwriters named below, who are represented by Donaldson,
Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc., BT Alex.
Brown Incorporated, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated, have severally agreed to
purchase from NRT and Apollo the number of shares of common stock set forth
opposite their names.
<TABLE>
<CAPTION>
Number of
Shares
----------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...............
Bear, Stearns & Co. Inc...........................................
BT Alex. Brown Incorporated.......................................
Lehman Brothers Inc...............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................
Morgan Stanley & Co. Incorporated.................................
----------
Total........................................................... 14,062,500
==========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of common stock in
the offering are subject to approval by their counsel of legal matters and to
other conditions. The underwriters must purchase and accept delivery of all the
shares of common stock in the offering, other than those shares covered by the
over-allotment option described below, if any are purchased. The offering price
and underwriting discounts and commissions per share for shares of common stock
offered by NRT, Apollo and Cendant (with respect to the underwriters' over-
allotment option discussed below) are identical.

The underwriters initially propose to offer the shares of common stock in
part directly to the public at the initial public offering price set forth on
the cover page of this prospectus and in part to certain dealers, including the
underwriters, at that price less a concession not in excess of $ per share.
The underwriters may allow, and these dealers may re-allow, to other dealers a
concession not in excess of $ per share. After the initial offering of
common stock, the public offering price and other selling terms may be changed
by the representatives of the underwriters at any time without notice. The
underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

Apollo and Cendant have granted to the underwriters an option, exercisable
within 30 days after the date of this prospectus, to purchase, from time to
time, in whole or in part, up to a total of 2,109,375 additional shares of
common stock at the initial public offering price less underwriting discounts
and commissions. The underwriters may exercise this option solely to cover
over-allotments, if any, made in connection with the offering. To the extent
that the underwriters exercise this option, each underwriter will become
obligated, subject to certain conditions, to purchase its pro rata portion of
the additional shares based on its percentage of the initial underwriting
commitment as indicated in the preceding table. On any exercise, the shares of
common stock subject to the underwriters' over-allotment option will be sold by
Apollo and Cendant in the following manner:

. the first 468,750 shares will be sold by Cendant; and

105
<PAGE>

. 10% of any remaining over-allotment shares will be sold by Cendant and
the other 90% by Apollo.

The following table shows the per share and total underwriting fees to be
paid to the underwriters by NRT, Apollo and Cendant in the offering. The
underwriting fee is equal to the public offering price per share of common
stock less the amount paid by the underwriters to NRT, Apollo and Cendant per
share of common stock. The underwriting fee is currently expected to be
approximately 6 1/4% of the initial public offering price. These amounts are
shown assuming either no exercise or full exercise of the underwriters' option
to purchase additional shares of common stock.

<TABLE>
<CAPTION>
Per No Full
Share Exercise Exercise
----- -------- --------
<S> <C> <C> <C>
Fees payable by NRT..................................... $ $ $
Fees payable by Apollo.................................. $ $ $
Fees payable by Cendant................................. $ $ $
</TABLE>

In addition, NRT will pay expenses related to the offering, excluding the
fees set forth above, that are currently estimated at $3.25 million.

NRT, Apollo and Cendant have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
and to contribute to payments that the Underwriters may be required to make in
respect of these liabilities.

Each of NRT, its executive officers and directors, Apollo and Cendant has
agreed for a period of 180 days after the date of this prospectus without the
prior written consent of Donaldson Lufkin & Jenrette Securities Corporation not
to:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

. enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock.

However, the following transactions are exempt from these restrictions:

. the grant of stock options, restricted stock or other awards pursuant to
NRT's 1997 Equity Participation Plan;

. the issuance of shares of common stock on exercise of an option or
warrant or conversion of convertible securities;

. the issuance of shares of common stock by NRT in connection with
acquisitions;

. the sale by Cendant to NRT of 725.4 shares of NRT's Series B convertible
preferred stock;

. transfers by Apollo and Cendant to and among their affiliates; and

. the transfer of securities by directors and officers of NRT to members
of their immediate families, to a trust of which a director or officer
or family member is the beneficiary, to the estate of a director or
officer upon his death or to any person as a bona fide gift.

In any transfer described above, the acquiring entity or transferee must agree
in writing to be bound by these restrictions. In addition, during such period,
NRT has also agreed not to file any registration statement with respect to, and
each of its executive officers and directors and Apollo and Cendant have agreed
not to make any demand for, or exercise any right with respect to, the
registration of any

106
<PAGE>

shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock. All of these restrictions may be waived by
Donaldson Lufkin & Jenrette Securities Corporation.

There has been no established trading market for the common stock. The
initial public offering price for the shares of common stock offered hereby
will be determined by negotiation among NRT, Apollo and Cendant and the
representatives of the underwriters. The factors to be considered in
determining the price include the history of and the prospects for the industry
in which NRT competes, the past and present operations of NRT, the historical
results of operations of NRT, the prospects for future earnings of NRT and the
general condition of securities markets at the time of the offering.

NRT's common stock has been approved, subject to notice of issuance, for
quotation on the Nasdaq National Market under the symbol NRTX.

No action has been taken in any jurisdiction (other than the United States)
by NRT, Apollo, Cendant or the underwriters that would permit a public offering
of the common stock offered hereby in any jurisdiction where action for that
purpose is required. The shares of common stock offered in this prospectus may
not be offered or sold, directly or indirectly, nor may this prospectus or any
other offering material or advertisements in connection with the offer and sale
of any such shares of common stock be distributed or published, in any
jurisdiction, except in compliance with applicable rules and regulations. You
should inform yourself about and observe any restrictions relating to the
offering and the distribution of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any shares of
common stock offered hereby in any jurisdiction in which such an offer or
solicitation is unlawful.

In connection with the offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot in connection with the offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of common stock in the open market to cover such syndicate
short position or to stabilize the price of the common stock. These activities
may stabilize or maintain the market price of the common stock above
independent market levels. The underwriters need not engage in these
activities, and may end any of these activities at any time. The underwriting
syndicate may reclaim selling concessions from syndicate members and selected
dealers if it repurchases previously distributed common stock in syndicate
covering transactions, in stabilizing transactions or otherwise or if
Donaldson, Lufkin & Jenrette Securities Corporation receives a report that the
clients of the members have "flipped" the common stock.

Of the shares offered hereby, 703,125 shares have been reserved for sale to
employees of NRT and its subsidiaries, clients and other persons designated by
NRT, in each case to the extent permitted by applicable law. The price per
share of the shares to be sold will be the same as the price to the public in
the offering. The maximum investment of any of these persons may be limited by
NRT in its sole discretion. This program is being administered by Donaldson,
Lufkin & Jenrette Securities Corporation and, where required by applicable law,
a locally licensed or authorized broker-dealer. It is currently anticipated
that the number of shares to be sold under this program will not exceed 5% of
the number of shares of common stock offered in connection with the offering
excluding shares subject to the over-allotment option.

107
<PAGE>

The representatives of the underwriters from time to time perform investment
banking and other financial services for NRT and its affiliates for which they
may receive advisory or transaction fees, plus out-of-pocket expenses of the
nature and in amounts customary in the industry. In connection with the
participation interest described below, Apollo has agreed to nominate one
director designated by Bear, Stearns & Co. Inc. for the Board of Directors of
NRT. Michael L. Tarnopol, a member of NRT's Board of Directors, is Vice
Chairman, a Senior Managing Director and Chairman of the Investment Banking
Division of Bear, Stearns & Co. Inc., which is acting as an underwriter in the
offering, and was designated by Bear, Stearns & Co. Inc. for nomination to
NRT's Board of Directors.

Bear, Stearns, a member of the National Association of Securities Dealers,
Inc., owns a 49% non-voting equity participation interest in Apollo's
investment in NRT. Because of this relationship between Bear, Stearns & Co.
Inc. and NRT, the offering is being conducted in accordance with Rule 2720 of
the Rules of Conduct of the National Association of Securities Dealers, Inc.
That rule requires that the price at which the shares of common stock are to be
distributed to the public must be no higher than the price recommended by a
qualified independent underwriter as defined by the NASD. In accordance with
this requirement, Donaldson, Lufkin & Jenrette Securities Corporation has
assumed the responsibilities of acting as qualified independent underwriter and
will recommend a price in compliance with the requirements of Rule 2720. In
connection with the offering, Donaldson, Lufkin & Jenrette Securities
Corporation has performed due diligence investigations and reviewed and
participated in the preparation of this prospectus and the Registration
Statement of which this prospectus forms a part. As compensation for the
services of Donaldson, Lufkin & Jenrette Securities Corporation as qualified
independent underwriter, NRT has agreed to pay Donaldson, Lufkin & Jenrette
Securities Corporation $5,000.

108
<PAGE>

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that NRT prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws,
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.

Representations of Purchaser

Confirmations of the acceptance of offers to purchase shares of common stock
will be sent to Canadian residents to whom this prospectus has been sent and
who have not withdrawn their offers to purchase prior to the issuance of such
confirmation. Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to NRT and the dealer from whom such
purchase confirmation is received that:

. such purchaser is entitled under applicable Canadian provincial
securities laws to purchase such common stock without the benefit of a
prospectus qualified under such securities laws;

. where required by law, such purchaser is purchasing as principal and not
as agent;

. such purchaser has reviewed the text above under "--Resale
Restrictions";

. if such purchaser is located in Manitoba, such purchaser is not an
individual and is purchasing for investment only and not with a view to
resale or distribution;

. if such purchaser is located in Ontario, a dealer registered as an
international dealer in Ontario may sell shares of common stock to such
purchaser; and

. if such purchaser is located in Quebec, such purchaser is a
"sophisticated purchaser" within the meaning of Section 43 of the
Securities Act (Quebec).

Taxation

Canadian residents should consult their own legal and tax advisers with
respect to the tax consequences of an investment in the common stock in their
particular circumstances and with respect to the eligibility of the common
stock for investment by the purchaser under relevant Canadian legislation.

Enforcement of Legal Rights

NRT has been organized under the laws of the State of Delaware. All of the
directors and officers of NRT reside outside Canada and substantially all of
the assets of NRT are located outside Canada. As a result, it may not be
possible for Canadian investors to effect service of process within Canada upon
NRT or to enforce against NRT in Canada judgments obtained in Canadian courts
that are predicated upon the contractual rights of action, if any, granted to
certain purchasers by NRT. It may also not be possible for investors to enforce
against NRT in the United States judgments obtained in Canadian courts.

109
<PAGE>

Furthermore, although the requirement for an issuer to provide to certain
purchasers the contractual right of action for damages and/or rescission
described below is consistent with contractual considerations associated with a
private placement which constitutes a primary distribution of the issuer's
securities by the issuer, an investor may not be able to enforce a contractual
right of action for rescission against the issuer where the offer or sale of
the issuer's securities is a secondary distribution being made by a third
party.

Notice to Ontario Residents

The common stock offered hereby is being issued by a foreign issuer and
Ontario purchasers will not receive the contractual right of action prescribed
by Section 32 of the Regulation under the Securities Act (Ontario).

As a result, Ontario purchasers must rely on other remedies that may be
available, including common law rights of action for damages or rescission or
rights of action under the civil liability provisions of the U.S. federal
securities laws.

All NRT's directors and officers as well as the experts named herein may be
located outside of Canada and, as a result, it may not be possible for Ontario
purchasers to effect service of process within Canada upon NRT or such persons.
All or a substantial portion of the assets of NRT and such persons may be
located outside of Canada and, as a result, it may not be possible to satisfy a
judgment against NRT or such persons in Canada or to enforce a judgment
obtained in Canadian courts against NRT or persons outside of Canada.

Notice to Nova Scotia Residents

The Securities Act (Nova Scotia) provides that where a Canadian offering
document, together with any amendments thereto, contains an untrue statement of
material fact or omits to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light of the
circumstances in which it was made (such untrue statement or omission herein
called a "misrepresentation"), a purchaser who was delivered such offering
document and who purchases such securities shall be deemed to have relied on
such misrepresentation if it was a misrepresentation at the time of purchase
and has a right of action for damages against the seller of the securities or
he may elect to exercise the right of rescission against the seller, in which
case he shall have no right of action for damages against the seller, provided
that:

. the seller will not be liable if the seller proves that the purchaser
purchased the securities with knowledge of the misrepresentation;

. in an action for damages, the seller will not be liable for all or any
portion of such damages that the seller proves do not represent the
depreciation in value of the security as a result of the
misrepresentation relied upon;

. in no case shall the amount recoverable pursuant to the right of action
exceed the price of which the securities were offered; and

. the action for rescission or damage conferred by the Securities Act
(Nova Scotia) is in addition to and without derogation from any other
rights the purchaser may have at law;

but no action to enforce these rights may be commenced more than 120 days after
the date on which payment is made for the securities or after the date on which
the initial payment for the securities is

110
<PAGE>

made where a payment subsequent to the initial payment is made pursuant to a
contractual commitment assumed prior to, or concurrently with, the initial
payment.

Notice to Saskatchewan Residents

The Securities Act (Saskatchewan) provides that in the event an offering
memorandum, together with any amendment thereto, or any advertising or sales
literature (as such terms are defined in the Securities Act (Saskatchewan))
used in connection with an offering contains a misrepresentation (as defined in
the Securities Act (Saskatchewan)) that was a misrepresentation at the time of
purchase, purchasers of securities will be deemed to have relied upon such
misrepresentation and will have a statutory right of action pursuant to the
Securities Act (Saskatchewan) for damages against the issuer and the seller of
the securities, or alternatively may elect to exercise a right of rescission
against the issuer or the seller, provided that:

. no person or company is liable where the person or company proves that
the purchaser purchased the securities with knowledge of the
misrepresentation;

. no person or company, other than the issuer or selling security holder,
is liable unless that person or company failed to conduct a reasonable
investigation sufficient to provide reasonable grounds for a belief that
there had been no misrepresentation, or believed there had been a
misrepresentation; and

. in an action for damages, the defendant is not liable for all or any
portion of such damages that it proves does not represent the
depreciation in value of the securities as a result of the
misrepresentation relied upon,

but no action to enforce these rights may be commenced:

. in the case of rescission, more than 180 days after the date of the
transaction that gave rise to the cause of action; and

. in the case of any other action, other than an action for rescission,
more than the earlier of

(1) 180 days after the purchaser first had knowledge of the facts
giving rise to the cause of action, or

(2)three years after the date of the transaction that gave rise to the
cause of action.

Language of Documents

All Canadian purchasers of shares of common stock acknowledge that all
documents evidencing or relating in any way to the sale of such shares will be
drawn in the English language only.

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<PAGE>

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon
for NRT by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Legal
matters in connection with the sale of shares of common stock in the offering
will be passed upon for the underwriters by Milbank, Tweed, Hadley & McCloy
LLP, New York, New York. Legal matters in connection with the sale of shares by
Apollo in the offering will be passed upon by Latham & Watkins. Skadden, Arps,
Slate, Meagher & Flom LLP has from time to time represented, currently
represents and may continue to represent Cendant, Apollo, the underwriters and
their respective affiliates in connection with legal matters. Milbank, Tweed,
Hadley & McCloy LLP has from time to time represented and may continue to
represent Apollo in connection with legal matters.

EXPERTS

The consolidated financial statements of Coldwell Banker Residential
Brokerage Corporation for the period from January 1, 1996 to May 31, 1996;
National Realty Trust and subsidiaries for the period from June 1, 1996 to
December 31, 1996 and the period from January 1, 1997 to August 31, 1997; and
NRT Incorporated and subsidiaries as of December 31, 1997 and 1998 and for the
four months ended December 31, 1997 and the year ended December 31, 1998, each
included in this prospectus, and the related financial statement schedule
included elsewhere in the registration statement have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report appearing in this
prospectus (which report expresses an unqualified opinion and includes an
explanatory paragraph referring to the preparation of the financial statements
of Coldwell Banker Residential Brokerage Corporation), and their report
appearing elsewhere in the registration statement. Such financial statements
and financial statement schedule have been included herein and elsewhere in the
registration statement in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.

The consolidated financial statements of Jon Douglas Real Estate Services
Group, Inc. for the nine months ended September 30, 1997, included in this
prospectus, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report appearing in this prospectus, and have been so
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.

The combined financial statements of Jon Douglas Company, San Vicente Escrow
Company, Equity Title Company, Douglas Referral Associates, and Jon Douglas
Financial for the period January 1, 1995 through November 14, 1995, included in
this prospectus, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing in this prospectus, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

The consolidated financial statements of Jon Douglas Real Estate Services
Group, Inc. for the period from November 15, 1995 through December 31, 1995 and
the year ended December 31, 1996, included in this prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect to such financial statements, and are included in
this prospectus in reliance upon the report of said firm and upon the authority
of said firm as experts in accounting and auditing.

112
<PAGE>

The financial statements of Cornish & Carey Residential, Inc. for the years
ended December 31, 1995 and 1996, included in this prospectus, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing in this prospectus, and have been so included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

The combined financial statements of Contempo Realty, Inc., Contempo
Relocation, Inc. and the Blossom Valley, Morgan Hill and Bascom general
partnerships for each of the three years in the period ended December 31, 1996,
included in this prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing in this prospectus,
and have been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.

The financial statements of Barbara Sue Seal Properties for the year ended
December 31, 1996, included in this prospectus, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing in this
prospectus, and have been so included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

113
<PAGE>

ADDITIONAL INFORMATION

NRT has filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock to be sold in the offering.
This prospectus is a part of the registration statement and does not contain
all the information in the registration statement, as permitted by the rules
and regulations of the SEC. Statements contained in this prospectus as to the
content of any contract, agreement or other document are not necessarily
complete. With respect to each contract, agreement or other document filed as
an exhibit to the registration statement, you should refer to the copy of such
contract, agreement or other document filed as an exhibit to the registration
statement. The registration statement, and the reports and other information to
be filed by NRT with the SEC following the offering in accordance with the
Securities Exchange Act of 1934, can be inspected and copied at the principal
office of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549, and at the following regional offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of these materials may be obtained from the SEC's
website, http://www.sec.gov, and from the Public Reference Room of the SEC at
its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the fees required by the SEC. Investors may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330.

After the closing of the offering, NRT will be subject to the informational
requirements of the Securities Exchange Act of 1934 and will file reports,
proxy and information statements and other information with the SEC. These
reports, proxy and information statements and other information can be
inspected and copied at the addresses described above. NRT intends to furnish
to its stockholders annual reports containing audited consolidated financial
statements, including an opinion on the audited financial statements expressed
by NRT's independent auditors.

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<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Financial Statements of NRT Incorporated and Subsidiaries
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998 and March
31, 1999 (unaudited) .................................................. F-4
Consolidated Statements of Operations for the years ended December 31,
1996, 1997
and 1998 and the three months ended March 31, 1998 and 1999
(unaudited)............................................................ F-5
Consolidated Statements of Trust and Stockholders' Equity (Deficit) for
the years ended December 31, 1996, 1997 and 1998 and the three months
ended March 31, 1999 (unaudited)....................................... F-6
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1997
and 1998 and the three months ended March 31, 1998 and 1999 (unaudited)
....................................................................... F-7
Notes to Consolidated Financial Statements.............................. F-9
Consolidated Financial Statements of Jon Douglas Real Estate Services
Group, Inc. and Subsidiaries
Independent Auditors' Reports........................................... F-29
Consolidated Statements of Operations for the years ended December 31,
1995 and 1996 and the nine months ended September 30, 1997............. F-32
Consolidated Statements of Shareholders' Deficit for the years ended
December 31, 1995 and 1996 and the nine months ended September 30,
1997................................................................... F-33
Consolidated Statements of Cash Flows for the years ended December 31,
1995 and 1996 and the nine months ended September 30, 1997............. F-34
Notes to Consolidated Financial Statements.............................. F-35
Financial Statements of Cornish & Carey Residential, Inc.
Independent Auditors' Report............................................ F-41
Statements of Operations for the years ended December 31, 1995 and 1996
and the six months ended June 30, 1996 (unaudited) and June 30, 1997
(unaudited)............................................................ F-42
Statements of Shareholders' Equity for the years ended December 31, 1995
and 1996 and the six months ended June 30, 1997 (unaudited)............ F-43
Statements of Cash Flows for the years ended December 31, 1995 and 1996
and the six months ended June 30, 1996 and June 30, 1997 (unaudited)... F-44
Notes to Financial Statements........................................... F-45
Combined Financial Statements of Contempo Realty, Inc. and Affiliates
Independent Auditors' Report............................................ F-49
Combined Statements of Operations for the years ended December 31, 1994,
1995 and 1996.......................................................... F-50
Combined Statements of Owners' Equity for the years ended December 31,
1994, 1995 and 1996.................................................... F-51
Combined Statements of Cash Flows for the years ended December 31, 1994,
1995, and 1996......................................................... F-52
Notes to Combined Statements of Operations, Owner's Equity and Cash
Flows.................................................................. F-53
Financial Statements of Barbara Sue Seal Properties Inc.
Independent Auditors' Report............................................ F-56
Statement of Operations and Retained Earnings for the year ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997
(unaudited)............................................................ F-57
Statements of Cash Flows for the year ended December 31, 1996 and the
nine months ended September 30, 1996 and 1997 (unaudited).............. F-58
Notes to Financial Statements........................................... F-59
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

"To the Board of Directors of
NRT Incorporated:

We have audited the accompanying consolidated balance sheets of NRT
Incorporated and subsidiaries ("NRT") as of December 31, 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the year ended December 31, 1998 and the four months ended
December 31, 1997 and the consolidated statements of operations, trust equity
and cash flows of National Realty Trust and subsidiaries (the "Predecessor
Trust") for the period from January 1, 1997 to August 31, 1997 and the period
from June 1, 1996 to December 31, 1996, and the consolidated statements of
operations, stockholders' equity (deficit) and cash flows of Coldwell Banker
Residential Brokerage Corporation and subsidiaries ("Predecessor CB
Residential") for the period from January 1, 1996 to May 31, 1996. These
financial statements are the responsibility of management of NRT, the
Predecessor Trust and Predecessor CB Residential. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of NRT at December 31, 1998 and 1997
and the results of its operations and its cash flows for the year ended
December 31, 1998 and the four months ended December 31, 1997 in conformity
with generally accepted accounting principles. Further, in our opinion, the
Predecessor Trust consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
the Predecessor Trust for the period from January 1, 1997 to August 31, 1997
and the period from June 1, 1996 to December 31, 1996 in conformity with
generally accepted accounting principles. Finally, in our opinion, the
Predecessor CB Residential consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Predecessor CB Residential for the period from January 1, 1996 to May
31, 1996, in conformity with generally accepted accounting principles.

As more fully described in Note 1, Coldwell Banker Residential Brokerage
Corporation was part of the Coldwell Banker companies and had no separate legal
status or existence for the period from January 1, 1996 to May 31, 1996.
Predecessor CB Residential had various transactions with other Coldwell Banker
entities that were material in amount. The financial statements of Predecessor
CB Residential have been prepared from the separate records maintained by
Coldwell Banker, and may not necessarily be indicative of the conditions that
would have existed if Predecessor CB Residential had operated as an independent
entity.

Costa Mesa, California
March 19, 1999
(April 2, 1999 as to Notes 2
and 13, April 6, 1999 as to
Note 19 and May , 1999 as to
the effects of the stock split
described in Note 2)"

F-2
<PAGE>

The accompanying consolidated financial statements include the effects of a
stock split of NRT's common stock anticipated to be approved by NRT's Board of
Directors. The above opinion is in the form which will be furnished by Deloitte
& Touche LLP upon consummation of the stock split, which is described in Note 2
of the notes to the consolidated financial statements, and assuming that, from
March 19, 1999 to the date of such stock split, no other events will have
occurred that would affect the accompanying financial statements and notes
thereto, or required disclosure therein.

Deloitte & Touche LLP
Costa Mesa, California
April 29, 1999

F-3
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
March 31,
March 31, 1999
December 31, December 31, 1999 (unaudited)
1997 1998 (unaudited) (Note 19)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents... $165,360 $ 52,701 $ 22,008
Restricted cash............. 40,316 93,878 93,561
Commissions and accounts
receivable, net............ 15,521 24,119 33,191
Mortgage loans held for
sale....................... -- 23,157 13,057
Deferred income taxes....... 26,587 33,420 29,850
Prepaid expenses and other
current assets............. 8,451 9,346 9,681
-------- -------- ---------
Total current assets....... 256,235 236,621 201,348
PROPERTY AND EQUIPMENT, net.. 51,545 94,127 94,700
GOODWILL, net................ 91,192 189,875 200,106
OTHER INTANGIBLES, net....... 6,451 5,689 1,133
DEFERRED INCOME TAXES........ 8,869 -- 6,301
OTHER ASSETS................. 2,379 4,400 4,405
-------- -------- ---------
$416,671 $530,712 $ 507,993
======== ======== =========
LIABILITIES AND STOCKHOLDERS'
DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses................... $ 99,927 $115,287 $ 109,482
Franchise fees payable...... 7,821 11,799 13,518
Accrued salaries and
benefits................... 25,347 48,464 31,969
Restricted cash bank loans.. 40,316 93,878 93,561
Mortgage warehousing loan... -- 22,756 12,668
Notes payable, current
portion.................... 10,296 10,581 10,528
Dividends payable........... 4,829 5,120 20,270
-------- -------- ---------
Total current liabilities.. 188,536 307,885 291,996
NOTES PAYABLE, long-term
portion..................... 4,844 16,791 12,735
BORROWING UNDER CREDIT
FACILITY.................... -- -- 30,000
DEFERRED REVENUE, LONG-TERM
PORTION..................... -- -- 26,705
DEFERRED INCOME TAXES........ -- 3,419 --
OTHER LIABILITIES............ 19,665 20,111 19,612
REDEEMABLE PREFERRED STOCK:
9.00% Series A Cumulative
Senior, at redemption value
of
$1 per share............... 157,591 161,137 164,763
5.00% Series B Cumulative
Convertible, at redemption
value of
$1 per share............... 24,000 24,300 24,604
18.00% Series C Cumulative
Junior, net; redemption
value of $80,822 (1997),
$84,457 (1998) and $88,185
(1999), respectively....... 56,267 66,610 71,991
-------- -------- ---------
Total redeemable preferred
stock..................... 237,858 252,047 261,358
-------- -------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par
value; 50,000,000 shares
authorized; 18,750,000
shares issued and
outstanding at December 31,
1997 and December 31, 1998,
and March 31, 1999
(unaudited)................ 188 188 188 $ 182
Additional paid-in capital.. 7,823 -- -- --
Accumulated deficit......... (42,243) (69,729) (134,601) (171,514)
-------- -------- --------- ---------
Total stockholders' defi-
cit....................... (34,232) (69,541) (134,413) $(171,332)
-------- -------- --------- =========
$416,671 $530,712 $ 507,993
======== ======== =========
</TABLE>

See independent auditors' report and notes to consolidated financial
statements.

F-4
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)

<TABLE>
<CAPTION>
Predecessors
---------------------------------------------
Coldwell Banker
Residential Brokerage National Realty Trust NRT Incorporated
--------------------- ----------------------- -------------------------------------------------
January 1, June 1, January 1, September 1, January 1, January 1,
1996 1996 1997 1997 Year 1998 to 1999 to
to to to to ended March 31, March 31,
May 31, December 31, August 31, December 31, December 31, 1998 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
---------- ------------ ---------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Real estate
commissions.......... $228,005 $400,076 $570,150 $446,134 $2,010,123 $ 330,241 $469,596
Other revenues........ 7,810 12,101 14,636 17,380 110,879 15,434 31,289
-------- -------- -------- -------- ---------- --------- --------
Total revenues....... 235,815 412,177 584,786 463,514 2,121,002 345,675 500,885
-------- -------- -------- -------- ---------- --------- --------
EXPENSES:
Commissions and
royalties............ 141,404 276,364 393,235 330,169 1,482,719 237,284 345,380
Salaries and
benefits............. 30,467 44,953 65,802 47,231 244,778 48,685 75,195
Business promotion and
advertising.......... 16,983 23,358 32,521 22,072 90,519 17,504 23,755
Building and equipment
expenses............. 20,708 24,546 34,736 24,471 120,919 25,746 35,617
Amortization of
goodwill ............ 482 104 1,162 637 3,403 1,083 1,610
Other operating
expenses............. 25,374 27,005 35,804 31,011 115,722 23,870 30,337
Acquisition related
costs................ 26 22,188 10,735 78,462 61,150 34,266 5,618
-------- -------- -------- -------- ---------- --------- --------
Total expenses....... 235,444 418,518 573,995 534,053 2,119,210 (388,438) 517,512
-------- -------- -------- -------- ---------- --------- --------
OPERATING INCOME
(LOSS)................ 371 (6,341) 10,791 (70,539) 1,792 (42,763) (16,627)
Interest expense,
net.................. 11 44 117 (2,843) (1,819) (868) 568
-------- -------- -------- -------- ---------- --------- --------
INCOME (LOSS) BEFORE
INCOME TAX PROVISION
(BENEFIT)............. 360 (6,385) 10,674 (67,696) 3,611 (41,895) (17,195)
INCOME TAX PROVISION
(BENEFIT)............. 156 -- 4,432 (25,453) 2,302 (16,758) (6,772)
-------- -------- -------- -------- ---------- --------- --------
NET INCOME (LOSS)...... $ 204 $ (6,385) $ 6,242 $(42,243) $ 1,309 $ (25,137) $(10,423)
======== ======== ======== ======== ========== ========= ========
Loss applicable to
common shareholders.. $(54,232) $ (35,309) $ (34,046) $(19,704)
======== ========== ========= ========
Per share information:
Loss per common share:
basic and diluted.................................................... $ (2.89) $ (1.88) $ (1.82) $ (1.05)
Weighted average shares outstanding:
basic and diluted.................................................... 18,750 18,750 18,750 18,750
</TABLE>

See independent auditors' report and notes to consolidated financial
statements.

F-5
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF TRUST AND STOCKHOLDERS' EQUITY (DEFICIT)

(dollars in thousands)

<TABLE>
<CAPTION>
Total
trust and
Additional Accumulated stockholders'
Common paid-in equity Trust equity
stock capital (deficit) equity (deficit)
------ ---------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Predecessor: Coldwell
Banker Residential
Brokerage
BALANCE, December 31,
1995..................... $ 487 $ 20,973 $ 3,186 $ -- $ 24,646
Net loss................. -- -- 204 -- 204
----- -------- --------- ------- ---------
BALANCE, May 31, 1996..... $ 487 $ 20,973 $ 3,390 $ -- $ 24,850
===== ======== ========= ======= =========
Predecessor: National
Realty Trust
BALANCE, June 1, 1996..... $ -- $ -- $ -- $ -- $ --
Trust formation.......... -- -- -- 5,000 5,000
Net loss................. -- -- -- (6,385) (6,385)
----- -------- --------- ------- ---------
BALANCE, December 31,
1996..................... -- -- -- (1,385) (1,385)
Net income............... -- -- -- 6,242 6,242
----- -------- --------- ------- ---------
BALANCE, August 31, 1997.. $ -- $ -- $ -- $ 4,857 $ 4,857
===== ======== ========= ======= =========
NRT Incorporated
BALANCE, September 1,
1997..................... $ -- $ -- $ -- $ -- $ --
Capital contribution..... 188 19,812 -- -- 20,000
Net loss................. -- -- (42,243) -- (42,243)
Accretion of Series C
preferred stock discount
and redemption.......... -- (2,257) -- -- (2,257)
Dividends on preferred
stock................... -- (9,732) -- -- (9,732)
----- -------- --------- ------- ---------
BALANCE, December 31,
1997..................... 188 7,823 (42,243) -- (34,232)
Net income............... -- -- 1,309 -- 1,309
Accretion of Series C
preferred stock discount
and redemption premium.. -- (1,636) (5,072) -- (6,708)
Dividends on preferred
stock................... -- (6,187) (23,723) -- (29,910)
----- -------- --------- ------- ---------
BALANCE, December 31,
1998..................... 188 -- (69,729) -- (69,541)
Net loss (unaudited)..... -- -- (10,423) -- (10,423)
Accretion of Series C
preferred stock discount
and redemption premium
(unaudited)............. -- -- (1,654) -- (1,654)
Dividends on preferred
stock (unaudited)....... -- -- (7,795) -- (7,795)
Dividends on common stock
(unaudited)............. -- -- (45,000) -- (45,000)
----- -------- --------- ------- ---------
BALANCE, March 31, 1999
(unaudited).............. $ 188 $ -- $(134,601) $ -- $(134,413)
===== ======== ========= ======= =========
</TABLE>

See independent auditors' report and notes to consolidated financial
statements.

F-6
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
Predecessors
-----------------------------------
Coldwell
Banker
Residential
Brokerage National Realty Trust NRT Incorporated
----------- ----------------------- -------------------------------------------------
January 1, June 1, January 1, September 1, January 1, January 1,
1996 1996 1997 1997 1998 to 1999 to
to to to to Year Ended March 31, March 31,
May 31, December 31, August 31, December 31, December 31, 1998 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------ ---------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income (loss)....... $ 204 $ (6,385) $ 6,242 $(42,243) $ 1,309 $(25,137) $(10,423)
-------- -------- -------- -------- -------- -------- --------
Adjustments to reconcile
net income (loss) to
net cash provided by
operating activities:
Depreciation and
amortization.......... 3,812 1,129 3,026 2,998 18,909 3,733 7,036
Amortization of
goodwill and other
intangibles........... 508 21,553 10,477 70,533 47,561 21,384 6,919
Deferred income taxes.. -- -- 4,432 (25,853) (283) (16,758) (6,150)
Changes in operating
assets and
liabilities, net of
effects from
acquisitions:
Commissions and
accounts receivable... 2,848 5,541 8,231 (11,472) 2,452 (1,972) (8,096)
Prepaid expenses and
other assets.......... 6,831 (115) (794) 5,492 5,041 (1,179) 464
(Increase) decrease in
mortgage loans held
for sale............. -- -- -- -- (19,959) -- 10,100
Accounts payable and
accrued expenses...... 3,986 5,170 (8,826) 7,900 (44,135) (7,193) (20,222)
Accrued salaries and
benefits.............. (1,226) 1,459 (2,808) 1,953 20,148 (8,807) (16,503)
Deferred income ....... -- -- -- -- -- -- 29,795
Other liabilities...... (12,256) 1,478 909 226 381 (408) (303)
Other.................. 148 (20) (264) (7) 553 (535) 119
-------- -------- -------- -------- -------- -------- --------
Total adjustments..... 4,651 36,195 14,383 51,770 30,668 (11,735) 3,156
-------- -------- -------- -------- -------- -------- --------
Net cash provided by
(used in) operating
activities........... 4,855 29,810 20,625 9,527 31,977 (36,872) (7,264)
-------- -------- -------- -------- -------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Change in restricted
cash.................. (14,935) 3,772 (14,444) (14,581) (53,562) 7,382 317
Expenditures for
property and
equipment............. (3,394) (5,049) (5,168) (6,668) (36,176) (6,055) (7,707)
Payments for
acquisitions (230) (13,535) (25,198) (86,326) (97,098) (56,052) (2,231)
Other.................. 139 42 15 100 185 360 115
-------- -------- -------- -------- -------- -------- --------
Net cash used in
investing
activities........... (18,420) (14,770) (44,795) (107,475) (186,651) (54,365) (9,506)
-------- -------- -------- -------- -------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Change in restricted
cash bank loans....... 14,935 (3,772) 14,444 14,581 53,562 (7,382) (317)
Capital contribution... -- -- -- 255,600 -- -- --
Dividends on preferred
and common stock...... -- -- -- (4,903) (22,139) (7,233) (30,000)
Payment of notes
payable............... (358) (181) (3,685) (1,970) (7,268) (597) (3,518)
Borrowings under credit
facility.............. -- -- -- -- -- -- 30,000
Development advance.... -- -- 20,000 -- -- -- --
Increase (decrease) in
mortgage warehousing
loan.................. -- -- -- -- 17,860 -- (10,088)
-------- -------- -------- -------- -------- -------- --------
Net cash provided by
(used in) financing
activities........... 14,577 (3,953) 30,759 263,308 42,015 (15,212) (13,923)
-------- -------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............ 1,012 11,087 6,589 165,360 (112,659) (106,449) (30,693)
CASH AND CASH
EQUIVALENTS, beginning
of period.............. 89 -- 11,087 -- 165,360 165,360 52,701
-------- -------- -------- -------- -------- -------- --------
CASH AND CASH
EQUIVALENTS, end of
period................. $ 1,101 $ 11,087 $ 17,676 $165,360 $ 52,701 $ 58,911 $ 22,008
======== ======== ======== ======== ======== ======== ========
</TABLE>

See independent auditors' report and notes to consolidated financial
statements.

F-7
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(dollars in thousands)

See independent auditors' report and notes to consolidated financial
statements.

F-8
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except for per share and per option amounts)

1. ORGANIZATION AND BASIS OF PRESENTATION

In May 1996, a subsidiary of Cendant Corporation ("Cendant") acquired
Coldwell Banker Corporation ("Coldwell Banker") and contributed its residential
real estate brokerage operations ("CB Residential") to National Realty Trust
(the "Trust"). Cendant retained ownership of all trademarks, and franchised the
right to the Trust to conduct business under the COLDWELL BANKER(R) brand name.
Subsequently, Cendant franchised the rights to the Trust to conduct business
under the ERA(R) and CENTURY 21(R) brand names.

In August 1997, NRT Incorporated ("NRT") was formed and acquired all of the
operating assets owned by the Trust. The acquisition was accounted for as a
purchase in accordance with Accounting Principles Board ("APB") Opinion No. 16,
Business Combinations. Accordingly, the total purchase price was allocated to
the tangible and intangible assets acquired and liabilities assumed based on
estimates of their respective fair values at the date of acquisition. NRT
recognized intangibles of approximately $55,800 and goodwill of approximately
$15,100 in connection with the acquisition and recorded an office closure
reserve of approximately $12,000 for facility and severance costs.

The accompanying consolidated financial statements present the operations of
NRT and its predecessors (CB Residential and the Trust) during the three-year
period ended December 31, 1998. CB Residential's financial statements have been
disaggregated (i.e., carved out) from other Coldwell Banker entities not
contributed to the Trust, and are presented for 1996 through the date of
acquisition by Cendant. Such financial statements have been prepared from
separate records maintained by CB Residential as well as from the combined
records of Coldwell Banker and include revenues and expenses that are directly
related to the operations of NRT. In cases involving amounts not specifically
identifiable to any particular division of Coldwell Banker, certain allocations
for corporate administrative and overhead charges were made based on NRT's
proportionate share of Coldwell Banker's total expenses, which management
believes provides a reasonable basis for the accompanying financial statements.
The CB Residential financial statements may not necessarily be indicative of
the conditions that would have existed if the CB Residential had operated as an
independent entity. Coldwell Banker's historical cost bases of the assets and
liabilities for CB Residential were carried over to the Trust. The Trust's
financial statements have been presented from its date of formation through the
sale of its assets to NRT.

The accompanying consolidated financial statements for the four months ended
December 31, 1997, the year ended December 31, 1998 and the three months ended
March 31, 1998 and 1999 (unaudited) reflect the operations of NRT. Because of
acquisition adjustments recorded by NRT and its predecessors as described
above, the accompanying consolidated financial statements of NRT are not
directly comparable to those of its predecessors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NRT--NRT owns and operates a network of full service residential real estate
brokerage offices under the COLDWELL BANKER(R), ERA(R) and CENTURY 21(R) brand
names. As a full service brokerage, NRT offers, either directly or through
third party arrangements, a wide variety of homeowner services in addition to
traditional brokerage services, including mortgage, title, escrow and
relocation services, home warranties, home security systems and relocation and
other services.

F-9
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Principles of Consolidation--The consolidated financial statements include
the accounts of NRT and its subsidiaries (including comparable operations of
its predecessors). All significant intercompany accounts and transactions have
been eliminated in consolidation.

Management Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Unaudited Information--In the opinion of management, the accompanying
unaudited consolidated financial statements include all adjustments (consisting
of normal recurring accruals only) considered necessary to present fairly the
financial position at March 31, 1999, and the results of operations, changes in
shareholders' equity, comprehensive income (loss) and cash flows for the three
months ended March 31, 1999 and 1998. The results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
any other interim period or for the entire year.

Cash Equivalents--NRT considers unrestricted short-term investments which
have maturities of three months or less at the date of purchase to be cash
equivalents.

Property and Equipment--Property and equipment, including significant
improvements thereto, are carried at cost. NRT provides for depreciation using
the straight-line method over the estimated useful lives of the respective
assets. Buildings are depreciated over 35 years, building improvements over 10
to 35 years and furniture and equipment over three to seven years. Leasehold
improvements are amortized on the straight-line method over the estimated
useful life of the asset or the term of the lease, whichever is shorter. Gains
or losses from retirements and disposals of property and equipment are included
in other operating expenses. Maintenance and repairs are charged to expense as
incurred.

Leases--NRT operates primarily in leased facilities. Lease terms are
generally five years with options to renew at varying terms. Certain facility
leases include scheduled base rent increases over the term of the lease. The
total amount of the base rent payments is being charged to expense using the
straight-line method over the term of the leases. NRT has recorded a liability
to reflect the excess of rent expense over cash payments since the inception of
the leases. In addition to the base rent payment, NRT may also be required to
pay certain of the building's operating expenses.

Goodwill and Other Intangibles--Goodwill represents the excess of cost over
the fair value of net assets acquired. Goodwill is amortized on a straight-line
basis over 40 years.

Other intangibles are stated at cost and include the capitalized values of
pending real estate sales contracts and real estate listing contracts of
acquired residential real estate brokerage companies which are being amortized
on a straight-line basis over their estimated lives of three and six months,
respectively. Such amortization is included in Acquisition Related Costs in the
consolidated statements of operations.

NRT assesses whether there has been an impairment in the value of long-lived
assets and intangible assets by considering factors such as expected
undiscounted future cash flows, trends and

F-10
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

prospects, the effects of demand, competition and other economic factors and
the fair values of tangible assets. Management believes no permanent impairment
has occurred.

Fair Value of Financial Instruments--The carrying values of cash and cash
equivalents, commissions and accounts receivable, accounts payable and accrued
expenses approximate fair value due to the short maturities of such
instruments. At December 31, 1998, the fair value of mortgage loans held for
sale exceeded the cost by approximately $200 and the carrying value of mortgage
warehousing loans approximated fair value.

Revenue Recognition--Real estate commissions and the related sales associate
commissions and franchise royalty fees are recorded as revenue and expense,
respectively, upon the closing of a real estate transaction. Other revenues are
recorded as revenue at the time that such services are provided.

Mortgage Banking Operations--In connection with its acquisition of Hunneman
Real Estate Corporation ("Hunneman"), NRT assumed Hunneman's mortgage banking
operations which are conducted in the Boston metropolitan area. NRT grants
mortgage loans only after it has a binding commitment to sell the loan to a
third party on a servicing released basis. Mortgage loans held for sale are
carried at the lower of cost or fair market value. Gain on the sale of mortgage
loans is recognized at the time of sale.

Income Taxes--NRT and its subsidiaries file a consolidated federal income tax
return. NRT uses the liability method of accounting for income taxes. Deferred
income taxes are recorded based on the difference between financial statement
and income tax bases of assets and liabilities and available tax credit
carryforwards using enacted rates in effect for the year in which the
differences are expected to reverse. Income tax expense is the tax payable for
the period and the change during the period in deferred income tax assets and
liabilities. A valuation allowance related to a deferred tax asset is recorded
when it is more likely than not that some portion or all of the deferred tax
asset will not be realized. Income taxes have been provided for the predecessor
entities based upon the effective tax rate of those entities.

Closed Offices--In the ordinary course of business, NRT opens and closes real
estate brokerage offices and facilities based on industry and local market
conditions. Leases related to facilities which have been closed are evaluated
taking into consideration current and prospective real estate market
conditions, sublease and lease termination opportunities and other factors, and
a charge to operations is recorded to reflect the expected future lease costs
and other expenses associated with such closed facilities. The estimated cost
of closing offices obtained through acquisition are considered part of the
acquisition purchase price.

Earnings (Loss) Per Share--NRT adopted Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS No. 128") on December 31, 1997.
SFAS No. 128 specifies the method of computation, presentation and disclosure
for earnings per share ("EPS"). SFAS No. 128 requires the presentation of two
EPS amounts, basic and diluted. Basic EPS is calculated by dividing net income
by the weighted average number of shares outstanding for the period. Diluted
EPS includes the dilution that would occur if outstanding stock options and
other dilutive securities were exercised.

Basic and diluted loss per share is based on the weighted average number of
common shares outstanding. Common stock equivalents were not included in the
computation of diluted EPS because such inclusion would have been antidilutive
for the four months ended December 31, 1997, year ended December 31, 1998 and
the three month periods ended March 31, 1998 and 1999.

F-11
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Split--On February 10, 1999, NRT filed a registration statement on Form
S-1 with the Securities and Exchange Commission to effect an initial public
offering of its common stock (see Note 19). Prior to the offering, NRT intends
to effect a 1.875-for-1 split of its common stock. The common share data and
loss per common share data in the accompanying consolidated financial
statements reflect the effect of this stock split.

Comprehensive Income--On January 1, 1998, NRT adopted Statement of Financial
Accounting Standard (SFAS) No. 130, Reporting Comprehensive Income ("SFAS No.
130"). SFAS No. 130 requires that all items required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. NRT does not have any items of other comprehensive income
requiring separate disclosure.

Segment Reporting--In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information ("SFAS No. 131"). SFAS No. 131 establishes standards for
the way companies report information about operating segments in annual
financial statements. It also establishes standards for related disclosure
about products and services, geographic areas and major customers. NRT conducts
its business activity in a single operating segment. Brokerage operations
comprised approximately 97%, 97% and 95% of total revenues during 1996, 1997
and 1998, respectively. Operations related to ancillary real estate services
amounted to 3%, 3% and 5% of total revenues during 1996, 1997 and 1998,
respectively.

3. ACQUISITIONS

NRT's business strategy includes actively pursuing strategic acquisitions of
real estate brokerage firms and brokerage-related businesses. NRT has an
agreement with Cendant that provides a significant source of funding for NRT's
brokerage acquisitions. Under an Acquisition Cooperation Agreement, in
acquisitions in which Cendant has agreed to participate, Cendant purchases the
trade names, trademarked operating names and any mortgage operations of
brokerages being acquired by NRT, thereby paying a substantial portion of the
total purchase price that otherwise would be payable by NRT in making such
brokerage acquisitions. Upon NRT's formation, Cendant committed approximately
$446,000 for NRT's brokerage acquisitions. Cendant has committed an additional
$1 billion for brokerage acquisitions in which Cendant agrees to participate
pursuant to the Acquisition Cooperation Agreement, which amends NRT's prior
agreement with Cendant by reducing the portion of the purchase price payable by
Cendant in future NRT brokerage acquisitions. The $1 billion commitment is
available in two $500,000 tranches. The first $500,000 is currently available,
and the second $500,000 will be available after the first $500,000 has been
provided by NRT but in no case earlier than February 9, 2004. The cumulative
amount expended by Cendant under the above commitments was approximately
$217,000 at December 31, 1997, $443,000 at December 31, 1998 and $461,000 at
March 31, 1999.

Under the Acquisition Cooperation Agreement, following the closing of the
offering (Note 19), Cendant will have the right to pay up to 50% of its
acquisition cost by canceling a portion of its senior preferred stock. Cendant
may exercise this right only if NRT has at least $50,000 in available borrowing
capacity under the leverage ratio test under the franchise agreements. In
addition, if NRT does not have available funds to close the brokerage
acquisition without Cendant's participation, NRT will have the right to
postpone the cancellation of preferred stock for up to 90 days following the
brokerage acquisition. Cendant would then be required to pay its acquisition
cost under the Acquisition Cooperation Agreement.

F-12
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

During 1996, 1997 and 1998, NRT acquired assets and assumed liabilities of
residential real estate brokerage companies. The acquisitions were accounted
for as purchases in accordance with APB Opinion No. 16, Business Combinations.
Accordingly, the total purchase price has been allocated to the tangible and
intangible assets acquired and the liabilities assumed based on NRT's estimates
of their respective fair values at the dates of acquisition. Such amounts are
subject to further refinements of closed office reserves, legal reserves and
other assumed liabilities and the tax effects thereon. The following table sets
forth information with respect to such acquisitions.

<TABLE>
<CAPTION>
Company Date of Acquisition
- ------- -------------------
<S> <C>
1996
The Kahn Realty Companies, Inc.............................. November 1, 1996
Douglas & Jean Burgdorff, Inc. ............................. December 1, 1996
1997
Del Monte Realty Company.................................... February 10, 1997
Contempo Realty, Inc........................................ March 1, 1997
Don Saunders, Inc........................................... July 17, 1997
Marie Powell & Associates, Inc.............................. July 24, 1997
George J. Cyrus & Company, Inc.............................. August 16, 1997
Cornish & Carey Residential, Inc. .......................... September 10, 1997
Jon Douglas Real Estate Services Group, Inc. ............... September 11, 1997
Barbara Sue Seal Properties, Inc............................ October 10, 1997
West Shell, Inc. ........................................... October 16, 1997
John M. Grubb Co. .......................................... October 16, 1997
Seville Properties, Inc..................................... October 17, 1997
Metro Real Estate Services, Inc............................. October 29, 1997
Continental Development Corp................................ November 8, 1997
1998
Waterside Property Sales, Inc. ............................. January 6, 1998
Polley, Polley & Madsen, Inc................................ January 7, 1998
TAM-BAY Realty, Inc......................................... January 14, 1998
Gimelstob Realty, Inc....................................... January 15, 1998
Joseph J. Murphy Realty, Inc................................ January 21, 1998
Buckhead Brokers of Georgia, Inc. .......................... February 1, 1998
Burnet Financial Group...................................... February 13, 1998
O'Conor, Piper & Flynn, Inc................................. February 23, 1998
Coker Ewing Cook & Cook..................................... August 3, 1998
1st American Realtors, L.L.C................................ August 20, 1998
Higgins & Heath, Inc........................................ September 4, 1998
Moore and Company........................................... September 30, 1998
Premier Van Schaak, Inc. (Denver operations) ............... September 30, 1998
Hunneman Real Estate Corporation............................ October 14, 1998
Carriage Properties, Ltd. .................................. October 20, 1998
Steve Schmidt & Co. ........................................ October 23, 1998
Pardoe Real Estate, Inc. ................................... December 8, 1998
Graham Realty, Inc. ........................................ December 8, 1998
</TABLE>

F-13
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In connection with the above acquisitions, NRT paid a total purchase price of
$14,960 in 1996, $96,531 in 1997 and $119,308 in 1998. In addition to the above
acquisitions, NRT acquired 20 other residential real estate brokerage companies
in 1996 for a total purchase price of $1,435, 15 in 1997 for a total purchase
price of $785, 37 in 1998 for a total purchase price of $8,420 and 12 during
the first three months of 1999 for a total purchase price of $3,007
(unaudited).

Goodwill of $76,042 arose from the 1997 acquisitions made subsequent to
August 1997 and $102,077 arose from the 1998 acquisitions. Goodwill associated
with those companies acquired before the formation of NRT was considered in the
accounting for the purchase of the assets of the Trust (Note 1). Other
intangibles of $7,646 in 1996, $26,097 in 1997 and $43,433 in 1998 arose from
acquisitions. The results of operations of the acquired companies are included
in NRT's consolidated statements of operations for the periods in which they
were owned by NRT.

Under the terms of certain acquisition agreements, NRT is obligated to fund
additional purchase price payments contingent upon the achievement of certain
operating targets. NRT records such amounts to goodwill when the contingencies
are resolved.

The following unaudited pro forma consolidated results of operations give
effect to the above acquisitions for 1996 as though the 1996 and 1997
acquisitions had occurred on January 1, 1996, for 1997 as though the 1997 and
1998 acquisitions had occurred on January 1, 1997 and for 1998 as though the
1998 acquisitions had occurred on January 1, 1998. Pro forma information for
the 1999 acquisitions is not presented as the acquisitions and the related
effect on the consolidated statements of operations are not material. The pro
forma information is provided for informational purposes only. It is based on
historical information and does not necessarily reflect the actual results that
would have occurred and is not necessarily indicative of future results of
operations of the combined companies.

<TABLE>
<CAPTION>
Unaudited
---------------------------------------------------
Year ended December 31, Three months
---------------------------------- ended March 31,
1996 1997 1998 1999
---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
Total revenues............ $1,226,340 $1,429,258 $2,462,269 $443,313
========== ========== ========== ========
Net income (loss)......... $ (39,569) $ (42,181) $ 4,406 $(43,447)
========== ========== ========== ========
Pro forma loss per common
share:
Basic and diluted......... $(2.89) $(1.72) $(2.79)
</TABLE>

In connection with the 1997 and 1998 acquisitions, NRT recorded office
closure reserves of $22,646 and $30,519, respectively, for facility and
severance costs. Costs include primarily office lease costs for offices
scheduled for closure and related severance for terminated employees. During
the four months ended December 31, 1997 and the year ended December 31, 1998,
approximately $8,206, and $18,997 of facility and severance costs were paid,
respectively.

F-14
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Acquisition related costs consist of office conversion costs and amortization
of pending real estate sales contracts and real estate listing contracts of
acquired residential real estate brokerage companies. Office conversion costs
include primarily signage change, name change advertising and other
transitional costs. Acquisition related costs are summarized as follows:

<TABLE>
<CAPTION>
Predecessors
-------------------------------------
Coldwell
Banker
Residential
Brokerage National Realty Trust NRT Incorporated
----------- ------------------------- -------------------------------------------------
Five months Seven months Eight months Four months
ended ended ended ended Year ended March 31, March 31,
May 31, December 31, August 31, December 31, December 31, 1998 1999
1996 1996 1997 1997 1998 (unaudited) (unaudited)
----------- ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Office conversion
costs.................. $-- $ 739 $ 1,421 $ 8,566 $16,997 $13,965 $ 308
Amortization............ 26 21,449 9,314 69,896 44,153 20,301 5,310
---- ------- ------- ------- ------- ------- ------
$ 26 $22,188 $10,735 $78,462 $61,150 $34,266 $5,618
==== ======= ======= ======= ======= ======= ======
</TABLE>

4. CASH AND CASH EQUIVALENTS

NRT had restricted cash totaling $40,316 at December 31, 1997, $93,878 at
December 31, 1998, and $93,561 at March 31, 1999 (unaudited), which can be used
only to repay the loans entered into to fund the restricted cash. See Note 7.

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
-----------------
March 31,
1999
1997 1998 (unaudited)
------- -------- -----------
<S> <C> <C> <C>
Land.................... $ 2,477 $ 1,978 $ 1,978
Buildings and improve-
ments.................. 4,983 4,941 4,929
Leasehold improvements.. 14,429 36,756 39,658
Furniture and equip-
ment................... 32,746 72,654 77,199
------- -------- --------
54,635 116,329 123,764
Less accumulated depre-
ciation and amortiza-
tion................... (3,090) (22,202) (29,064)
------- -------- --------
Property and equipment,
net.................... $51,545 $ 94,127 $ 94,700
======= ======== ========
</TABLE>

Depreciation and amortization expense was $3,812 for the five months ended
May 31, 1996, $1,129 for the seven months ended December 31, 1996, $3,026 for
the eight months ended August 31, 1997, $2,998 for the four months ended
December 31, 1997 and $18,909 for the year ended December 31, 1998.

F-15
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The components of accounts payable and accrued expenses are summarized as
follows:

<TABLE>
<CAPTION>
December March 31,
---------------- 1999
1997 1998 (unaudited)
------- -------- -----------
<S> <C> <C> <C>
Accounts payable.............................. $14,688 $ 14,981 $ 17,078
Commissions payable........................... 16,914 19,902 12,343
Reserve for office closures................... 24,274 28,696 32,534
Accrued legal reserves........................ 15,467 12,353 11,332
Deferred revenue.............................. -- -- 3,000
Other accrued expenses........................ 28,584 39,355 33,195
------- -------- --------
$99,927 $115,287 $109,482
======= ======== ========
</TABLE>

7. RESTRICTED CASH BANK LOANS

Proceeds from restricted cash bank loans are invested in cash equivalents and
cannot be used other than to repay the related loans. The loans bear interest
at rates ranging from 0.55% to 2.0% at December 31, 1997 and 0.25% to 2.0% at
December 31, 1998 and March 31, 1999 (unaudited) and are due monthly.

8. MORTGAGE WAREHOUSING LOAN

Mortgage warehousing loan represents borrowings under a $25,000 line of
credit with a commercial bank. Borrowings under the line bear interest at the
prime rate (7.75% at December 31, 1998) and the federal funds rate plus 1.75%
at March 31, 1999 (unaudited). The borrowings are collateralized by mortgage
loans held for sale and are generally repaid within 60 days. The line of credit
expires March 8, 2000.

9. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
December March 31,
----------------- 1999
1997 1998 (unaudited)
-------- ------- -----------
<S> <C> <C> <C>
Acquisition-related notes................. $ 10,737 $15,096 $11,868
Obligations under capital leases (Note
18)...................................... 3,584 12,103 11,228
Other..................................... 819 173 167
-------- ------- -------
15,140 27,372 23,263
Less current portion...................... (10,296) (10,581) (10,528)
-------- ------- -------
$ 4,844 $16,791 $12,735
======== ======= =======
</TABLE>

Obligations under capital leases bear interest at rates ranging up to 11.0%,
have terms ranging from 36 months to 68 months and are generally collateralized
by the related leased assets.

Acquisition-related notes consist primarily of amounts payable to former
owners of businesses acquired by NRT, are unsecured with maturities generally
under two years and bear interest at rates ranging from 5.0% to 11.0% at
December 31, 1997 and 6.0% to 11.0% at December 31, 1998 and March 31, 1999
(unaudited).

F-16
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Scheduled maturities of notes payable, excluding capital lease obligations
(Note 18), at December 31, 1998 are as follows:

<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1999............................................................ $ 6,530
2000............................................................ 4,518
2001............................................................ 2,534
2002............................................................ 561
2003............................................................ 491
Thereafter...................................................... 635
-------
$15,269
=======
</TABLE>
The carrying value of notes payable approximates market value due to the
short maturities of such instruments.

10. DEVELOPMENT ADVANCE

During 1997, National Realty Trust received a $20,000 non-interest-bearing
development advance from Coldwell Banker Real Estate Corporation, a wholly
owned subsidiary of Cendant, which was assumed by NRT in August 1997. The
development advance is recorded in other liabilities in the accompanying
consolidated balance sheets. The advance was being amortized over a 10-year
period prior to September 1, 1997. The advance was replaced on September 1,
1997 with an advance of $18,750 which is being amortized over a 40-year period.
Under the terms of the advance, 1/480th of the original balance is forgiven
each month so long as NRT is not in material breach of the terms of its
franchise agreements. The amount forgiven is reflected as a reduction to
royalties in the accompanying consolidated statements of operations. In the
event NRT is determined to be in default on a material term of the franchise
agreements, the entire remaining advance will become immediately due and
payable and bear interest at the prime interest rate. It is management's
intention to maintain compliance with the terms of the advance.

11. INCOME TAXES

NRT's (benefit) provision for income taxes was comprised as follows:

<TABLE>
<CAPTION>
Four Months ended Year ended
December 31, December 31,
1997 1998
----------------- ------------
<S> <C> <C>
Current:
Federal......................................... $ -- $ 482
State........................................... 400 2,103
-------- ------
400 2,585
Deferred:
Federal......................................... (21,216) 1,338
State........................................... (4,637) (1,621)
-------- ------
(25,853) (283)
-------- ------
Total (benefit) provision for income taxes...... $(25,453) $2,302
======== ======
</TABLE>

F-17
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A reconciliation of income tax provision (benefit) at the statutory federal
income tax rate to NRT's effective income tax rate is as follows:
<TABLE>
<CAPTION>
Four Months ended Year ended
December 31, December 31,
1997 1998
----------------- ------------

<S> <C> <C>
Federal tax at statutory rate................... (35.0)% 35.0%
State income taxes, net of federal benefit...... (4.1) 8.7
Non-deductible expenses......................... 1.5 20.0
----- ----
(37.6)% 63.7%
===== ====
</TABLE>

The components of NRT's deferred income taxes are summarized as follows at
December 31:

<TABLE>
<CAPTION>
1997 1998
------------------- -------------------
Current Noncurrent Current Noncurrent
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Deferred income tax assets:
Net operating loss carryforward...... $10,781 $10,781 $13,617 $ --
Reserves............................. 18,420 -- 18,463 --
Goodwill............................. -- 3,258 -- 2,007
Alternative minimum tax credit
carryforward........................ -- -- 569 --
Other................................ 1,692 85 1,878 49
------- ------- ------- -------
Total deferred income tax assets... 30,893 14,124 34,527 2,056
------- ------- ------- -------
Deferred income tax liabilities:
Fixed assets......................... -- (5,255) -- (3,123)
Purchase accounting.................. (4,306) -- (1,107) (2,352)
------- ------- ------- -------
Total deferred income tax
liabilities....................... (4,306) (5,255) (1,107) (5,475)
------- ------- ------- -------
Net deferred tax asset (liability)..... $26,587 $ 8,869 $33,420 $(3,419)
======= ======= ======= =======
</TABLE>

At December 31, 1998, NRT had federal and state net operating loss
carryforwards of approximately $30,000. The federal losses will expire in the
year ending December 31, 2012, while the state losses will expire in various
years depending on jurisdictions.

The provision (benefit) for income taxes for the predecessor entities are
based upon the historical effective tax rate of those entities.

12. REDEEMABLE PREFERRED STOCK

NRT's 9.00% Series A Cumulative Senior Redeemable Preferred Stock (the
"Series A Preferred Stock") accrues dividends based on a liquidation preference
amount equal to $1 per share plus any previously declared and unpaid dividends.
At December 31, 1997 and at December 31, 1998, there were 260,000 shares of
Series A Preferred Stock authorized and 157,591 shares of Series A Preferred
Stock issued and outstanding. The Series A Preferred Stock has a mandatory
redemption requirement of 10% per annum beginning August 29, 2004 through
August 29, 2008 with any remaining shares required to be redeemed on August 29,
2009, in each case at a price equal to 100% of the liquidation preference plus
accrued and unpaid dividends. NRT may redeem the shares at the liquidation
preference at any time prior to the required redemption dates.

F-18
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NRT's 5.00% Series B Cumulative Convertible Redeemable Preferred Stock (the
"Series B Preferred Stock") accrues dividends based on a liquidation preference
amount equal to $1 per share plus any previously declared and unpaid dividends.
At December 31, 1997 and at December 31, 1998, there were 25,000 shares of
Series B Preferred Stock authorized and 24,000 shares of Series B Preferred
Stock issued and outstanding. NRT, at its option, may redeem the shares
following the third anniversary of (1) the public offering of 20% or more of
NRT's outstanding common stock, (2) the sale by NRT of assets representing 80%
or more of NRT's assets on a fair market value basis or (3) the distribution to
stockholders of other assets representing 80% or more of NRT consolidated net
assets on a fair market value basis (each, a "Triggering Event") at a price of
(1) 103% of the principal amount on or prior to the fourth anniversary of a
Triggering Event, (2) 102% of the principal amount on or prior to the fifth
anniversary of a Triggering Event (3) 101% of the principal amount on or prior
to the sixth anniversary of a Triggering Event and (4) 100% of the principal
amount after the sixth anniversary of a Triggering Event. Shares of Series B
Preferred Stock are convertible into shares of common stock beginning
immediately prior to a Triggering Event at a conversion rate calculated in
accordance with the Series B Preferred Stock's Certificate of Designation. NRT
is required to redeem any remaining Series B Preferred Stock on August 29,
2012.

NRT's 18.00% Series C Cumulative Junior Redeemable Preferred Stock (the
"Series C Preferred Stock") accrues dividends based on a liquidation preference
amount equal to $1 per share plus any declared and unpaid dividends. In
addition to the 18% dividend accrual rate, NRT is required to pay an additional
dividend equal to 0.1% of NRT's gross commission revenue, as defined in NRT's
franchise agreement with Coldwell Banker Real Estate Corporation. At December
31, 1997 and 1998, there were 120,000 shares of Series C Preferred Stock
authorized and 68,510 shares of Series C Preferred Stock issued and
outstanding. The Series C Preferred Stock was issued at a discount to its
liquidation preference and is recorded at its issue price. The difference in
the carrying amount of the stock and the redemption price, as defined, is being
accreted through charges to additional paid in capital of NRT over the period
from issuance to the mandatory redemption date. At December 31, 1997 and 1998
and March 31, 1999 the redemption price of the Series C Preferred Stock totaled
approximately $80,822, $84,457 and $88,185, respectively. NRT is required to
redeem any remaining Series C Preferred Stock on August 29, 2001. NRT, at its
option, may redeem the shares at the redemption price at any time prior to the
mandatory redemption date. NRT plans to redeem the Series C preferred stock
with the proceeds from the offering.

F-19
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. LOSS PER COMMON SHARE

The following table sets for the computation of basic and diluted loss per
common share:

<TABLE>
<CAPTION>
Three Months
Ended March 31,
Four Months Year -----------------------
Ended Ended 1998 1999
December 31, 1997 December 31, 1998 (unaudited) (unaudited)
----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Net (loss) income....... $(42,243) $ 1,309 $(25,137) $(10,423)
Less: Preferred stock
dividends.............. (9,732) (29,910) (7,255) (7,627)
Less: Accretion of
preferred stock
discount and redemption
premium................ (2,257) (6,708) (1,654) (1,654)
-------- -------- -------- --------

Loss applicable to
common stockholders.... $(54,232) $(35,309) $(34,046) $(19,704)
======== ======== ======== ========
Basic and dilutive
weighted average shares
outstanding (in
thousands) 18,750 18,750 18,750 18,750
======== ======== ======== ========
Basic and diluted loss
per common share....... $ (2.89) $ (1.88) $ (1.82) $ (1.05)
======== ======== ======== ========
</TABLE>

Common stock equivalents, which for NRT includes options to purchase common
stock and the convertible preferred stock, were excluded from the computation
of diluted loss per share as their effect is antidilutive for the four months
ended December 31, 1997, the year ended December 31, 1998 and for the three
months ended March 31, 1998 and 1999.

14. STOCKHOLDERS' EQUITY

Stock Option Plan--In September 1997, NRT adopted the 1997 Equity
Participation Plan of NRT Incorporated (as amended, the "Plan"), which provides
for the grant of stock options and other awards to certain officers,
consultants, directors and key employees of NRT. The maximum number of shares
of common stock that may be issued pursuant to the Plan is 4,687,500. Options
under the Plan generally have 10-year terms and one half of the options granted
are time vesting options and are exercisable at 20% per year, commencing one
year from the date of grant. One-half of the options granted to employees are
performance-based options, which are not earned prior to the earlier of the
eighth anniversary of the date of grant or the date of a qualifying triggering
event, as defined, under the Plan. Upon the closing of the offering (Note 19),
the performance-based options will be converted into time vesting options
effective as of the date of the grant. NRT granted options to purchase shares
of NRT's common stock as set forth in the following table at prices which NRT's
Board of Directors deemed to be equal to, or in excess of, fair market value of
the common stock at the dates of grants, to employees and directors of NRT.

F-20
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table summarizes the activity under the Plan for the periods
indicated:

<TABLE>
<CAPTION>
Weighted
average
Options Range of exercise
outstanding Exercise Prices price
----------- --------------- --------
<S> <C> <C> <C>
OUTSTANDING, September 1, 1997.......... -- $ -- $ --
Grants.................................. 1,650,000 .01 .01
---------
OUTSTANDING, December 31, 1997.......... 1,650,000 .01
Grants.................................. 1,872,656 4.16-10.67 7.98
Cancelled............................... (100,313) .01-4.16 .19
---------
OUTSTANDING, December 31, 1998.......... 3,422,343 $ 4.84
Cancelled............................... (23,203) .01-4.16 3.77
---------
OUTSTANDING, March 31, 1999............. 3,399,140 $ 4.85
=========
</TABLE>

On September 28, 1998, NRT Board of Directors approved an adjustment to the
exercise price of each option under the Plan outstanding as of such date to
give effect to the payment of $30,000 of dividends to Apollo and the payment to
NRT's franchisors of an additional royalty pursuant to the franchise agreements
of 0.15% of NRT total revenue per quarter for each quarter (up to a total of 20
quarters) in which NRT's EBITDA over the preceding twelve-month period exceeds
$225,000. In no event, however, shall the exercise price for such options be
adjusted to less than $0.01 per share. The final exercise price adjustment will
be determined at the time of the offering or upon a Triggering Event. The
adjustment will affect approximately 2,350,000 shares and is estimated to be
$1.07 per share ($1.06 per share for the 1997 grants). Such adjustments have
been reflected in the above table.

At December 31, 1997, there were no exercisable options to purchase shares,
and at December 31, 1998, there were 216,328 exercisable options to purchase
shares. At December 31, 1997 and 1998 the weighted average remaining
contractual life of options outstanding was 9.75 years and 9.3 years,
respectively.

SFAS No. 123, Accounting for Stock-Based Compensation, encourages but does
not require companies to record compensation cost for employee stock option
grants. NRT has chosen to account for employee option grants using APB Opinion
No. 25 and uses the disclosure-only provisions of SFAS No. 123. Accordingly, no
compensation expense has been recognized for employee stock option grants. Had
compensation expense for the employee stock option grants been recognized based
on the calculated fair value at the grant dates, consistent with SFAS No. 123,
NRT's loss per share would have been equal to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
Four months
ended Year ended
December 31, December 31,
1997 1998
------------ ------------
<S> <C> <C>
Loss applicable to common shareholders:
As reported......................................... $(54,232) $(35,309)
Pro forma........................................... $(54,270) $(36,150)
Loss per share:
Basic and diluted as reported....................... $ (2.89) $ (1.88)
Basic and diluted pro forma......................... $ (2.89) $ (1.93)
</TABLE>

The weighted average fair value of options granted under the Plan was $0.51
and $3.61 in 1997 and 1998, respectively.

F-21
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The fair value of each option grant is estimated on the date of grant using
the Minimal Value option-pricing model with the following weighted-average
assumptions for options granted in 1997 and 1998:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Dividend Yield.............................................. -- --
Expected Volatility......................................... -- --
Risk-free interest rate..................................... 6.7% 5.6%
Expected holding period..................................... 10 years 10 years
</TABLE>

As NRT is not a public company and its stock does not have a trading history,
NRT used the Minimal Value option-pricing model as permitted under SFAS No.
123. The Minimal Value option-pricing model does not take into account stock
price volatility in the determination of fair value.

15. COMMITMENTS AND CONTINGENCIES

Litigation--NRT and its subsidiaries are defendants in certain lawsuits
involving routine litigation incidental to the businesses in which they are
engaged. Based on the opinions of in-house and external counsel, NRT believes
that any liability which may result from disposition of these lawsuits will not
have a material effect on NRT's consolidated financial position or results of
operations.

16. RELATED-PARTY TRANSACTIONS

Concurrent with NRT's formation, certain affiliates of Apollo Management,
L.P. ("Apollo") acquired all of NRT's outstanding common stock and Series C
Preferred Stock and a subsidiary of Cendant acquired all of NRT's outstanding
Series A Preferred Stock and Series B Preferred Stock.

Franchise Agreements--In conjunction with the acquisition of the assets of
National Realty Trust, NRT entered into franchise agreements with Coldwell
Banker Real Estate Corporation, ERA Franchise Systems, Inc., and Century 21
Real Estate Corporation. On February 9, 1999, NRT entered into new franchise
agreements with each of its franchisors, which superseded the existing
franchise agreements. Each franchise agreement has a 50-year term and provides
for a royalty payment generally equal to 6% of NRT's gross closed commission
income earned (with the exception of CENTURY 21(R) offices in Northern
California, for which NRT currently pays royalties of 4.89% of gross closed
commission income earned, and offices acquired by NRT without Cendant's
participation, for which NRT pays a lower royalty rate), plus approximately
$167 per month.

Pursuant to the franchise agreements, NRT is also required to pay an
additional royalty of approximately $167 per month. In addition, upon the
closing of NRT's initial public offering, NRT will be required to pay an
additional $156 per month. Upon the occurrence of a brokerage acquisition in
which Cendant acquires the stock of the acquired brokerage and then sells the
assets of such brokerage to NRT in accordance with the Acquisition Cooperation
Agreement, NRT will also be required to pay Cendant, in consideration of the
stepped-up tax basis received by NRT for such assets, an additional monthly
royalty, beginning with the first month after the consummation of such
transaction, in an amount equal to one-tenth of the federal income tax payable
by Cendant in respect of the gain on the sale of the assets to NRT in such
transaction, divided by 12. To date, NRT has not

F-22
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

been required to pay Cendant additional royalties as a result of taxes being
incurred by Cendant in connection with NRT's brokerage acquisitions. NRT
incurred franchise royalties totaling $24,000 for the seven months ended
December 31, 1996, $31,500 for the eight months ended August 31, 1997, $26,200
for the four months ended December 31, 1997, and $121,307 for the year ended
December 31, 1998 respectively. Since January 1999, NRT has been required to
pay an additional monthly royalty up to a maximum additional royalty of $5,000
annually. Upon the closing of the initial public offering of NRT's securities,
such royalty will be replaced with an additional monthly royalty equal to 1.1%
of NRT's gross commission income, up to a maximum additional royalty of $24,000
per year. In addition, an additional royalty of 0.15% of NRT's total revenue
per quarter (up to a total of 20 quarters) is payable for each quarter in which
NRT's earnings before interest, income taxes, depreciation and amortization for
the preceding twelve month period exceeds $225,000.

Under the franchise agreements, NRT is required to give Cendant prior notice
before opening or acquiring new brokerage offices. If Cendant objects to the
opening or acquisition of such new brokerage offices based on a determination
that such opening or acquisition would have an adverse impact on other existing
Cendant franchisees under the relevant brand, NRT cannot open or acquire the
new brokerage offices set forth in its notice. To compensate the franchisors
for any actual administrative costs incurred in connection with the acquisition
process and for the benefits to be received by NRT resulting from newly
acquired or opened offices identified by Cendant's franchise sales force, NRT
is required to pay the franchisors an initial fee of $7.5 for each office that
is acquired in a transaction in which Cendant's franchise sales force is
involved ($4.0 if Cendant's franchise sales force is not involved), subject to
a maximum of $100 per acquisition. Each acquired office is required to be
operated under one of the franchisor's brands, unless such office is closed
within one year of its acquisition in accordance with the business plan
presented to NRT's Board of Directors and Cendant at the time of acquisition.
No initial office fee is payable with respect to newly acquired offices that
are closed within one year of their acquisition so long as such offices do not
operate under any of the franchisors' brands during such period. Through
December 31, 1998, NRT has incurred approximately $1,200 in such fees payable
to Cendant for new offices opened since August 1997, of which Cendant will
provide $800 pursuant to the Acquisition Cooperation Agreement.

The franchise agreements also require NRT to make monthly contributions to
national advertising funds maintained by the franchisors for the creation and
development of advertising, public relations and promotional programs promoting
the franchisors' brands. Under the CENTURY 21(R) and ERA(R) franchise
agreements, NRT is required to pay a monthly fee of 2% of NRT's gross
commission income and, under the COLDWELL BANKER(R) franchise agreement, NRT is
required to pay a fee in the amount of 2 1/2% of NRT's gross commission income,
subject in each case to certain minimum and maximum advertising fees per
brokerage office. In addition, the fees payable under the COLDWELL BANKER(R)
franchise agreement are subject to temporary abatement for acquired offices
with gross commission income of over $750,000. As a result of the maximum
advertising fee limitation, NRT paid an average of 0.33% and 0.27% of its gross
commission income

F-23
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

to the national advertising funds in 1997 and 1998, respectively. NRT
contributed to the franchisors' national advertising funds a total of $1,400
during 1996 (from May 31, 1996), $3,400 during 1997, and $5,467 during 1998.

The franchise agreements also restrict NRT's ability to incur indebtedness
(including acquired indebtedness) if such incurrence would cause NRT's pro
forma ratio of total indebtedness to operating income before interest, income
taxes, depreciation and amortization over the preceding twelve-month period,
with certain exclusions, to exceed 2.0 to 1. Once Cendant's additional $1
billion commitment to provide funds in connection with future brokerage
acquisitions has been exhausted pursuant to the Acquisition Cooperation
Agreement and provided that Cendant has not then committed to provide
additional funds in connection with NRT's brokerage acquisitions on
substantially similar economic terms, the maximum permitted leverage ratio will
be increased to 3.0 to 1 from 2.0 to 1.

In addition, the franchise agreements prohibit NRT from incurring
indebtedness to finance the payment of any dividends on its common or preferred
stock. NRT is also prohibited from declaring or paying any dividend that is not
a regularly scheduled quarterly dividend consistent with past practice which
exceeds 20% of NRT's net income for the year in which declared or paid (less
any dividends paid during such period) unless NRT's leverage ratio (calculating
indebtedness net of cash and cash equivalents) is 1.0 to 1 or less.

Lease Agreements--NRT leases its corporate offices from Cendant. The leases
expire in September 2002 and have options to extend the term for an additional
five years. The landlord is responsible for property tax, maintenance and
insurance as well as various ancillary services, including janitorial,
security, mail room, and general lobby reception. NRT paid total rentals of
$342 for the seven months ended December 31, 1996, $353 for the eight months
ended August 31, 1997, $176 for the four months ended December 31, 1997, and
$853 for the year ended December 31, 1998. Prior to June 1, 1996, such costs
were allocated to NRT from Coldwell Banker based on usage.

Support Agreement--NRT also has an agreement with Cendant for certain data
processing and telecommunication services. The agreement expires in 1999 and
can be canceled or terminated by NRT with 90 days' notice. Total costs under
this arrangement were $958 for the eight months ended August 31, 1997 and $479
for the four months ended December 31, 1997, and $1,978 for the year ended
December 31, 1998.

Marketing Agreement--NRT has a Marketing Agreement with Cendant Mortgage
Corporation which provides for the joint marketing of Cendant's mortgage
products through NRT's real estate brokerage offices. The agreement expires in
2037 and is subject to certain termination provisions. Total fees earned by NRT
totaled $699 for the four months ended December 31, 1997 and $11,183 for the
year ended December 31, 1998.

F-24
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Program Outsourcing Agreement--NRT and Cendant have entered into a Program
Outsourcing Agreement pursuant to which NRT has appointed Cendant as its
exclusive outsourcing agent to negotiate the terms of NRT's participation in
(1) purchasing relationships and programs (including corporate purchasing
relationships) with vendors and (2) programs through which NRT markets vendors'
products or services to its customers. NRT is generally not permitted to enter
into or pursue any purchasing relationships or marketing programs (other than
the programs established by Cendant) and is required to refer to Cendant all
program opportunities and parties with which NRT would enter into such a
relationship.

NRT has agreed to participate, and to encourage its sales associates to
participate, in existing and new programs established by Cendant with vendors,
to make such programs available to its employees and sales associates and to
provide program training to its sales associates. NRT is not required to
participate in: (1) a program if such program does not afford NRT terms at
least as advantageous (taken as a whole) as those afforded to any other
franchisees of Cendant's real estate brokerage systems; or (2) any new program
if NRT is already participating in a program covering a similar good or service
to the new program, the term of which has not expired; provided that upon
implementation of a new program in which NRT is required to participate, NRT
will terminate any program which conflicts with such new program as soon as it
is permissible to terminate such program without cost to NRT, or earlier if NRT
is directed by Cendant to do so and is reimbursed for such cost. In addition,
NRT will not be required to participate in the new program if Cendant
reasonably determines that the program does not offer competitive pricing and
service relative to NRT's size and compared to any similar program in which NRT
participates, or, with respect to marketing programs in which NRT receives
buyer leads, listing leads or barter consideration and no other consideration,
that such program is reasonably expected to provide the same value to NRT.
However, NRT will participate in such program if after the program is
implemented, Cendant determines that the program is then offering competitive
pricing and service relative to NRT's size and compared to any Company program
covering a similar good or service.

Advisory Services Agreement--NRT also has entered into an Advisory Services
Agreement with Apollo which requires NRT to pay Apollo $167 monthly for
advisory services provided by Apollo. The agreement expires upon the redemption
of all of the outstanding 18.00% Series C Cumulative Junior Redeemable
Preferred Stock or as mutually agreed upon by NRT and Apollo.

17. FIDUCIARY FUNDS

The consolidated financial statements do not include the assets and
liabilities or activities of various fiduciary funds held by NRT. At December
31, 1998 and March 31, 1999, such funds amounted to approximately $119,188 and
$145,075 (unaudited), respectively. These funds are comprised primarily of
deposits by homebuyers pending close of escrow or transfer of title. NRT is
subject to various disclosure and fiduciary duties under certain state laws
with which NRT believes it currently complies.

18. LEASES

Operating Leases--NRT leases certain of its offices and equipment under non-
cancelable operating leases.

F-25
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Minimum annual rental commitments under non-cancelable operating leases and
related sublease rentals are as follows at December 31, 1998:
<TABLE>
<CAPTION>
Minimum Sublease
payments rentals
<S> <C> <C>
-------- ------
Year ending December 31:
1999........................................................ $ 77,141 $2,345
2000........................................................ 65,087 1,598
2001........................................................ 53,348 877
2002........................................................ 38,677 457
2001........................................................ 24,414 424
Thereafter.................................................. 48,622 716
-------- ------
Total..................................................... $307,289 $6,417
======== ======
</TABLE>

Rent expense is summarized as follows:
<TABLE>
<CAPTION>
Net
Rent Sublease rent
expense income expense
<S> <C> <C> <C>
------- ------ -------
Five months ended May 31, 1996...................... $13,433 $2,276 $11,157
Seven months ended December 31, 1996................ 17,093 1,526 15,567
Eight months ended August 31, 1997.................. 23,116 1,926 21,190
Four months ended December 31, 1997................. 15,663 839 14,824
Year ended December 31, 1998........................ 74,165 2,237 71,928
</TABLE>

In connection with the formation of the Trust, Cendant assumed the
liabilities for certain closed office leases. Lease payments net of sublease
income for these closed offices amounted to $1,893 for the eight months ended
August 31, 1997, $983 for the four months ended December 31, 1997 and $1,196
for the year ended December 31, 1998.

NRT leases certain pieces of equipment under capital lease agreements which
expire over the next five fiscal years.

Property under capital leases at December 31, 1998 consists of the following:

<TABLE>
<S> <C>
Office equipment................................................. $15,519
Less accumulated depreciation.................................... (3,668)
-------
$11,851
=======
</TABLE>

Future minimum lease payments under capital leases together with the present
value of net minimum lease payments are as follows:

<TABLE>
<S> <C>
1999............................................................. $ 5,314
2000............................................................. 4,021
2001............................................................. 2,902
2002............................................................. 1,700
2003............................................................. 510
-------
14,447
Less amount representing interest.............................. (2,344)
-------
Present value of net minimum lease payments.................... $12,103
=======
</TABLE>

F-26
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

19. SUBSEQUENT EVENTS

On January 7, 1999, NRT entered into a $50,000 bank credit facility, which
was subsequently increased to $100,000. Advances made thereunder may be used
for NRT's general working capital needs in the ordinary course of business and
permitted acquisitions.

Borrowings under the bank credit facility may be designated and maintained as
either a base rate loan or a Eurodollar loan. Interest accrues on the base rate
loans at a rate equal to 0.75% plus the higher of the federal funds rate plus
0.5% and the prime lending rate. Interest accrues on the Eurodollar loans at a
rate equal to 1.75% plus the British Bankers' Association interest settlement
rate (or if not available, by reference to the London interbank market rate).

NRT had borrowings of $30,000 under this facility at March 31, 1999 with
interest at 6.75%.

NRT's obligations arising under the bank credit facility are secured by a
pledge of the capital stock of NRT's subsidiaries and are guaranteed by NRT's
subsidiaries. The guarantees are secured by a pledge of the capital stock of
the guarantors' subsidiaries.

The bank credit facility is available to NRT until May 29, 2001. NRT has the
intent and ability to maintain the $30,000 borrowing for at least the next
twelve months. Accordingly, the borrowing is classified as a long-term
liability in the accompanying balance sheet.

On February 9, 1999, NRT and Cendant entered into the Acquisition Services
Agreement, pursuant to which NRT has agreed to provide advisory services to
Cendant relating to the identification of potential acquisition candidates, the
negotiation of agreements and other services in connection with future
brokerage acquisitions by NRT. In exchange for such advisory services, Cendant
paid NRT $30,000 as an advance against the fees that are payable to NRT
pursuant to a fee schedule attached to the Acquisition Services Agreement,
which, among other things, takes into account the size of NRT's future
brokerage acquisitions. In no event will Cendant be required to advance
additional amounts to NRT in respect of the advisory services. The portion of
the advance that is paid but not earned under the Acquisition Services
Agreement will be refundable to Cendant in the event that services under the
Acquisition Services Agreement are not provided to Cendant. The Acquisition
Services Agreement has a ten-year term, unless earlier terminated upon mutual
consent of the parties.

On February 9, 1999, NRT declared a $45,000 cash dividend on its common stock
to Apollo, $30,000 of which was paid on February 11, 1999 and the remaining
$15,000 was paid on April 2, 1999.

On February 10, 1999, NRT filed a registration statement on Form S-1 with the
Securities and Exchange Commission to effect an initial public offering of its
common stock. Under the proposed offering, NRT will offer 9,375,000 shares of
common stock and Apollo will offer 4,687,500 shares of its common stock. At
March 31, 1999, NRT had recorded $1,128 of costs related to the offering in
prepaid expenses and other current assets. Such amounts will be recognized as
expenses if the offering is not completed.

F-27
<PAGE>

NRT INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On April 6, 1999, NRT repurchased 574,575 shares of common stock from Apollo
for $10,725. The impact on common stockholders' deficit of this repurchase has
been reflected on a pro forma basis at March 31, 1999.

Upon the completion of the offering, NRT will repurchase all of the
outstanding shares of

Series C junior preferred stock from Apollo including a redemption premium of
$16,194 and will repurchase 725.4 shares of Series B convertible preferred
stock for $10,725. The impact on common stockholders' deficit of the redemption
premium and the excess of the repurchase price over the cost basis of the
Series B convertible preferred stock, has also been reflected on a pro forma
basis.

F-28
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders of the Jon Douglas Companies:

We have audited the accompanying combined statements of operations,
shareholders' deficit and cash flows of Jon Douglas Company (a California
corporation), San Vicente Escrow Company (a California corporation), Equity
Title Company (a California corporation), Douglas Referral Associates (a
California corporation) and Jon Douglas Financial (a California corporation)
(collectively, the "Jon Douglas Companies" or "Predecessor"), all of which are
under common ownership and common management, for the period January 1, 1995
through November 14, 1995. These combined financial statements are the
responsibility of the Jon Douglas Companies' management. Our responsibility is
to express an opinion on these combined financial statements based on our
audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statements of operations,
shareholders' deficit and cash flows are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the combined statements of operations, shareholders' deficit and
cash flows. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the combined statements of operations, shareholders' deficit
and cash flows. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the combined statements of operations, shareholders' deficit
and cash flows referred to above present fairly, in all material respects, the
combined results of operations and combined cash flows of the Jon Douglas
Companies for the period January 1, 1995 through November 14, 1995 in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Costa Mesa, California
July 10, 1998

F-29
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Jon Douglas Real Estate Services Group, Inc.:

We have audited the accompanying consolidated statements of operations,
shareholders' deficit and cash flows of Jon Douglas Real Estate Services Group,
Inc., a Delaware corporation (the "Company"), for the year ended December 31,
1996 and the period from November 15, 1995 to December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the consolidated statements of operations, shareholders'
deficit and cash flows referred to above present fairly, in all material
respects, the consolidated results of operations and cash flows of Jon Douglas
Real Estate Services Group, Inc. for the year ended December 31, 1996 and the
period from November 15, 1995 to December 31, 1995 in conformity with generally
accepted accounting principles.

Arthur Andersen LLP
Los Angeles, California
March 19, 1997

F-30
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors of
Jon Douglas Real Estate Services Group, Inc.:

We have audited the accompanying consolidated statements of operations,
shareholders' deficit and cash flows of Jon Douglas Real Estate Services Group,
Inc., a Delaware corporation (the "Company"), for the nine months ended
September 30, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated statements of operations,
shareholders' deficit and cash flows are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated statements of operations, shareholders' deficit
and cash flows. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated statements of operations, shareholders'
deficit and cash flows. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated statements of operations, shareholders'
deficit and cash flows referred to above present fairly, in all material
respects, the consolidated results of operations and cash flows of Jon Douglas
Real Estate Services Group, Inc. for the nine months ended September 30, 1997
in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Costa Mesa, California
July 10, 1998

F-31
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)

See notes to consolidated financial statements.

F-32
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(in thousands)

<TABLE>
<CAPTION>
Common shares Additional
------------- paid-in Accumulated
Shares Amount capital deficit Total
------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Predecessor: Jon Douglas
Companies
BALANCE, January 1, 1995........ 55 $754 $453 $ (5,101) $ (3,894)
Dividends paid................. (930) (930)
Net loss for the period January
1, 1995 to November 14, 1995.. (2,759) (2,759)
----- ---- ---- -------- --------
BALANCE, November 14, 1995...... 55 754 453 (8,790) (7,583)
Jon Douglas Real Estate Services
Group, Inc.:
Capital formation and merger
adjustments.................... 945 (744) (11) (18,337) (19,092)
----- ---- ---- -------- --------
BALANCE, November 15, 1995...... 1,000 10 442 (27,127) (26,675)
Net loss for the period
November 15, 1995 (date of
merger) to December 31, 1995.. (1,182) (1,182)
----- ---- ---- -------- --------
BALANCE, December 31, 1995...... 1,000 10 442 (28,309) (27,857)
Net income..................... 7,183 7,183
----- ---- ---- -------- --------
BALANCE, December 31, 1996...... 1,000 10 442 (21,126) (20,674)
Net loss....................... (2,981) (2,981)
----- ---- ---- -------- --------
BALANCE, September 30, 1997..... 1,000 $ 10 $442 $(24,107) $(23,655)
===== ==== ==== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-33
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Predecessor
------------
Jon Douglas
Companies
------------ November 15,
January 1, 1995 (date of Nine months
1995 to merger) to Year ended ended
November 14, December 31, December 31, September 30,
1995 1995 1996 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income...................................................... $(2,759) $(1,182) $ 7,183 $(2,981)
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization........................................ 1,235 523 3,455 2,421
Write-off of deferred costs.......................................... 1,187
Write-off of other assets............................................ 326
Change in certain assets and liabilities:
Restricted cash.................................................... 106 (73) (45)
Commissions receivable............................................. (217) 115 (13) 135
Notes and other receivables, net................................... (375) 585 (1,267) (221)
Prepaid expenses and other......................................... (121) (667) 275 223
Other assets....................................................... (411) 166 (117) 153
Deferred tax asset................................................. (867)
Accounts payable and accrued expenses.............................. 669 501 1,459 5,497
Accrued office closure costs....................................... 1,367 (220) (1,695) 250
Deferred indemnity fees............................................ 132 (226) (872) 1,154
Claims liability................................................... 422 (1,908) 2,436
Other liabilities.................................................. (24) (752) 360 56
Deferred tax liability............................................. 41
------- ------- ------- -------
Net cash (used in) provided by operating activities.............. (398) (735) 5,961 10,591
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements...................... (462) (121) (2,500) (1,429)
Additions to deferred costs............................................ (88)
------- ------- ------- -------
Net cash used in investing activities............................ (462) (121) (2,588) (1,429)
CASH FLOWS FROM FINANCING ACTIVITIES:
Release of restricted cash............................................. 56
Borrowings from notes payable.......................................... 2,614
Repayments of notes payable............................................ (900) (43) (1,511) (5,936)
Dividends paid......................................................... (930)
------- ------- ------- -------
Net cash provided by (used in) financing activities.............. 784 13 (1,511) (5,936)
------- ------- ------- -------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS................... (76) (843) 1,862 3,226
CASH AND CASH EQUIVALENTS, beginning of period......................... 4,591 4,283 3,440 5,302
------- ------- ------- -------
CASH AND CASH EQUIVALENTS, end of period............................... $ 4,515 $ 3,440 $ 5,302 $ 8,528
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE--
Cash paid during the year for:
Interest........................................................... $ 637 $ -- $ 3,562 $ 2,732
======= ======= ======= =======
Income tax......................................................... $ 76 $ -- $ 3,666 $ 2,279
======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-34
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)

1. ORGANIZATION AND BASIS OF PRESENTATION

On November 15, 1995, Jon Douglas Real Estate Services Group, Inc. (the
"Company") was formed for the purpose of merging the Jon Douglas Company and
certain of its affiliates (collectively, the "Jon Douglas Companies" or
"Predecessor") with Prudential California Realty and certain of its affiliates
(collectively, the "Prudential Companies"). The Company accounted for the
transaction using the historical cost amounts of the Jon Douglas Companies and
the Prudential Companies (carryover basis). The acquisition of minority
interests was accounted for as a purchase, with the excess acquisition cost
being assigned to goodwill.

In February 1996, Jon Douglas Financial (a wholly owned subsidiary of the
Company) was merged into Hamera Corp. ("Hamera"), with Hamera as the surviving
corporation. In connection with this merger, the Company became the owner of
100% of the issued and outstanding stock of the post-merger Hamera (Note 4).

The accompanying consolidated financial statements present the operations of
the Company for the period November 15, 1995 (date of merger) to December 31,
1995, the year ended December 31, 1996 and the nine months ended September 30,
1997 and its Predecessor for the period January 1, 1995 to November 14, 1995.
The Jon Douglas Companies' financial statements are presented for the period
January 1, 1995 to November 14, 1995, the date prior to the merger with the
Prudential Companies (the "Merger"). The Company's financial statements are
presented from the date of the Merger through its sale of operations to NRT
Incorporated (Note 7). Because of merger adjustments recorded by the Company
and its Predecessor, the accompanying consolidated financial statements of the
Company are not directly comparable to those of its Predecessor.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

The Company--The Company is primarily engaged in the business of providing
residential real estate brokerage, title, mortgage, escrow, information and
other real estate related services throughout California.

Principles of Consolidation--The accompanying consolidated financial
statements were prepared in accordance with generally accepted accounting
principles and include the accounts of the Company and its wholly owned
subsidiaries, including: Jon Douglas Company, a California corporation; West
Coast Escrow Company, a California corporation (formerly San Vicente Escrow
Company); Equity Title Company, a California corporation; Douglas Referral
Associates, a California corporation; and Jon Douglas Financial, a California
corporation (including comparable operations of its predecessor). See
"Organization and Basis of Presentation" above. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Revenue Recognition--Real estate commission revenues and the related
commission expenses earned by agents are recognized upon the close of escrow or
transfer of title.

F-35
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Escrow and loan fees are recognized as income at the close of escrow.

Title premium fees are recognized as income in the period the title policy is
issued. A liability for estimated claim costs relating to title insurance
policies issued is recorded when premium revenue is recognized and is based on
prior experience.

Depreciation and Amortization--Depreciation on furniture and equipment is
computed using the straight-line method over the estimated useful lives ranging
from two to seven years. Amortization on leasehold improvements is computed
using the straight-line method over the shorter of the term of the leases,
excluding options to renew, or their estimated useful lives.

Deferred Costs--Deferred costs represent costs incurred in financing and are
amortized over the term of the related debt.

Amortization of Intangibles--Franchise costs are amortized over eight years
(the initial term of the franchise agreement) (Note 6) and goodwill is
amortized over 20 years. In addition, loan fees are amortized using the
effective interest method over the lives of the respective loans.

The Company periodically assesses whether there has been an impairment in the
value of goodwill and other intangible assets by considering factors such as
expected future operating income, trends and prospects, as well as the effects
of demand, competition and other economic factors.

Income Taxes--The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes. The Jon Douglas Companies operated as S corporations during the period
January 1, 1995 to November 14, 1995. Accordingly, no provision for federal
income tax was made during the period.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications--Certain reclassifications have been made to the 1995 and
1996 amounts to conform to the 1997 presentation.

F-36
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

3. INCOME TAXES

The provision (benefit) for income taxes includes the following:

The reconciliation of (loss) income before provision for income taxes at the
statutory federal income tax rate to the Company's effective income tax rate is
as follows:

The increase in the valuation allowance during the nine months ended
September 30, 1997 is due to the inability of the Company to realize any of the
tax benefit arising from the net operating loss sustained during the period.

The Jon Douglas Companies operated as Subchapter S corporations during the
period January 1, 1995 to November 14, 1995. As such, the Jon Douglas Companies
were not liable for federal income taxes, and accordingly, no provision for
federal income taxes was made during the period.

F-37
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. RELATED PARTY TRANSACTIONS

An affiliate of one of the Company's shareholders monitored its investment in
the Company, pursuant to an Investment Monitoring Agreement, for an annual fee
of $300. The investment monitoring fee amounted to $38, $300 and $225 for the
period November 15, 1995 (date of merger) to December 31, 1995, the year ended
December 31, 1996 and the nine months ended September 30, 1997, respectively.
In connection with the merger of the Company with PRGI, the Investment
Monitoring Agreement was terminated.

The Company leases certain office facilities from entities in which
shareholders of the Company have a financial interest. The rental payments to
these affiliated entities amounted to $236, $392, $510 and $440 during the
period January 1, 1995 to November 14, 1995, the period November 15, 1995 (date
of merger) to December 31, 1995, the year ended December 31, 1996 and the nine
months ended September 30, 1997, respectively.

In connection with the merger of Hamera, the Company issued irrevocable stock
options to certain former shareholders of Hamera which entitle them to purchase
up to 25% of the outstanding shares (subject to adjustment) of Hamera for a
nominal amount. In addition, Hamera agreed to make payments to certain former
shareholders based upon operating cash flow, as defined. During 1996 and 1997,
Hamera paid approximately $365 and $475 to these former shareholders, which is
included in other expenses in the accompanying consolidated statements of
operations.

5. EMPLOYEE BENEFIT PLAN

The Company adopted the Prudential employee benefit plan (the "Plan"), a
defined contribution profit sharing plan under Section 401(k) of the Internal
Revenue Code. During 1995, 1996 and the nine months ended September 30, 1997,
the Company did not authorize any contributions to the Plan. In connection with
the merger of the Company with PRGI, the Plan was terminated.

6. COMMITMENTS AND CONTINGENCIES

The Company had a claims management plan whereby, for an annual fee,
independent real estate agents who worked out of the Company's offices were
offered indemnification for claims filed against the Company and the real
estate sales agents within the covered period. The fees collected from the
agents for this indemnification were deferred and offset against legal expenses
ratably over the term of the covered period (one year). During the period
January 1, 1995 to November 14, 1995, the period November 15, 1995 (date of
merger) to December 31, 1995, the year ended December 31, 1996 and the nine-
month period ended September 30, 1997, fees of $1,197, $219, $2,622 and $2,080,
respectively, were recognized and recorded as a reduction of legal expense.

In accordance with a franchise agreement (the "Franchise Agreement"), prior
to the PRGI transaction the Company paid to Prudential Real Estate Affiliates,
Inc. ("PREA") a franchise fee

F-38
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
based on 1.14% of gross sales, as defined, and an advertising fee. In addition,
during 1996, certain PREA affiliates paid to the Company a management fee in
connection with this franchise agreement. The Franchise Agreement ceased
effective with the merger of the Company with PRGI (Note 7).

Equity Title Company had an agreement which expired in 1998 with an insurance
company whereby Equity Title was authorized to issue title insurance policies
on behalf of the insurance company. Equity Title pays a percentage of gross
title premiums to the insurance company and was responsible for up to $5,000 of
any losses incurred in connection with each policy issued. In addition, Equity
Title has a title plant agreement, expiring in 2000, with an insurance company
whereby Equity Title rents the title plant for a percentage of gross title
premiums. Because both the underwriting and plant costs are directly related to
Equity Title's revenues, the future fixed commitments under these agreements
cannot be determined.

Certain key executives entered into annual employment contracts with the
Company which guarantee a minimum annual base salary with incentive bonus
compensation based on achieving certain financial performance targets. In
connection with the merger of the Company with PRGI, such employment contracts
were terminated (Note 7).

As part of the consideration for a partial forgiveness of the Prudential
Companies' debt prior to the Merger, the Company agreed to a contingent payment
obligation ("CPO") equal to 10% of the Company's equity value, as defined, less
$20,000 upon the occurrence of certain events, including the sale of all or
substantially all of the Company's assets. In connection with the merger of the
Company with PRGI, the Company paid $1,000 to satisfy the CPO (Note 7).

The Company leases various properties under operating leases with terms
ranging from one to eight years. Aggregate future minimum payments of such
leases at September 30, 1997 are as follows:

<TABLE>
<S> <C>
Year ending September 30:
1998.................................................................. $ 9,189
1999.................................................................. 8,460
2000.................................................................. 6,173
2001.................................................................. 4,450
2002.................................................................. 2,908
Thereafter............................................................ 2,834
-------
Total............................................................. $34,014
=======
</TABLE>

The Company incurred rental expenses of $5,644, $2,230, $14,207 and $11,064
during the period January 1, 1995 to November 14, 1995, the period November 15,
1995 (date of merger) to December 31, 1995, the year ended December 31, 1996
and the nine-month period ended September 30, 1997, respectively.

F-39
<PAGE>

JON DOUGLAS REAL ESTATE SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. SUBSEQUENT EVENT

In September 1997, the Company merged with and into Property Resources Group,
Inc. ("PRGI"), a wholly owned subsidiary of Cendant Corporation, with the
Company being the surviving entity. Subsequent to the merger with PRGI, certain
of the Company's assets were acquired and certain liabilities assumed by NRT
Incorporated. Effective October 1, 1997, the Company's results of operations
were included in NRT Incorporated's consolidated financial statements.

In connection with the merger of the Company with PRGI, the Company recorded
certain merger-related expenses primarily related to employee severance
payments and termination fees associated with the early termination of
contractual obligations.

F-40
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Cornish & Carey Residential, Inc.
San Mateo, California

We have audited the accompanying statements of operations, shareholders'
equity and cash flows of Cornish & Carey Residential, Inc. (the "Company") for
the years ended December 31, 1995 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of operations, shareholders'
equity and cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of operations, shareholders' equity and cash flows. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the statements of operations, shareholders' equity and cash flows. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the statements of operations, shareholders' equity and cash
flows referred to above, present fairly, in all material respects, the results
of operations and cash flows of Cornish & Carey Residential, Inc. for the years
ended December 31, 1995 and 1996 in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP
San Francisco, California
June 19, 1998

F-41
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
Six Months Ended
------------------------
June 30, June 30,
1996 1997
1995 1996 (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Real estate commissions.. $61,562,247 $81,820,650 $39,517,342 $44,401,437
Agent fees............... 1,391,069 1,367,899 580,837 590,172
Other revenues........... 932 226,187 126,216 275,909
----------- ----------- ----------- -----------
Total revenues......... 62,954,248 83,414,736 40,224,597 45,267,518
----------- ----------- ----------- -----------
EXPENSES:
Commissions and
referrals............... 42,017,224 57,045,512 27,048,177 31,396,761
Salaries and related
expenses................ 8,137,527 11,093,363 5,280,452 4,603,704
Facilities and related
expenses (Note 2)....... 4,487,478 4,979,577 2,463,805 2,343,613
Advertising and
promotion............... 3,051,250 3,238,123 1,678,574 1,674,129
Professional fees and
settlement costs........ 1,349,873 1,621,444 701,414 332,048
Depreciation and
amortization............ 978,237 1,177,323 541,910 653,563
General and
administrative.......... 1,931,709 1,889,358 428,860 1,040,709
----------- ----------- ----------- -----------
Total expenses......... 61,953,298 81,044,700 38,703,192 42,044,527
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS..... 1,000,950 2,370,036 1,521,405 3,222,991
OTHER INCOME (EXPENSE):
Interest income.......... 32,171 135,717 32,780 73,413
Interest expense......... (102,092) (117,200) (58,035) (37,412)
Other income............. 178,049 153,285 -- 94,092
Other expense (Note 6)... (489,205) (199,834) (108,144) (4,403)
----------- ----------- ----------- -----------
Total other income
(expense)............. (381,077) (28,032) (133,399) 125,690
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAX
PROVISION................. 619,873 2,342,004 1,388,006 3,348,681
INCOME TAX PROVISION (Note
3)........................ 284,842 958,422 567,077 1,372,357
----------- ----------- ----------- -----------
NET INCOME................. $ 335,031 $ 1,383,582 $ 820,929 $ 1,976,324
=========== =========== =========== ===========
</TABLE>

See notes to financial statements.

F-42
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
Common Stock Total
----------------- Retained Shareholders'
Shares Amount Earnings Equity
------ --------- ----------- -------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1995........ 3,648 $ 693,199 $ 2,288,564 $ 2,981,763
Repurchase and retirement of
common stock (Note 5).......... (730) (138,716) (861,284) (1,000,000)
Net income...................... 335,031 335,031
----- --------- ----------- -----------
BALANCE, December 31, 1995...... 2,918 554,483 1,762,311 2,316,794
Dividends paid.................. (300,000) (300,000)
Net income...................... 1,383,582 1,383,582
----- --------- ----------- -----------
BALANCE, December 31, 1996...... 2,918 554,483 2,845,893 3,400,376
Dividends paid (unaudited)...... (1,052,210) (1,052,210)
Net income (unaudited).......... 1,976,324 1,976,324
----- --------- ----------- -----------
BALANCE, June 30, 1997
(unaudited).................... 2,918 $ 554,483 $ 3,770,007 $ 4,324,490
===== ========= =========== ===========
</TABLE>

See notes to financial statements.

F-43
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
Six Months Ended
------------------------
June 30, June 30,
1996 1997
1995 1996 (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income................ $ 335,031 $ 1,383,582 $ 820,929 $ 1,976,324
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization........... 978,237 1,177,323 541,910 653,563
Provision for deferred
income taxes........... 221,000 (87,000) (52,000) 26,000
Loss on sale of fixed
assets................. 3,310 69,155 4,137 4,403
Loss on disposition of
fixed assets included
in loss on office
closures............... 41,719 41,719
Loss on sale of land and
real property held for
resale................. 31,819
Gain on investment in
partnerships........... (25,364)
Change in operating
assets and liabilities:
Receivables........... (184,303) (150,693) (920,494) (263,489)
Refundable income
taxes................ (88,000) 110,000
Prepaid expenses...... 422,840 (104,654) ( 79,650) (29,325)
Refundable deposits... (3,553) (254) (141,401) (181,965)
Accounts payable...... (21,908) 1,151,673 1,671,251 (308,705)
Accrued expenses...... 150,953 359,585 915,558 533,297
----------- ----------- ---------- -----------
Net cash provided by
operating
activities......... 1,820,062 3,950,436 2,801,959 2,410,103
----------- ----------- ---------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in
partnership.............. (33,844) 5,052
Proceeds from investment
in partnership........... 126,230
Proceeds from sale of land
and real property held
for sale................. 253,181
Principal payments
received on notes
receivable............... 36,125 177,538 106,246
Issuance of notes
receivable............... (264,937) (112,245) (97,455) (9,810)
Proceeds from disposition
of fixed assets.......... 7,709 8,141 8,141 55,604
Purchase of fixed assets.. (1,876,031) (1,744,333) (617,609) (309,093)
----------- ----------- ---------- -----------
Net cash used in
investing
activities......... (1,717,723) (1,704,743) (602,677) (258,247)
----------- ----------- ---------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on
long-term debt........... (571,399) (877,995) (295,043) (269,486)
Proceeds from long-term
debt..................... 666,412 500,296 500,296
Dividend paid............. (300,000) -- (1,052,210)
Repurchase of common
stock.................... (400,000)
----------- ----------- ---------- -----------
Net cash (used in)
provided by
financing
activities......... (304,987) (677,699) 205,253 (1,321,696)
----------- ----------- ---------- -----------
(DECREASE) INCREASE IN CASH
AND EQUIVALENTS............ (202,648) 1,567,994 2,404,535 830,160
CASH AND CASH EQUIVALENTS,
Beginning of year.......... 1,426,339 1,223,691 1,223,691 2,791,685
----------- ----------- ---------- -----------
CASH AND CASH EQUIVALENTS,
End of year................ $ 1,223,691 $ 2,791,685 $3,628,226 $ 3,621,845
=========== =========== ========== ===========
SUPPLEMENTAL CASH FLOW
INFORMATION:
Interest paid............. $ 102,000 $ 117,000 $ 58,000 $ 37,000
=========== =========== ========== ===========
Income taxes paid......... $ 185,000 $ 93,000 $ 45,000 $ 872,000
=========== =========== ========== ===========
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Notes payable issued in
repurchase of common
stock.................... $ 600,000 $ -- $ -- $ --
=========== =========== ========== ===========
Notes payable issued in
acquisition of fixed
assets................... $ 82,407 $ -- $ -- $ --
=========== =========== ========== ===========
</TABLE>

See notes to financial statements.

F-44
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1997 (UNAUDITED)

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business--Cornish & Carey Residential, Inc. (the "Company")
provides real estate marketing and brokerage services related to residential
properties. The Company provides these services from 23 separate offices
located in Northern California. In 1996, the Company also began licensing its
name to other high-end residential real estate brokerages in the Bay Area.

During September 1997, certain of the Company's assets were acquired and
certain liabilities were assumed by NRT Incorporated.

Revenue Recognition--Commissions are recognized upon the close of escrow.
Fees paid by agents are recognized as supporting services are rendered to
agents.

Depreciation and Amortization--Depreciation is computed using the straight-
line method over estimated useful lives of three to seven years.

Amortization of leasehold improvements is computed using the straight-line
method over the shorter of the lease term or the estimated useful life of the
assets.

Commission and Referral Expenses--Commission expenses are recorded upon the
close of escrow. Referral expenses are recorded as services are performed.

Cash and Cash Equivalents--For purposes of the statement of cash flows, the
Company considers all highly-liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.

The Company routinely maintains cash deposits with a major financial
institution. Such deposits exceed the $100,000 limit insured by the Federal
Deposit Insurance Corporation.

Advertising Costs--Costs associated with the production of advertising, such
as writing copy, printing, and other costs, are charged to expense when
incurred. Costs associated with communicating advertising that has been
produced, such as newspaper and billboard space, are charged to expense as
services are received.

Income Taxes--The Company uses the liability method to account for income
taxes. Deferred income tax assets and liabilities result when the Company's
carrying value for assets and liabilities for income tax purposes is different
from the amount on its financial statements. Deferred income taxes result
principally from depreciation, franchise tax expense, and reserves recorded for
financial statement purposes which are not deductible for income tax purposes
until realized.

F-45
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Unaudited Information--The financial information with respect to the six-
months ended June 30, 1996 and June 30, 1997 is unaudited. In the opinion of
management, such information contains all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
of such periods. The results of operations for the six-months ended June 30,
1996 and June 30, 1997 are not necessarily indicative of the results to be
expected for the full year.

2. COMMITMENTS AND CONTINGENCIES

Lease Commitments--The Company leases its office facilities under operating
lease agreements. Rent expense in 1995 and 1996 was approximately $3,394,000
and $3,652,000, respectively. Rent expense during the six-months ended June
30, 1996 and June 30, 1997 (unaudited) was $1,861,000 and $1,720,000,
respectively.

At June 30, 1997 (unaudited), future minimum operating lease payments are
approximately:

<TABLE>
<S> <C>
Year ending June 30 (unaudited):
1998.......................................................... $ 2,713,152
1999.......................................................... 1,984,199
2000.......................................................... 1,305,648
2001.......................................................... 880,888
2002.......................................................... 621,528
Thereafter.................................................... 3,323,004
-----------
Total........................................................... $10,828,419
===========
</TABLE>

The Company leased certain of its office facilities from a related party in
1995. Rent paid for these facilities in 1995 was approximately $434,000. As of
November 1995, the lessor is no longer considered a related party.

Contingencies--The Company is involved in certain legal actions and claims
arising in the ordinary course of its business. While the Company believes
many of these claims are without merit, from time to time it will settle
matters to avoid the cost of litigation. During 1995 and 1996, the Company
settled several matters for aggregate payments of approximately $482,000 and
$415,000, respectively. Settlement payments during the six months ended June
30, 1996 and June 30, 1997 (unaudited) were approximately $269,000 and
$100,000, respectively. In addition, the Company provides reserves against
matters that are still pending, when it believes it is appropriate to do so.
With respect to all known unsealed actions and claims, the Company believes
they will be resolved without material effect on the Company's financial
position or results of operations and cash flows.

F-46
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

3. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 30,
December 31, December 31, 1996 1997
1995 1996 (Unaudited) (Unaudited)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Current:
Federal................. $ 57,889 $ 814,703 $482,840 $1,138,739
State................... 5,953 230,719 136,237 207,618
-------- ---------- -------- ----------
Total................. 63,842 1,045,422 619,077 1,346,357
-------- ---------- -------- ----------
Deferred:
Federal................. 166,000 (86,000) (51,000) 22,000
State................... 55,000 (1,000) (1,000) 4,000
-------- ---------- -------- ----------
Total................. 221,000 (87,000) (52,000) 26,000
-------- ---------- -------- ----------
Total..................... $284,842 $ 958,422 $567,077 $1,372,357
======== ========== ======== ==========
</TABLE>

The reconciliation between the Company's effective tax rate and the
statutory federal income tax rate is as follows:

<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 30,
December 31, December 31, 1996 1997
1995 1996 (Unaudited) (Unaudited)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Statutory federal income
tax rate................ 34.0% 34.0% 34.0% 34.0%
State income taxes, net
of federal tax benefit.. 6.2 6.2 6.2 6.2
Nondeductible
entertainment and
officers' life
insurance............... 3.5 0.7 0.7 0.4
Tax-exempt dividend
income.................. (1.1) (0.5) (0.4)
Other.................... 3.4 0.5 0.4 0.4
---- ---- ---- ----
Total.................... 46.0% 40.9% 40.9% 41.0%
==== ==== ==== ====
</TABLE>

4. PENSION PLAN

The Company had a defined contribution pension plan (401(k) plan). All
employees over the age of 21 who completed at least one year of service were
eligible to participate. Participants could elect to have amounts deducted
from their compensation and contributed to the 401(k) plan up to the limit
allowed by applicable laws. All such contributions were fully vested to the
employee. While the Company was not required to make contributions to the
401(k) plan, it had accrued a $35,000 and $30,000 contribution for 1995 and
1996, respectively. For the six months ended June 30, 1996 and 1997, the
Company had accrued $15,000 and $15,000, respectively. Subsequent to the
acquisition (Note 1), the plan was terminated.

5. RELATED-PARTY TRANSACTIONS

During 1995, the Company repurchased and retired capital stock from a
shareholder. The Company purchased the shares for $1,000,000 ($400,000 in cash
and $600,000 in a note).

F-47
<PAGE>

CORNISH & CAREY RESIDENTIAL, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

6. INVESTMENT IN MARKETING VENTURE

During 1995, the Company purchased the operating rights to certain
specialized computer software to enhance its residential home marketing
efforts. Because of the developer's inability to continue supporting and
maintaining the software, the Company abandoned these assets in October 1995.
The total costs written off related to these assets amount to approximately
$406,000 and are included in other expense in the accompanying statements of
operations.

F-48
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Contempo Realty, Inc.
Contempo Relocation, Inc.
and
To the Partners of Blossom Valley Partnership
Morgan Hill Partnership
Bascom Partnership

We have audited the accompanying combined statements of operations, owners'
equity and cash flows of Contempo Realty, Inc., Contempo Relocation, Inc. and
the Blossom Valley, Morgan Hill and Bascom general partnerships, which are
under common ownership and common management, for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the management of the companies and partnerships. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statements of operations,
owners' equity and cash flows are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the combined statements of operations, owners' equity and cash
flows. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the combined statements of operations, owners' equity and cash
flows. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such combined statements of operations, owners' equity and
cash flows present fairly, in all material respects, the combined results of
operations of the companies and partnerships referred to above and their
combined cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
San Francisco, California
June 26, 1998

F-49
<PAGE>

CONTEMPO REALTY

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Commission income........................ $34,615,265 $36,807,848 $54,333,863
Other revenues........................... 2,325,102 3,102,626 2,033,736
----------- ----------- -----------
Total.................................. 36,940,367 39,910,474 56,367,599
EXPENSES:
Commission and referral fees............. 26,805,532 29,193,097 42,592,573
Salaries and related expenses............ 2,338,300 2,514,483 4,004,671
Facilities and related expenses.......... 2,206,076 2,215,809 2,558,936
Advertising and promotion................ 1,214,832 1,216,675 1,117,804
Depreciation and amortization............ 372,946 498,478 499,059
General and administrative............... 3,438,423 3,203,931 3,452,880
----------- ----------- -----------
Total.................................. 36,376,109 38,842,473 54,225,923
----------- ----------- -----------
INCOME FROM OPERATIONS..................... 564,258 1,068,001 2,141,676
OTHER INCOME............................... 74,725 107,264 51,361
----------- ----------- -----------
INCOME BEFORE INCOME TAX PROVISION......... 638,983 1,175,265 2,193,037
PROVISION FOR INCOME TAX (Note 2).......... 12,902 219,599 433,660
----------- ----------- -----------
NET INCOME................................. $ 626,081 $ 955,666 $ 1,759,377
=========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-50
<PAGE>

CONTEMPO REALTY

COMBINED STATEMENTS OF OWNERS' EQUITY

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
Shareholders' Equity
------------------------
Common Stock Total
Partners' --------------- Retained Owners'
Equity Shares Amount Earnings Equity
---------- ------ -------- -------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994..... $ 170,189 32,061 $325,911 $151,815 $ 647,915
CASH DISTRIBUTIONS........... (758,849) (758,849)
NET INCOME (LOSS)............ 643,863 (17,782) 626,081
---------- ------ -------- -------- ----------
BALANCE, DECEMBER 31, 1994... 55,203 32,061 325,911 134,033 515,147
CASH DISTRIBUTIONS........... (515,859) (515,859)
NET INCOME................... 766,708 188,958 955,666
---------- ------ -------- -------- ----------
BALANCE, DECEMBER 31, 1995... 306,052 32,061 325,911 322,991 954,954
CASH DISTRIBUTIONS........... (920,632) (920,632)
NET INCOME................... 1,276,439 482,938 1,759,377
---------- ------ -------- -------- ----------
BALANCE, DECEMBER 31, 1996... $ 661,859 32,061 $325,911 $805,929 $1,793,699
========== ====== ======== ======== ==========
</TABLE>

See accompanying notes to combined financial statements.

F-51
<PAGE>

CONTEMPO REALTY

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
1994 1995 1996
--------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 626,081 $ 955,666 $ 1,759,377
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation........................... 372,946 498,478 499,059
Loss on disposal of fixed assets....... 8,403 2,274 36,392
Changes in assets and liabilities:
Receivables.......................... (21,509) (139,572) (102,054)
Prepaid expenses..................... (49,974)
Other assets......................... (36,845) (39,978) (60,924)
Trade payables....................... (34,560) 176,944 17,177
Accrued expenses..................... 14,951 99,256 81,868
Other liabilities.................... (60,498) 19,800 249,164
--------- ---------- -----------
Net cash provided by operating
activities........................ 868,969 1,572,868 2,430,085
--------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets....... 2,564
Purchase of property and equipment....... (877,000) (792,732) (431,796)
Investment in affiliated entities........ (68,306) (150,920)
Distributions from affiliated entities... 85,729 2,834
--------- ---------- -----------
Net cash used in investing
activities........................ (791,271) (861,038) (577,318)
--------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid....................... (758,849) (515,859) (920,632)
Increase (decrease) in credit line
payable................................. 65,801 4,298 (25,444)
Increase (decrease) in notes payable..... 527,808 129,420 (268,876)
Repayments of loans from shareholders.... (48,134) (44,997) (262,464)
--------- ---------- -----------
Net cash used in financing
activities........................ (213,374) (427,138) (1,477,416)
--------- ---------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS............................... (135,676) 284,692 375,351
CASH AND CASH EQUIVALENTS, beginning of
year...................................... 741,741 606,065 890,757
--------- ---------- -----------
CASH AND CASH EQUIVALENTS, end of year..... $ 606,065 $ 890,757 $ 1,266,108
========= ========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION--
Interest paid............................ $ 69,000 $ 168,000 $ 111,000
========= ========== ===========
Income taxes paid........................ $ -- $ 190,000 $ 430,000
========= ========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-52
<PAGE>

CONTEMPO REALTY

NOTES TO COMBINED STATEMENTS OF OPERATIONS,
OWNERS' EQUITY AND CASH FLOWS

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation--The statements of operations, owners' equity and cash flows for
Contempo Realty, Inc., Contempo Relocation, Inc., and the Morgan Hill, Almaden
and Bascom general partnerships (collectively, the "Company" or "Contempo
Realty") have been combined, due to common ownership and common management, and
are presented herein. Contempo Realty, Inc. has a 10% direct interest in each
of the partnerships.

Nature of Business--The Company provides real estate marketing and brokerage
services related to resident properties. The Company operates business
locations in Santa Clara, San Benito and Alameda Counties.

During March 1997, the Company was acquired by Coldwell Banker Residential
Brokerage Corporation, an affiliate of National Realty Trust.

Cash and Cash Equivalents--The Company considers cash investments with a
maturity of three months or less at the time of purchase to be cash
equivalents.

Depreciation and Amortization--Depreciation is computed using the straight-
line method over estimated useful lives of three to seven years.

Amortization of leasehold improvements is computed using the straight-line
method over the shorter of the lease term or the estimated useful life of the
assets.

Revenue Recognition--Real estate commissions are recorded as revenue upon
close of escrow or upon transfer of title. Other fees including management and
referral fees are recorded as revenue at the time the related services have
been performed by the Company unless significant future contingencies exist.

Income Taxes--The Company uses the same method of depreciation for financial
reporting purposes as used for federal income tax reporting purposes. There is
no deferred tax liability, as there are no timing differences relating to
income or expenses.

Income tax has been provided only on the income of Contempo Realty, Inc. and
Contempo Relocation, Inc. (the "Corporations"). This includes the Corporations'
share of the partnerships' income. No tax has been provided for the
partnerships as this tax is the responsibility of the individual partners.

F-53
<PAGE>

CONTEMPO REALTY

NOTES TO COMBINED STATEMENTS OF OPERATIONS,
OWNERS' EQUITY AND CASH FLOWS--(Continued)
2. INCOME TAX PROVISION

As tax is only provided on the Corporations' (loss) income, the following
table shows the corporate taxable income for each year:

<TABLE>
<CAPTION>
1994 1995 1996
-------- ---------- ----------
<S> <C> <C> <C>
Corporate (loss) income..................... $ (4,880) $ 408,557 $ 916,598
Partnership income.......................... 643,863 766,708 1,276,439
-------- ---------- ----------
Income before income tax provision.......... $638,983 $1,175,265 $2,193,037
======== ========== ==========
</TABLE>

The income tax provision consists of the following at December 31:

<TABLE>
<CAPTION>
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
Federal............................................ $ 9,128 $183,856 $363,076
State.............................................. 3,774 35,743 70,584
------- -------- --------
Total.............................................. $12,902 $219,599 $433,660
======= ======== ========
</TABLE>

The Company has no federal or state carryovers or deferred tax attributes
remaining as of December 31, 1996.

The reconciliation between the Corporations' effective tax rate on income
before taxes and the statutory federal income tax rate is as follows at
December 31:

<TABLE>
<CAPTION>
1994 1995 1996
------ ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate................... 34.0 % 34.0 % 34.0 %
State income taxes, net of federal benefit.......... 6.2 6.2 6.2
Nondeductible entertainment and officers' life in-
surance............................................ 12.3 1.8 1.0
Taxable interentity partnership income.............. (293.2) 14.7 9.1
Others.............................................. (23.7) (3.0) (3.0)
------ ---- ----
Total............................................... (264.4)% 53.7 % 47.3 %
====== ==== ====
</TABLE>

3. MINIMUM LEASE COMMITMENTS

The Company leases its office facilities under operating lease agreements.
Rent expense in 1994, 1995 and 1996 was $1,634,000, $1,840,000 and $2,071,000,
respectively. Also, the Company is obligated under lease agreements for various
office equipment.

F-54
<PAGE>

CONTEMPO REALTY

NOTES TO COMBINED STATEMENTS OF OPERATIONS,
OWNERS' EQUITY AND CASH FLOWS--(Continued)

At December 31, 1996, future minimum operating lease payments for office
facilities and equipment are approximately:

<TABLE>
<CAPTION>
Office
Facilities Equipment
---------- ---------
<S> <C> <C>
Year ending December 31:
1997..................................................... $1,295,339 $239,758
1998..................................................... 1,161,219 180,371
1999..................................................... 825,444 64,469
2000..................................................... 482,909 22,660
2001..................................................... 388,404 3,779
Thereafter............................................... 47,486
---------- --------
Total...................................................... $4,200,801 $511,037
========== ========
</TABLE>

F-55
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Barbara Sue Seal Properties, Inc.
Portland, Oregon

We have audited the accompanying statements of operations and retained
earnings and of cash flows of Barbara Sue Seal Properties, Inc. (the "Company")
for the year ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of operations and retained
earnings and of cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of operations and retained earnings and of cash flows. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the statements of operations and retained earnings and of cash flows. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statements of operations and retained earnings and of
cash flows referred to above, present fairly, in all material respects, the
results of operations and cash flows of Barbara Sue Seal Properties, Inc. for
the year ended December 31, 1996 in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP

Portland, Oregon
July 1, 1998

F-56
<PAGE>

BARBARA SUE SEAL PROPERTIES, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

FOR THE YEAR ENDED DECEMBER 31, 1996
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1997 (UNAUDITED)

<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
Year Ended September September 30,
December 31, 30, 1996 1997
1996 (unaudited) (unaudited)
------------ ----------- -------------
<S> <C> <C> <C>
REVENUES:
Real estate commissions............ $20,292,752 $15,455,489 $17,000,134
Other.............................. 392,013 96,546 47,391
----------- ----------- -----------
Total revenues................... 20,684,765 15,552,035 17,047,525
----------- ----------- -----------
EXPENSES:
Commissions........................ 13,455,268 9,829,784 11,474,149
Salaries and wages................. 1,806,585 1,408,419 1,407,303
Advertising and marketing.......... 1,784,286 1,210,478 1,297,049
Rent............................... 1,121,253 842,238 819,721
General and administrative......... 1,141,787 954,218 904,493
Depreciation and amortization...... 220,828 132,300 286,919
----------- ----------- -----------
Total expenses................... 19,530,007 14,377,457 16,189,634
----------- ----------- -----------
INCOME FROM OPERATIONS............... 1,154,758 1,174,578 857,891
----------- ----------- -----------
INTEREST INCOME (EXPENSE):
Interest income.................... 53,706 27,264 39,678
Interest expense................... (1,095) (1,095) (230)
----------- ----------- -----------
Interest income--net............. 52,611 26,169 39,448
----------- ----------- -----------
NET INCOME........................... 1,207,369 1,200,747 897,339
RETAINED EARNINGS, BEGINNING OF
PERIOD.............................. 1,728,273 1,728,273 1,677,642
DISTRIBUTIONS........................ (1,258,000) (730,000) (943,000)
----------- ----------- -----------
RETAINED EARNINGS, END OF PERIOD..... $ 1,677,642 $ 2,199,020 $ 1,631,981
=========== =========== ===========
</TABLE>

See notes to financial statements.

F-57
<PAGE>

BARBARA SUE SEAL PROPERTIES, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 1996
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1997 (UNAUDITED)

<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1997
1996 (unaudited) (unaudited)
---------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................... $1,207,369 $1,200,747 $ 897,339
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization...... 220,828 132,300 286,919
Bad debt (recovery) expense........ 4,801 2,152 (8,108)
Gain on sale of investment in
securities........................ (34,854) (26,141) --
Change in:
Commissions receivable........... (44,134) 69,921 20,028
Other receivables................ (5,716) (7,011) (5,750)
Prepaid expenses................. 9,688 11,101 (5,898)
Accounts payable................. 112,876 1,479 (49,433)
Accrued bonuses and commissions
to agents....................... 199,518 (22,156) (257,239)
Deferred compensation............ 75,233 54,492 174,447
Accrued and related tax
benefits........................ 9,148 15,029 (12,130)
Other accrued liabilities........ 3,865 (59) (1,473)
---------- ---------- ----------
Net cash provided by operating
activities.................... 1,758,622 1,409,653 1,038,702
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold
improvements........................ (511,638) (389,228) (45,061)
Investment in securities, net........ (12,971) 262,104 143,881
Decrease (Increase) in notes
receivable.......................... 79,364 61,139 (50,109)
---------- ---------- ----------
Net cash (used in) provided by
investing activities.......... (445,245) (65,985) 48,711
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES--
Distributions......................... (1,258,000) (730,000) (943,000)
---------- ---------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS........................... 55,377 613,668 144,413
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................ 276,637 276,637 332,014
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF
PERIOD................................ $ 332,014 $ 890,305 $ 476,427
========== ========== ==========
</TABLE>

See notes to financial statements.

F-58
<PAGE>

BARBARA SUE SEAL PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 1996
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1997 (UNAUDITED)
1. ORGANIZATION

Barbara Sue Seal Properties, Inc. (the "Company"), founded in 1983, operates
as a real estate broker/dealer specializing in sales of prestigious residential
real estate in Oregon and Washington.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents include all cash balances and highly-liquid
investments, all of which have maturities of three months or less.

Depreciation--Equipment and leasehold improvements are stated at cost and are
depreciated using the straight-line and accelerated methods over the estimated
useful lives ranging from 5 to 31 years.

Revenue Recognition--Real estate commission revenues and the related
commission expenses earned by agents are recognized upon the close of escrow or
transfer of title.

Advertising Costs--Advertising costs are expensed when incurred.

Income Taxes--The Company has elected under the Internal Revenue Code to be
an S Corporation. In lieu of corporation income taxes, the stockholders of an S
Corporation are taxed on their proportionate share of the Company's taxable
income. Therefore, no provision or liability for federal income taxes has been
included in the financial statements.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Unaudited Information--The financial information for the nine months ended
September 30, 1996 and 1997 is unaudited. In the opinion of management, such
information contains all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the results of such periods.
The results of operations for the nine months ended September 30, 1996 and 1997
are not necessarily indicative of the results to be expected for the full year.

3. LEASING COMMITMENTS

The Company leases office space under long-term operating lease agreements.
Most leases have original terms of five years with several three- to five-year
renewal options with terms and conditions similar to the original lease.

The Uptown branch is leased from the 100% stockholder of the Company, and the
Wilsonville branch is leased from the Seal Family, LLC, a related party. The
Sunset Corridor Branch is leased

F-59
<PAGE>

BARBARA SUE SEAL PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

from Seal-Wieden, LLC, a related party. Total rent paid to the stockholder and
related parties amounted to $285,008 for the year ended December 31, 1996 and,
$208,006 and $229,606 for the nine months ended September 30, 1996 and 1997,
respectively (unaudited).

The following is a schedule, by years, of future minimum lease payments under
leases that have initial or remaining noncancelable lease terms in excess of
one year at September 30, 1997 (unaudited):

<TABLE>
<CAPTION>
Year Ending September 30 (Unaudited):
<S> <C>
1998......................................................... $ 214,419
1999......................................................... 778,955
2000......................................................... 546,542
2001......................................................... 486,229
2002......................................................... 332,338
Thereafter................................................... 260,000
----------
$2,618,483
==========
</TABLE>

Beginning in 1995, the Company subleased a portion of its office space under
month-to-month leases. Sublease rental income was $99,600 in 1996.

Rental expense under operating leases was $1,121,253 for the year ended
December 31, 1996 and, $842,258 and $819,721 for the nine months ended
September 30, 1996 and 1997, respectively (unaudited).

4. RETIREMENT PLAN

The Company has a defined contribution profit sharing pension plan covering
substantially all of its employees with contributions set at the discretion of
management. The total contributions to the plan were $20,000 for the year ended
December 31, 1996 and, $8,100 and $20,000 for the nine months ended September
30, 1996 and 1997, respectively (unaudited).

5. DEFERRED COMPENSATION PLANS

The Company established a deferred compensation system in 1990 called the
President's Council. Employees are admitted into the Plan based on sales and
years of service and vest five years after entering the plan. The Company makes
contributions based on level of sales and years of service. The plan was
amended in March 1996, retroactive to January 1, 1995 to read that participants
in the plan who are 100% vested will not be allowed to withdraw from the plan
except for termination, retirement or economic hardship reasons.

The Company established an additional deferred compensation system in 1992
called the Roundtable. Employees are admitted into this plan based on sales and
years of service. The Company makes contributions based on level of sales and
years of service. Contributions to the President's Council and Roundtable
deferred compensation plans were $81,775 for the year ended December 31, 1996
and, $101,522 and $90,512 for the nine months ended September 30, 1996 and
1997, respectively (unaudited).

F-60
<PAGE>

BARBARA SUE SEAL PROPERTIES, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

6. SUBSEQUENT EVENT

On October 10, 1997, the Company was acquired by NRT Incorporated. After the
acquisition, the Company became Coldwell Banker Barbara Sue Seal Properties.

As a result of the acquisition, the Company terminated the employee profit
sharing plan and both the President's Council and Roundtable deferred
compensation plans. In November 1997, participants' account balances were
dispersed resulting in total distributions of $652,197, $742,455, and $18,915,
for each of the respective plans.

* * * * * *

F-61
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999

NRT Incorporated

14,062,500 Shares of Common Stock

---------------------

PROSPECTUS

---------------------

Donaldson, Lufkin & Jenrette
Bear, Stearns & Co. Inc.
BT Alex. Brown
Lehman Brothers
Merrill Lynch & Co.
Morgan Stanley Dean Witter

- --------------------------------------------------------------------------------

We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters that are not stated in this prospectus. You must not rely on
unauthorized information. This prospectus is not an offer to sell these
securities or our solicitation of your offer to buy the securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery
of this prospectus nor any sales made hereunder after the date of this
prospectus shall create any implication that the information contained herein
or the affairs of the company have not changed since the date hereof.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Until , 1999 (25 days after the date of this prospectus), all dealers that
effect transactions in these securities may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as an underwriter in this offering and when selling
previously unsold allotments or subscriptions.

- --------------------------------------------------------------------------------
<PAGE>

PART II

Item 13. Other Expenses of Issuance and Distribution.

The following table indicates the estimated expenses to be incurred in
connection with the offering, all of which will be paid by NRT.

<TABLE>
<S> <C>
SEC registration fee............................................. $ 62,550
NASD fee......................................................... 23,000
Nasdaq National Market listing fee............................... 95,000
Accounting fees and expenses..................................... 980,000
Legal fees and expenses.......................................... 950,000
Printing and engraving........................................... 1,100,000
Transfer agent's fees............................................ 5,000
Blue sky fees and expenses (including counsel fees).............. 7,500
Miscellaneous expenses........................................... 26,950
----------
Total.......................................................... $3,250,000
==========
</TABLE>

Item 14. Indemnification of Directors and Officers

As permitted by Section 102(b)(7) of the General Corporation Law of the State
of Delaware, the Restated Certificate of Incorporation of NRT (filed herewith
as Exhibit 3.1) provides that no director shall be liable to NRT or its
stockholders for monetary damages for breach of fiduciary duty as a director
other than for (i) breaches of the directors' duty of loyalty to NRT and its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) the unlawful
payment of dividends or unlawful stock purchases or redemptions under Section
174 of the Delaware General Corporation Law and (iv) any transaction from which
the director derived an improper personal benefit.

Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines or amounts paid in settlement actually and reasonably
incurred by them in connection with the defense of any action by reason of
being or having been directors or officers, if such person shall have acted in
good faith in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful, except that if such action shall be in the right of the corporation,
no such indemnification shall be provided as to any claim, issue or matter as
to which such person shall have been adjudged to have been liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which the action was brought shall determine upon application
that, in view of all of the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the Court of
Chancery or other court shall deem proper.

II-1
<PAGE>

The Restated Certificate of Incorporation and the Amended and Restated By-
laws of NRT (filed herewith as Exhibit 3.2) provide for indemnification of
officers and directors of NRT, both past and present, to the fullest extent
permitted by the Delaware General Corporation law, and allow NRT to advance or
reimburse litigation expenses upon submission by the director or officer of an
undertaking to repay such advances or reimbursements if it is ultimately
determined that indemnification is not available to such director or officer
pursuant to the Amended and Restated By-laws. The Amended and Restated By-laws
also authorize NRT to purchase and maintain insurance on behalf of an officer
or director, past or present, against any liability asserted against him in any
such capacity whether or not NRT would have the power to indemnify him against
such liability under the provisions of its certificate of incorporation or
Section 145 of the Delaware General Corporation Law.

NRT intends to provide liability insurance for each of its directors and
officers against certain losses arising from claims made against them while
acting in their capacities as directors or officers of NRT, whether or not NRT
would have the power to indemnify such person against such losses, as permitted
by law.

The form of Underwriting Agreement filed herewith as Exhibit 1.1 provide,
among other things, for the indemnification by the underwriters of directors
and certain officers of NRT against certain liabilities.

Item 15. Recent Sales of Unregistered Securities.

In connection with the formation of NRT, on August 29, 1997, (i) Apollo
Investment Fund III, L.P. purchased 91.16263 shares of common stock of NRT for
$18,232,526 in cash and 50,140 shares of 18.00% Series C Cumulative Junior
Redeemable Preferred Stock of NRT ("Series C Preferred Stock") for $36,921,272
in cash, (ii) Apollo Overseas Partners III, L.P. purchased 5.45832 shares of
common stock of NRT for $1,091,664 in cash and 50,140 shares of Series C
Preferred Stock for $2,210,564 in cash, and (iii) Apollo (UK) Partners III,
L.P. purchased 3.37905 shares of common stock of NRT for $675,810 in cash and
1,858 shares of Series C Preferred Stock for $1,368,164 in cash. On the same
date, Cendant Corporation purchased 132,500 shares of 9.00% Series A Cumulative
Senior Redeemable Preferred Stock of NRT for $132,500,000 in cash and 24,000
shares of 5.00% Series B Cumulative Convertible Redeemable Preferred Stock of
NRT for $24,000,000 in cash. On September 11, 1997, (i) Cendant purchased an
additional 25,091 shares of senior preferred stock for $25,091,000 in cash,
(ii) Apollo Investment Fund III, L.P. purchased an additional 12,319 shares of
Series C Preferred Stock for $12,319,000 in cash, (iii) Apollo Overseas
Partners III, L.P. purchased an additional 736 shares of Series C Preferred
Stock for $736,000 in cash, and (iv) Apollo (UK) Partners III, L.P. purchased
an additional 455 shares of Series C Preferred Stock of NRT for $455,000 in
cash. All such transactions were exempt from the registration requirements of
the Securities Act of 1933, as amended in reliance on Section 4(2) of the
Securities Act on the basis that such transactions did not involve a public
offering.

II-2
<PAGE>

Items 16. Exhibits

(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
1.1++ Form of Underwriting Agreement.
3.1* Form of Restated Certificate of Incorporation of NRT.
3.2* Form of Amended and Restated By-laws of NRT.
4.1* Specimen of Common Stock Certificate.
5.1++ Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, regarding
legality of securities being registered.
10.1* Master Membership Agreement, dated as of February 9, 1999, between ERA
Franchise Systems, Inc. and NRT.
10.2* Master Century 21 Real Estate Franchise Agreement, dated as of
February 9, 1999, between Century 21 Real Estate Corporation and NRT.
10.3* Master Real Estate Franchise Agreement, dated as of February 9, 1999,
between Coldwell Banker Real Estate Corporation and NRT.
10.4+ Form of Amended and Restated Stockholders Agreement, among NRT, Apollo
Management, L.P., Cendant Corporation and the stockholders named
therein.
10.5* Acquisition Cooperation Agreement, dated as of February 9, 1999,
between Cendant Corporation and NRT.
10.6* Marketing Agreement, dated as of August 11, 1997, between NRT and
Cendant Mortgage Corporation.
10.7* Program Outsourcing Agreement, dated as of February 9, 1999, between
NRT and Cendant Corporation.
10.8* Support Agreement, dated as of August 11, 1997, between Cendant
Corporation and NRT.
10.9* Advisory Services Agreement, dated as of August 11, 1997, among NRT
and Apollo Management, L.P.
10.10* Lease, dated as of August 11 , 1997, between NRT and Cendant (relating
to Parsippany, New Jersey property).
10.11* Lease, dated as of August 11, 1997, between NRT and Cendant (relating
to Mission Viejo, California property).
10.12* Acquisition Services Agreement, dated as of February 9, 1999, between
NRT and Cendant Corporation.
10.13* Development Advance Promissory Note, dated as of September 1, 1997,
between NRT and Coldwell Banker Real Estate Corporation.
10.14* Amended and Restated Credit Agreement, dated as of March 31, 1999,
among NRT, The Chase Manhattan Bank, Bankers Trust Company and the
lending institutions party thereto.
10.15* NRT Incorporated 1997 Equity Participation Plan, as amended.
10.16* License Agreement, dated as of February 9, 1999, between Cendant and
NRT.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
10.17* Amendment dated March 24, 1999 to Acquisition Cooperation Agreement
between Cendant Corporation and NRT.
10.18* Purchase Agreement dated April 1, 1999, between Cendant Operations,
NRT and Apollo Investment Fund III, L.P., Apollo Overseas Partners
III, L.P. and Apollo (UK) Partners III, L.P.
10.19+ First Amendment to Credit Agreement, dated as of May 4, 1999, among
NRT, The Chase Manhattan Bank, Bankers Trust Company and the lending
institutions party thereto.
11.1+ Calculation of Loss per Common Share.
21.1* Subsidiaries of NRT.
23.1++ Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
23.2++ Consent of Deloitte & Touche LLP.
23.3+ Consent of Deloitte & Touche LLP.
23.4+ Consent of Deloitte & Touche LLP.
23.5+ Consent of Deloitte & Touche LLP.
23.6+ Consent of Deloitte & Touche LLP.
23.7+ Consent of Deloitte & Touche LLP.
23.8+ Consent of Arthur Andersen LLP.
24.1* Power of Attorney.
27.1+ Financial Data Schedule.
</TABLE>
- -------------------
* Previously filed.
+ Filed herewith.
++ To be filed by amendment.

(b) Financial Statement Schedules:

Schedule II--Valuation and Qualifying Accounts has been included on page S-1.

Item 17. Undertakings.

(a) NRT hereby undertakes to provide to the underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
NRT by NRT pursuant to the Underwriting Agreement, the restated certificate of
incorporation, the amended and restated by-laws, the Delaware General
Corporation Law or otherwise, NRT has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by NRT of expenses incurred or paid by a director, officer or
controlling person of NRT in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, NRT will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the adjudication of such issue.

II-4
<PAGE>

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by NRT pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Parsippany, State of New Jersey, on May 13,
1999.

NRT Incorporated

By: /s/ Steven L. Barnett
-----------------------------------
Name: Steven L. Barnett
Title: Senior Vice President,
General Counsel and
Secretary

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

Signature Title Date

* President, Chief
- ------------------------------------ Executive Officer May 13, 1999
Robert M. Becker and Director
(Principal
Executive Officer)

* Chairman of the
- ------------------------------------ Board and Director May 13, 1999
Chandler B. Barton

* Senior Vice
- ------------------------------------ President, Chief May 13, 1999
Gregory W. Hunt Financial Officer
and Treasurer
(Principal
Financial and
Accounting
Officer)

II-6
<PAGE>

Signature Title Date

* Director
- ------------------------------------ May 13, 1999
Terence W. Edwards

* Director
- ------------------------------------ May 13, 1999
Joshua J. Harris

* Director
- ------------------------------------ May 13, 1999
David M. Johnson

* Director
- ------------------------------------ May 13, 1999
Samuel L. Katz

* Director
- ------------------------------------ May 13, 1999
Marc J. Rowan

* Director
- ------------------------------------ May 13, 1999
Richard A. Smith

* Director
- ------------------------------------ May 13, 1999
Michael L. Tarnopol

* Director
- ------------------------------------ May 13, 1999
Michael D. Weiner

/s/ Steven L. Barnett
*By: ___________________________
Steven L. Barnett
Attorney-in-Fact

II-7
<PAGE>

INDEPENDENT AUDITORS' REPORT

"To the Board of Directors of NRT Incorporated

We have audited the consolidated financial statements of NRT Incorporated and
subsidiaries ("NRT") as of December 31, 1998 and 1997 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the year ended December 31, 1998 and the four months ended December
31, 1997 and the consolidated statements of operations, trust equity and cash
flows of National Realty Trust and subsidiaries (the "Predecessor Trust") for
the period from January 1, 1997 to August 31, 1997 and the period from June 1,
1996 to December 31, 1996, and the consolidated statements of operations,
stockholders' equity (deficit) and cash flows of Coldwell Banker Residential
Brokerage Corporation and subsidiaries ("Predecessor CB Residential") for the
period from January 1, 1996 to May 31, 1996 and have issued our report thereon
dated March 19, 1999 (April 2, 1999 as to Notes 2 and 13, April 6 as to Note 19
and May , 1999 as to the effects of the stock split described in Note 2),
included elsewhere in this Registration Statement. Our audits also included the
financial statement schedule listed at Item 16(b) of this Registration
Statement. This financial statement schedule is the responsibility of the
management of NRT. Our responsibility is to express an opinion on the financial
statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

Costa Mesa, California
March 19, 1999"

Deloitte & Touche LLP
Costa Mesa, California
April 29, 1999

S-1
<PAGE>

NRT Incorporated

Schedule II--Valuation and Qualifying Accounts for the Years Ended December 31,
1998, 1997 and 1996 and the Three Months Ended March 31, 1999

<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- ----------------------- --------- ---------- ----------
Balance at Charged Balance at
Beginning to Operating End of
Description of Period Expenses Other (a) Deductions Period
- ----------- ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Legal Reserves.......... $12,353 $ 296 $ 410 $ 1,727 $11,332
Closed Office Reserves.. 28,696 -- 7,961 4,123 32,534
------- ------ ------- ------- -------
Total at March 31,
1999................... $41,049 $ 296 $ 8,371 $ 5,850 $43,866
======= ====== ======= ======= =======
Legal Reserves.......... 15,467 608 5,445 9,167 12,353
Closed Office Reserves.. 24,274 -- 23,419 18,997 28,696
------- ------ ------- ------- -------
Total at December 31,
1998................... $39,741 $ 608 $28,864 $28,164 $41,049
======= ====== ======= ======= =======
Legal Reserves.......... 2,988 710 14,070 42,301 15,467
Closed Office Reserves.. 380 -- 32,100 8,206 24,274
------- ------ ------- ------- -------
Total at December 31,
1997................... $ 3,624 $ 710 $46,170 $10,763 $39,741
======= ====== ======= ======= =======
Legal Reserves.......... 3,744 969 -- 1,725 2,988
Closed Office Reserves.. 351 -- 285 256 380
------- ------ ------- ------- -------
Total at August 31,
1997................... $ 4,095 $ 969 $ 285 $ 1,725 $ 3,624
======= ====== ======= ======= =======
Legal Reserves.......... 3,605 1,278 5 1,144 3,744
Closed Office Reserves.. 3,687 -- 515 3,851 351
------- ------ ------- ------- -------
Total at December 31,
1996................... $ 7,292 $1,278 $ 520 $ 4,995 $ 4,095
======= ====== ======= ======= =======
</TABLE>
Notes: (a) Amounts relate to acquisitions.

S-2

<PAGE>

EXHIBIT 10.4
------------

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
-------------------------------------------

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement"), dated
---------
as of _______, 1999, by and among NRT Incorporated, a Delaware corporation (the
"Company"), Apollo Management, L.P., Cendant Corporation, each of the
-------
stockholders of the Company listed on Schedule A hereto and such other
stockholders of the Company as may, from time to time, become parties to this
Agreement in accordance with the provisions hereof (individually, a
"Stockholder" and, collectively, the "Stockholders").
----------- ------------

WHEREAS, as of the date hereof, each Stockholder is the beneficial
owner of the shares of Common Stock and/or Preferred Stock (each as defined
herein) set forth on Schedule A hereto; and

WHEREAS, the parties hereto desire to amend and restate the
Stockholders Agreement, dated as of August 11, 1997 (the "1997 Agreement"), as
--------------
more fully set forth herein.

NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows, hereby amending, restating
and superceding the 1997 Agreement in its entirety:

ARTICLE I

DEFINITIONS

Section I.1 Definitions. Unless otherwise defined herein, the
-----------
following terms used in this Agreement shall have the meanings specified below:

"Affiliate" shall mean, with respect to any Person, any of (i) a
---------
director or executive officer of such Person and (ii) any other Person that,
directly or indirectly, controls, or is controlled by or is under common control
with such Person. For the purpose of this definition, "control" (including the
terms "controlling", "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities or by contract
or agency or otherwise; it being understood that Cendant and Sponsors and their
Affiliates shall be deemed to be Affiliates of the Company.
<PAGE>

"Apollo" shall mean Apollo Management, L.P.
------

"Board" shall mean the Board of Directors of the Company.
-----

"By-Laws" shall mean the Amended and Restated By-Laws of the Company,
-------
as amended from time to time.

"Cendant" shall mean Cendant Corporation, a Delaware corporation, or
-------
any subsidiary of Cendant Corporation that holds the Common Stock or the
Convertible Preferred Stock.

"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.

"Common Stock" shall mean the Common Stock, par value $0.01 per share,
------------
of the Company.

"Convertible Preferred Stock" shall mean the 5.00% Series B Cumulative
---------------------------
Convertible Redeemable Preferred Stock of the Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934 shall include a
reference to the comparable section, if any, of any such similar federal
statute.

"Junior Preferred Stock" shall mean the 18.00% Series C Cumulative
----------------------
Junior Redeemable Preferred Stock.

"Master Franchise Agreements" shall mean the Amended and Restated
---------------------------
Master Franchise Agreements between the Company and each of Coldwell Banker Real
Estate Corporation, ERA Franchise Systems, Inc. and Century 21 Real Estate
Corporation, as the same shall be amended from time to time after the date
hereof.

"Person" shall mean a corporation, an association, a partnership, a
------
limited liability company, an organization, a business, a trust, an individual,
a government or a subdivision thereof or a governmental agency or any other
entity.

"Preferred Stock" shall mean shares of any class of Preferred Stock of
---------------
the Company, including the Senior Preferred Stock, the Convertible Preferred
Stock and the Junior Preferred Stock.

2
<PAGE>

"Public Sale" shall mean any sale of Common Stock or Preferred Stock
-----------
to the public pursuant to a public offering registered under the Securities Act
or to the public through a broker, dealer or market maker pursuant to the
provisions of Rule 144 (or any similar provision then in force) adopted under
the Securities Act.

"Registration Expenses" shall mean all expenses incidental to the
---------------------
Company's performance of, or compliance with, its obligations under Article IV
including, without limitation, all registration and filing fees, all fees and
expenses of compliance with securities and "blue sky" laws, all printing and
copying expense, all messenger and delivery expenses, the fees and expenses of
not more than one counsel for all selling securityholders, all fees and expenses
of the Company's independent certified public accountants and counsel and other
Persons retained by the Company in connection therewith. Notwithstanding the
foregoing, Registration Expenses shall not include underwriting discounts or the
fees and expenses of underwriters, accountants, agents or experts retained by a
holder of Common Stock in connection with the sale of Common Stock but shall
include the Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties, the expense of any annual audit and the expense of any
liability insurance) and the expenses and fees for listing the Common Stock on
the New York Stock Exchange or other exchange or automated quotation system.

"Restricted Securities" shall mean all shares of Common Stock and
---------------------
Preferred Stock and any securities obtained upon exchange for or upon conversion
or transfer of or as a distribution on such shares of Common Stock and Preferred
Stock or any such securities, except that any particular Restricted Securities
shall cease to be such when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) such securities shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force, or (iv) such securities shall have ceased to be
outstanding. Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the issuer
thereof or its transfer agent, without expense (other than transfer taxes, if
any), new securities of like tenor not bearing a legend of the character set
forth in Section 3.1.

"Securities Act" shall mean the Securities Act of 1933, or any similar
--------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. Reference to a particular section of
the Securities Act of 1933 shall include a reference to the comparable section,
if any, of any such similar federal statute.

3
<PAGE>

"Senior Preferred Stock" shall mean the 9.00% Series A Cumulative
----------------------
Senior Redeemable Preferred Stock of the Company.

"Sponsors" shall mean Apollo Investment Fund III, L.P., Apollo
--------
Overseas Partners III, L.P. and Apollo (UK) Partners III, L.P. As used in this
Agreement, whenever any action requires the consent of, or the determination of,
Sponsors, such consent or determination shall be made upon obtaining the consent
or determination of a majority of the Sponsor Designees (as defined in Section
2.1).

"Stockholder" shall mean the stockholders listed on Schedule A hereto
-----------
and such other stockholders as may, from time to time, become parties to this
Agreement in accordance with the provisions hereof.

"Transfer" shall mean any conveyance, sale, disposition, lease,
--------
transfer, pledge or transaction granting a mortgage, encumbrance, lien, security
interest or charge, or any similar transaction.

ARTICLE II

BOARD OF DIRECTORS; VOTING AGREEMENTS

Section II.1 Board of Directors. (a) Each of the Stockholders shall
------------------
vote all of its Common Stock, and will take all other necessary or desirable
actions within its control, and the Company will take all necessary or desirable
action within its control, in order to cause (i) the number of directors on the
Board to be twelve, except as provided in Section 2.1(b), (ii) five of the Board
members to be nominated by Cendant (each, a "Cendant Designee"), (iii) five of
----------------
the Board members to be nominated by Sponsors (each a "Sponsor Designee") and
----------------
(iv) two of the Board members (the "Independent Directors") to be nominated by a
---------------------
majority of the entire Board of Directors, provided that at least one Cendant
--------
Designee and at least one Sponsor Designee must not be employed by, a consultant
to, or an officer or director of, Cendant, Sponsors or any of their Affiliates
(other than the Company or its subsidiaries); provided, further, that each
-------- -------
Independent Director must be an "independent director" (within the meaning of
the rules of the New York Stock Exchange or other exchange or market upon which
the Common Stock is then or proposed to be listed). It is hereby agreed that
one of the Cendant Designees shall initially be Robert M. Becker and one of the
Sponsor Designees shall initially be Chandler B. Barton.

(b) As soon as legally permissible, each Stockholder shall vote all
of its shares of Common Stock and will take all other necessary or desirable
actions to call, or cause the Company to call, a special or annual meeting of
stockholders of the Company and to vote all of the shares of Common Stock owned
or held of record by such Stockholder for, or to take all actions by written
consent in lieu of any such meeting

4
<PAGE>

necessary to cause, the removal, in accordance with the applicable provisions of
the By-Laws, of any director designated and elected pursuant to Section 2.1(a)
if:

(i) such director is a Cendant Designee, upon the request of
Cendant by written notice to the other Stockholders; or

(ii) such director is a Sponsor Designee, upon the request of
Sponsors by written notice to the other Stockholders.

(c) In the event that any Cendant Designee or Sponsor Designee
shall for any reason cease to serve as a member of the Board during his term of
office, the resulting vacancy on the Board will be filled by a representative
designated, respectively, by Cendant or Sponsors, as the case may be. In the
event that any Independent Director shall for any reason cease to serve as a
member of the Board during his term of office, the resulting vacancy on the
Board will be filled with an Independent Director selected by a majority of the
entire Board of Directors.

(d) Each Stockholder agrees to vote its shares of Common Stock
at any special or annual meeting of stockholders, or take all actions by written
consent in lieu of any meeting necessary to (i) cause the election of members of
the Board so that the Board is constituted in accordance with this Section 2.1
and (ii) prevent the removal, other than for cause, of any Independent Director,
except as provided in Section 2.1(b)(iii).

ARTICLE III

TRANSFER OF SHARES

Section III.1 Restrictions on Transfer; Legend on Certificates. (a)
------------------------------------------------
Except for Transfers of shares of capital stock of the Company (i) to a
Stockholder on the date hereof or one of its wholly owned subsidiaries (in the
case of Sponsors, whose officers are all bona fide officers of such Sponsor),
(ii) from one Sponsor to another Sponsor, (iii) pursuant to a registration
statement filed by the Company pursuant to Article IV hereof, (iv) from a
Sponsor to an investment fund of which Apollo or an entity that is an Affiliate
of Apollo holds sole voting and investment discretion with respect to such
shares or (v) in connection with the Transfer by any Sponsor of all or
substantially all of its assets to its investors, from such Sponsor to its
investors (provided that such Transfer would not otherwise be a Transfer of the
type described in (A), (B) or (C) below)), in each case in compliance with
federal and all applicable state securities laws, none of Sponsors or Apollo
shall, directly or indirectly, Transfer, in a single transaction or a series of
transactions, (A) shares of Common Stock and/or securities convertible into or
exercisable for shares of Common Stock to any person or group (each as defined
in Section 13(d)(3) of the Exchange Act), if such person or group would, as a
result of such Transfer, acquire

5
<PAGE>

beneficial ownership of 20% or more of the then outstanding Common Stock, (B)
shares of Common Stock and/or securities convertible into or exercisable for
shares of Common Stock representing in the aggregate more than 10% of the then
outstanding Common Stock to any person or group, and (C) shares of Common Stock
and/or securities convertible into or exercisable for Common Stock to any person
or group (other than Cendant or its designee) if such person or group would, as
a result of such Transfer, become the beneficial owner of 30% or more of the
Common Stock, unless, in the case of (A) or (B) above, Sponsors or Apollo shall
have received the prior written consent of Cendant to such Transfer (which
consent shall not be unreasonably withheld). For purposes of the foregoing
sentence, reasonable grounds for withholding consent shall include, without
limitation, if Cendant believes in good faith, in its sole discretion, that the
proposed transferee may be acquiring such securities with the purpose of
acquiring, changing or influencing control of the Company (or facilitating any
such acquisition, change or influence of control), which belief may be based,
without limitation, on the proposed transferee's failure to disclaim any present
control intention, any previous history or a reputation of seeking to acquire,
change or influence control of a company. In the case of a Transfer pursuant to
clause (i) above, immediately prior to such time as the transferee of such
shares is no longer a wholly owned subsidiary of the holder of such shares on
the date hereof, the transferee shall immediately transfer such shares to a
Person who is then a wholly owned subsidiary of the holder of such shares on the
date hereof and who would then be a permitted transferee pursuant to clause (i).
Notwithstanding the foregoing, nothing in this Agreement shall restrict the
Transfer of any ownership interests in Apollo or any successor thereto, or any
Transfer of indirect ownership interests in Apollo; and nothing in this
Agreement shall restrict the Transfer of investment interests in any funds
managed by Apollo or any affiliate thereof which do not hold, as their primary
investment, securities of the Company.

(b) Until the earlier of (i) the third anniversary of the date hereof
or (ii) the date on which Sponsors own less than 5% of the Common Stock, Cendant
shall not be entitled to Transfer any shares of Common Stock or Convertible
Preferred Stock except that Cendant may Transfer such shares (i) to a
Stockholder on the date hereof or one of its wholly owned subsidiaries, (ii)
pursuant to a registration statement filed by the Company pursuant to Article IV
hereof or (iii) in a sale not registered under the Securities Act up to an
aggregate of $25 million of Common Stock and Convertible Preferred Stock in any
quarter but not in excess of an aggregate of $50 million of Common Stock and
Convertible Preferred Stock in any year, in each case less any amount sold by
Cendant pursuant to Article IV during the respective quarter or year, as the
case may be. In the case of a Transfer pursuant to clause (i) above, immediately
prior to such time as the transferee of such shares is no longer a wholly owned
subsidiary of the holder of such shares on the date hereof, the transferee shall
immediately transfer such shares to a Person who is then a wholly owned
subsidiary of the Stockholder on the date hereof and who would then be a
permitted transferee pursuant to clause (A).

6
<PAGE>

(c) In addition to any other restrictions contained in this
Agreement, no Stockholder shall Transfer any Restricted Securities except (i)
pursuant to an effective registration statement under the Securities Act, (ii)
pursuant to Rule 144 or 144A (or any successor provisions) under the Securities
Act or (iii) upon receipt by the Company of an opinion of counsel in form and
substance reasonably satisfactory to the Company to the effect that such
Transfer is exempt from the registration requirements of the Securities Act.

(d) Unless otherwise expressly provided herein, each certificate for
Restricted Securities and each certificate issued in exchange for or upon
transfer of any thereof shall be stamped or otherwise imprinted with a legend in
substantially the following form:

"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and the transfer
of such securities is subject to the conditions specified in that certain
Amended and Restated Stockholders Agreement, dated as of ________ __, 1999,
among NRT Incorporated and the stockholders listed therein, a counterpart
of which has been placed on file by the issuer at its principal place of
business and its registered office. The issuer reserves the right to
refuse the transfer of such securities until such conditions have been
fulfilled with respect to such transfer."

(e) Any other provision of this Agreement to the contrary
notwithstanding, no Transfer of any shares of Common Stock or Preferred Stock
may be made to any Person (other than Transfers pursuant to a registration
statement filed by the Company pursuant to Article IV hereof) unless such Person
shall have agreed in writing that such Person, as a Stockholder, and the shares
of Common Stock or Preferred Stock it acquires, shall be bound by all the
provisions of this Agreement applicable to shares of the class of Common Stock
or Preferred Stock acquired by such Person. Any purported Transfer of shares of
Common Stock or Preferred Stock without compliance with the applicable
provisions of this Agreement shall be void and of no effect, and the purported
transferee shall have no rights hereunder. In the event of such non-complying
Transfer, the Company shall not transfer any such shares of Common Stock or
Preferred Stock on its books or recognize the purported transferee as a
shareholder for any purpose, until all applicable provisions of this Agreement
have been complied with.

ARTICLE IV

REGISTRATION RIGHTS

7
<PAGE>

Section IV.1 Demand Registration. (a) At the request of Sponsors,
-------------------
the Company shall use reasonable efforts to effect the registration under the
Securities Act pursuant to the terms of this Section 4.1(a) of the shares of
Common Stock held by Sponsors; provided that upon the Public Sale of all of
--------
Sponsors' Common Stock, Sponsors will no longer be entitled to any registration
rights pursuant to this Section 4.1. At the request of Cendant, the Company
shall use reasonable efforts to effect a registration under the Securities Act
pursuant to this Section 4.1(a) of the shares of Common Stock or Convertible
Preferred Stock held by Cendant. Sponsors jointly and Cendant shall each be
entitled to four underwritten registrations pursuant to this Section 4.1 and
Sponsors jointly and Cendant shall each be entitled to one "shelf" registration
pursuant to this Section 4.1. Until the earlier of (i) the third anniversary of
the date hereof or (ii) the date on which Sponsors own less than 5% of the
Common Stock, in any such registration requested by Sponsors or Cendant, and in
any additional underwritten registrations of Common Stock held by Sponsors or
Cendant which the Company elects to effect (other than as required pursuant to
this Section 4.1(a)), Sponsors shall be entitled to register up to the greater
of (i) 80% of the total number of shares to be registered in the secondary
offering by Sponsors and Cendant (including any shares to be sold by Sponsors
and Cendant pursuant to the underwriters' over-allotment option, if exercised)
or (ii) such percentage of the total number of shares to be registered in the
secondary offering by Sponsors and Cendant such that Sponsors will have sold at
least 70% of all shares sold by Sponsors and Cendant following the Company's
initial public offering. After the third anniversary of the date hereof, in any
registration requested by Sponsors or Cendant, and in any additional
underwritten registrations of Common Stock held by Sponsors or Cendant which the
Company elects to effect (other than as required pursuant to this Section
4.1(a)), each of Sponsors and Cendant shall be entitled to register a number of
shares equal to 50% of the total number of shares to be registered in the
secondary offering by Sponsors and Cendant (including any shares to be sold by
Sponsors and Cendant pursuant to the underwriters' over-allotment option, if
exercised). Notwithstanding the foregoing, once Sponsors own less than 5% of the
Common Stock, in any registration requested by Cendant or Sponsors, Cendant
shall be entitled to register 100% of the total number of shares to be
registered in a secondary offering (including any shares to be sold pursuant to
the underwriters' overallotment option, if exercised), subject to Sponsors'
right to include shares in such registration pursuant to Section 4.2 (subject to
the limitations set forth in Section 4.2(b)). In any registration hereunder,
Cendant shall be entitled, at its election, to (i) register the number of shares
permitted to be registered by Cendant hereunder or (ii) cause the Company to
register on its own behalf the number of shares set forth in clause (i) and use
the proceeds from the sale of such shares to redeem, at Cendant's election, the
Convertible Preferred Stock or Senior Preferred Stock, if permitted by
applicable law. If the proceeds of any sale under this Section 4.1 are not
permitted under applicable law to be used to redeem the Convertible Preferred
Stock or Senior Preferred Stock, then such proceeds shall be held by the Company
to be paid in respect of such shares when and to the extent permitted by law.

8
<PAGE>

(b) Registrations under this Section 4.1 shall be on such appropriate
registration form of the Commission (i) as shall be selected by the Company and
(ii) as shall permit the disposition of the Common Stock in accordance with the
intended method or methods of disposition.

(d) If a registration pursuant to this Section 4.1 involves an
underwritten offering, the underwriter or underwriters thereof shall be
selected, after consultation with the Company, jointly by Sponsors and Cendant,
and shall be reasonably acceptable to the Company.

(e) A registration requested pursuant to this Section 4.1 shall not
be deemed to have been effected (i) if a registration statement with respect
thereto has not become effective, provided that a registration which does not
become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal of Sponsors or Cendant to
proceed shall be deemed to have been effected by the Company at the request of
Sponsors or Cendant, as the case may be, (ii) if, after it has become effective,
such registration becomes subject to, for longer than 90 days, any stop order,
injunction or other order of the Commission or other governmental agency or
court for any reason or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied, other than by reason of some act or
omission by Sponsors. If a registration requested pursuant to this Section 4.1
is to be a "shelf" registration, the Company shall use reasonable efforts to
keep such registration statement effective for one year after the effective date
thereof, provided that the Company shall not be required to keep the
registration statement effective if the continued effectiveness of the
registration statement would require the Company to disclose a material
financing, acquisition or other corporate development and the Company shall have
determined that such disclosure is not in the best interests of the Company for
such period not to exceed 180 days; and provided further that the requirement to
use reasonable efforts to keep the registration statement effective shall be
extended one day for each day that the Company allows the effectiveness of the
registration statement to lapse in reliance on the preceding proviso.

(f) If a registration pursuant to this Section 4.1 involves an
underwritten offering, and the managing underwriter shall advise the Company in
writing (with a copy to each holder of Common Stock being registered) that, in
its opinion, the number of shares of Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering within a
price range acceptable to the Stockholders requesting such registration, the
Company will include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, Common Stock to be included
in such registration by Sponsors and Cendant (or, if

9
<PAGE>

Cendant makes the election described in Section 4.1(a), the Company) pro rata
--- ----
among such holders on the basis of the number of shares of Common Stock
requested to be included by such holders.

Section IV.2 Incidental Registration. (a) If the Company at any
-----------------------
time proposes to register any of its Common Stock under the Securities Act
(other than by a registration on Form S-4 or S-8 or any successor or similar
forms and other than pursuant to Section 4.1), whether or not for sale for its
own account, it will each such time give prompt written notice to the
Stockholders of its intention to do so and of such holders' rights under this
Section 4.2. Upon the written request of any such holder made within 20 days
after the receipt of any such notice (which request shall specify the Common
Stock or Convertible Preferred Stock intended to be disposed of by such holder
and the intended method of disposition thereof), the Company will, subject to
the terms of this Agreement, use reasonable efforts to effect the registration
under the Securities Act of all Common Stock and Convertible Preferred Stock
which the Company has been so requested to register by the holders thereof, to
the extent required to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Common Stock and Convertible Preferred
Stock so to be registered, provided that if, at any time after giving written
--------
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each Stockholder and, thereupon, (i) in the case
of a determination not to register, shall be relieved of its obligation to
register any Common Stock and Convertible Preferred Stock in connection with
such registration (but not from its obligation to pay the Registration Expenses
in connection therewith), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Common Stock and
Convertible Preferred Stock, for the same period as the delay in registering
such other securities. The Company will pay all Registration Expenses in
connection with each registration of Common Stock and Convertible Preferred
Stock pursuant to this Section 4.2.

(b) If (i) a registration pursuant to this Section 4.2 involves an
underwritten offering of the securities so being registered, whether or not for
sale for the account of the Company, to be distributed (on a firm commitment
basis) by or through one or more underwriters of recognized standing under
underwriting terms appropriate for such a transaction and (ii) the managing
underwriter of such underwritten offering shall inform the Company and holders
of Common Stock and Convertible Preferred Stock requesting such registration by
letter of its belief that the distribution of all or a specified number of such
Common Stock and Convertible Preferred Stock concurrently with the securities
being distributed by such underwriters would interfere with the successful
marketing of the securities being distributed by such underwriters (such writing
to state the basis of such belief and the approximate number of shares of such
Common Stock and Convertible Preferred Stock which may be distributed without
such effect), then the

10
<PAGE>

Company may, upon written notice to all holders of Common Stock and Convertible
Preferred Stock, reduce pro rata (if and to the extent stated by such managing
underwriter to be necessary to eliminate such effect) the number of such shares
of Common Stock and Convertible Preferred Stock the registration of which shall
have been requested by each holder of Common Stock and each holder of
Convertible Preferred Stock pursuant to this Section 4.2 so that the resultant
aggregate number of shares of Common Stock and Convertible Preferred Stock so
included in such registration pursuant to this Section 4.2 shall be equal to the
number of shares stated in such managing underwriter's letter.

Section IV.3 Registration Procedures. If and whenever the Company is
-----------------------
required to use reasonable efforts to effect the registration of any Common
Stock or Convertible Preferred Stock under the Securities Act as provided in
Sections 4.1 and 4.2, the Company shall, as expeditiously as possible:

(i) prepare and within 60 days after the end of the
period within which requests for registration may be given to the Company
or as soon thereafter as possible (in the case of a registration pursuant
to Section 4.1, such filing to be made within 60 days after the request of
Sponsors or Cendant, as applicable, or in any event, as soon thereafter as
possible) file with the Commission the requisite registration statement to
effect such registration and thereafter use reasonable efforts to cause
such registration statement to become effective, provided, however, that
-------- -------
the Company may postpone filing any registration statement otherwise
required to be filed by the Company pursuant to Section 4.1 or suspend the
use of any effective registration statement for a reasonable period of time
not to exceed 180 days, if the Chairman of the Board determines in his good
faith, reasonable judgment that such registration or distribution would be
materially detrimental to the Company or because the Company is in
possession of material non-public information the disclosure of which would
be materially detrimental to the Company;

(ii) subject to Section 4.1(e), prepare and file with
the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until the earlier of (A)
such time as all of such securities have been disposed of in accordance
with the intended methods of disposition set forth in the registration
statement and (B) (i) in the case of a registration pursuant to Section 4.1
other than a "shelf" registration statement, the expiration of 180 days
after such registration statement becomes effective, (ii) in the case of a
"shelf" registration pursuant to Section 4.1, the expiration of one year
after such

11
<PAGE>

registration statement becomes effective, but subject to Section 4.1(e),
and (iii) in the case of a registration pursuant to Section 4.2, the
expiration of 90 days after such registration statement becomes effective;

(iii) furnish to each seller of Common Stock and
Convertible Preferred Stock covered by such registration statement such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such seller may reasonably request in order to
facilitate the public sale or other disposition of the Common Stock and
Convertible Preferred Stock owned by such seller;

(iv) use reasonable efforts to register or qualify all
Common Stock and Convertible Preferred Stock under such other securities
laws or blue sky laws of such jurisdictions as any seller thereof shall
reasonably request, to keep such registrations or qualifications in effect
for so long as such registration statement remains in effect, and take any
other action which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified, to
subject itself to income taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;

(v) use reasonable efforts to cause all Common Stock
and Convertible Preferred Stock covered by such registration statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Common Stock or Convertible Preferred
Stock;

(vi) notify the holders of Common Stock and Convertible
Preferred Stock and the managing underwriter or underwriters, if any,
promptly and confirm such advice in writing promptly thereafter:

12
<PAGE>

(A) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;

(B) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;

(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;

(D) if at any time the representations and warranties of the
Company made as contemplated by Section 4.4 below cease to be true and
correct; and

(E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Common Stock or
Convertible Preferred Stock for sale under the securities or blue sky
laws of any jurisdiction or the initiation or threat of any proceeding
for such purpose;

(vii) notify each seller of Common Stock and Convertible
Preferred Stock covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon the Company's discovery that, or upon the happening of
any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request
of any such seller promptly prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;

(viii) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to
the holders of Common Stock and Convertible Preferred Stock, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months,

13
<PAGE>

but not more than eighteen months, beginning with the first full quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder, and will furnish to each such seller at least
five business days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not file
any thereof to which any such seller shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;

(ix) make available for inspection by a representative or
representatives of the holders of Common Stock and Convertible Preferred
Stock, each such representative representing the holders of not less than a
majority of the Common Stock and Convertible Preferred Stock included in
the registration, any underwriter participating in any disposition pursuant
to the registration statement and any attorney or accountant retained by
such selling holders or underwriter (each, an "Inspector"), all reasonably
---------
requested financial and other records, pertinent corporate documents and
properties of the Company (the "Records"), and cause the Company's
-------
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration in
order to permit a reasonable investigation within the meaning of Section 11
of the Securities Act, provided that the Company shall not be required to
--------
comply with this subdivision (ix) if there is a reasonable likelihood, in
the judgment of the Company, that such delivery could result in the loss of
any attorney-client privilege related thereto; and provided, further, that
-------- -------
Records which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be disclosed to
any Inspector unless such Inspector shall have executed a confidentiality
agreement reasonably acceptable to the Company.

(x) furnish to each underwriter, if an underwritten offering,
customary "comfort" letters from its independent auditors, legal opinions
from counsel to the Company on customary matters, and such other
certificates, instruments or other matters reasonably requested by the
underwriters;

(xi) cause the Company's executive officers, including its chief
executive officer and chief financial officer, to be available to meet with
potential investors and to participate in any "roadshow" requested by the
underwriters and which in the underwriters' judgment is reasonably
necessary or appropriate for the sale of the Common Stock and Convertible
Preferred Stock; and

(xii) take such other action that may be requested by a seller of
Common Stock or Convertible Preferred Stock that are customary and

14
<PAGE>

reasonably required in connection with the sale of Common Stock or
Convertible Preferred Stock.

The Company may require each seller of Common Stock and Convertible
Preferred Stock as to which any registration is being effected to furnish the
Company such information regarding such seller and the distribution of such
securities as the Company, state "blue sky" commissions or the Commission may
from time to time reasonably request in writing.

Each Stockholder agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in subdivision
(vii) of this Section 4.3, such holder will forthwith discontinue such
Stockholder's disposition of Common Stock and Convertible Preferred Stock
pursuant to the registration statement relating to such Common Stock and
Convertible Preferred Stock until such Stockholder's receipt of the copies of
the supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 4.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Stockholder's possession of the prospectus relating to such Common Stock
and Convertible Preferred Stock current at the time of receipt of such notice.
In the event the Company shall give any such notice, the period mentioned in
paragraph (ii) of this Section 4.3 shall be extended by the length of the period
from and including the date when each seller of any Common Stock or Convertible
Preferred Stock covered by such registration statement shall have received such
notice to the date on which each such seller has received the copies of the
supplemented or amended prospectus contemplated by paragraph (vii) of this
Section 4.3.

Section IV.4 Underwritten Offerings. (a) If requested by the
----------------------
underwriters for any underwritten offering pursuant to a registration under
Section 4.1, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in Section 4.6. The
Stockholders will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof.

(b) If the Company at any time proposes to register any of its
securities under the Securities Act and such securities are to be distributed by
or through one or more underwriters, the Company will, if requested by any
Stockholder as provided in Section 4.2 and subject to the provisions of Section
4.2(b), use reasonable efforts to arrange for such underwriters to include all
the Common Stock and Convertible Preferred

15
<PAGE>

Stock to be offered and sold by such holder among the securities to be
distributed by such underwriters.

(c) Each Stockholder agrees, if so required by the managing
underwriter, not to sell, make any short sale of, loan, grant any option for the
purchase of, effect any public sale or distribution of or otherwise dispose of
any equity securities of the Company, in violation of Regulation M under the
Securities Act or during the 120 days (or such time as reasonably requested by
the managing underwriter) after any underwritten registration pursuant to
Section 4.1 or 4.2 has become effective, except as part of such underwritten
registration or pursuant to Section 3.1, whether or not such Stockholder
participates in such registration.

(d) No Person may participate in any underwritten offering
hereunder unless such Person (i) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved, subject to the terms
and conditions hereof, by the Company and the holders of a majority of Common
Stock and Convertible Preferred Stock to be included in such underwritten
offering, (ii) completes and executes all questionnaires, indemnities,
underwriting agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements and (iii) makes the
representations and warranties provided for in Section 4.4(a).

Section IV.5 Preparation; Reasonable Investigation. In connection
-------------------------------------
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the holders of
Common Stock and Convertible Preferred Stock registered under such registration
statement, their underwriters, if any, and their respective counsel and
accountants the reasonable opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto.

Section IV.6 Indemnification. (a) In the event of any registration
---------------
of any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless (i) in the case of any registration
statement filed pursuant to Section 4.1 or 4.2, each Stockholder covered by such
registration statement, its directors and officers, each broker who participates
in such offering or sale on behalf of a Stockholder, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such Stockholder or any such underwriter
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Stockholder or any such director or
officer or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any

16
<PAGE>

preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such Stockholder and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be liable
--------
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with information furnished to the Company by any Stockholder
or any underwriter participating in the offering, and provided further that the
--------
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Common Stock or Convertible Preferred Stock or to any
other Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, within the time required by the
Securities Act to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Common Stock or Convertible Preferred Stock to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Stockholder or any such director,
officer, underwriter or controlling person and shall survive the transfer of
such securities by such Stockholder.

(b) The Company may require, as a condition to including any
Common Stock or Convertible Preferred Stock in any registration statement filed
pursuant to Sections 4.1 or 4.2, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such Common Stock
or Convertible Preferred Stock, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this Section
4.6) the Company, each director of the Company, each officer of the Company and
each other Person, if any, who controls the Company within the meaning of the
Securities Act and each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
any such underwriter within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with information furnished to the Company by
such seller. Any such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director,

17
<PAGE>

officer or controlling person and shall survive the transfer of such securities
by such seller. Such indemnity shall be limited to the net proceeds from such
offering received by such indemnitor.

(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim referred to in
the preceding subdivisions of this Section 4.6, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
--------
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 4.6, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless a conflict of interest
between such indemnified and indemnifying parties would exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that the indemnifying party may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.

(d) If the indemnification provided for in the preceding
subdivisions of this Section 4.6 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability. In determining the
amount of contribution to which an indemnified party is entitled, there shall be
considered such indemnified party's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and other
equitable considerations appropriate under the circumstances. It is hereby
agreed that it would not necessarily be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not found guilty of such fraudulent misrepresentation.

18
<PAGE>

ARTICLE V

CERTAIN COVENANTS

Section V.1 Reasonable Access. Subject to Section 5.4, the Company
-----------------
agrees that each Stockholder (and its representatives) may, upon reasonable
notice during normal business hours, visit and inspect the properties of the
Company and its subsidiaries and examine and copy their books of record and
account and discuss their affairs, finances and accounts with their officers and
accountants. Subject to Section 5.4, the Company shall furnish to Sponsors and
Cendant, monthly financial information consisting of at least: monthly and year-
to-date operating statements, statements of cash flows and month-end balance
sheets, in each case, on a pre-acquisition accounting and a post-acquisition
accounting basis, and otherwise in accordance with generally accepted accounting
principles as then in effect, any forecasted information prepared by the
Company, a comparison to Company's forecast for such period and a corresponding
period of the prior year and such other financial information as may be
reasonably required by any stockholder in order to evaluate and monitor its
investment in the Company.

Section V.2 Action by Stockholders. The Stockholders shall from time
----------------------
to time vote their shares of Common Stock and Convertible Preferred Stock as may
be required to cause the Company to comply with the provisions of this
Agreement.

Section V.3 Further Actions. In case at any time after the date
---------------
hereof any further action is necessary or desirable to carry out the purposes of
this Agreement, each party hereto shall take all such necessary action.

Section V.4 Confidentiality. Each Stockholder shall use, and shall
---------------
cause its Affiliates, employees and agents to use, its or their best efforts to
ensure that confidential information concerning the business and affairs of the
Company and its subsidiaries are kept confidential unless the Company shall have
consented to the disclosure of such information, provided that such information
--------
may be disclosed to the extent required by law or legal process, provided,
--------
further, that any party may disclose such information pursuant to the terms of a
- -------
customary confidentiality agreement to a Person engaged in good faith
negotiations to acquire all or substantially all of the equity interests or
business of such party, provided, further, that the Stockholders may provide
-------- -------
regular reports to their respective investors. The Company shall use, and shall
cause its Affiliates, employees and agents to use, its or their best efforts to
ensure that the terms of this Agreement and information concerning the business
and affairs of each Stockholder are kept confidential unless such Stockholder
shall have consented to the disclosure of such information. The foregoing shall
not prohibit disclosure of information which (i) is or becomes publicly
available other than as a result of a violation of this Section 5.4, (ii) is or
becomes available to a Stockholder or the Company, as the case may be, from a
source (other than

19
<PAGE>

the Company or any Stockholder, as the case may be) which is not prohibited from
disclosing such information by legal, contractual or fiduciary obligations or
(iii) is required to be included in a registration statement filed pursuant to
Article IV.

Section V.5 Additional Shares. Each Stockholder agrees that upon
-----------------
acquisition of additional shares of Common Stock or Preferred Stock by such
party or its subsidiaries or other controlled entities, whether by purchase,
conversion, exercise of an option, or otherwise, the additional shares will
become subject to this Agreement and such Stockholder shall become bound by the
terms of this Agreement with respect to such additional shares.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Notices. Any notice, request or other document to be
-------
given hereunder to any party shall be effective upon receipt (or refusal of
receipt) and shall be in writing and delivered personally or sent by telex,
telecopy or certified or registered mail, postage prepaid and addressed to:

If to the Company, addressed to:

NRT Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Telecopy No.: (973) 496-0101
Attention: General Counsel

If to Cendant or Cendant Operations, Inc., addressed to:

Cendant Corporation
6 Sylvan Way
Parsippany, NJ 07054
Telecopy No.: (973) 496-5331
Attention: General Counsel

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopy No.: (212) 735-2000

20
<PAGE>

Attention: Stephen F. Arcano

If to Apollo or Sponsors, addressed to:

Apollo Management L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Telecopy No.: (212) 261-4071
Attention: Joshua J. Harris

With a copy to:

Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin

or to such other address as any party shall have specified by written notice
given to the other parties in the manner specified above.

Section 6.2 Binding Nature of Agreement; No Third Party
-------------------------------------------
Beneficiaries. This Agreement shall be binding upon and inure to the benefit of
- -------------
and be enforceable by the parties hereto or their successors in interest, except
as expressly otherwise provided herein. Nothing in this Agreement shall convey
any rights upon any person or entity which is not a party or an assignee of a
party to this Agreement.

Section 6.3 Descriptive Headings. The descriptive headings of the
--------------------
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.

Section 6.4 Specific Performance. Without limiting the rights of
--------------------
each party hereto to pursue all other legal and equitable rights available to
such party for the other parties' failure to perform their obligations under
this Agreement, the parties hereto acknowledge and agree that the remedy at law
for any failure to perform their obligations hereunder would be inadequate and
that each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.

Section 6.5 Governing Law. This Agreement shall be construed and
-------------
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of

21
<PAGE>

the State of Delaware, without regard to the principles of conflicts of law.
Each party irrevocably consents to the service of any and all process in any
action or proceeding arising out of or relating to this Agreement by the mailing
of copies of such process to each party at its address specified herein. The
parties hereto irrevocably submit to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York (or, if
subject matter jurisdiction in that court is not available, in any state court
located within the City of New York) over any dispute arising out of or relating
to this Agreement or any agreement or instrument contemplated hereby or entered
into in connection herewith or any of the transactions contemplated hereby or
thereby. Each party hereby irrevocably agrees that all claims in respect of such
dispute or proceeding may be heard and determined in such courts. The parties
hereby irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum in
connection therewith.

Section 6.6 Counterparts. This Agreement may be executed
------------
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.

Section 6.7 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

Section 6.8 Entire Agreement. This Agreement is intended by the
----------------
parties hereto as a final and complete expression of their agreement and
understanding in respect to the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings, written or oral, between the
parties with respect to such subject matter.

Section 6.9 Amendment and Waiver. Any provision of this Agreement
--------------------
may be amended if, but only if, such amendment is in writing and is signed by
the Company and the Stockholders (or their Affiliates or transferees) owning at
least a majority of the then outstanding shares of each class of Preferred Stock
and Common Stock, provided that (i) no such amendment may materially adversely
--------
affect the rights of any Stockholder without the prior written consent of such
Stockholder, (ii) Section 3.1 may be amended only if such amendment is in
writing and is signed by the Company and all of the Stockholders, (iii) no such
amendment may both (A) adversely affect the rights of Stockholders of any class
and (B) treat the holders of such class differently from holders of another
class in a manner not contemplated by this Agreement without the prior written

22
<PAGE>

consent of holders of a majority of shares (whether outstanding or issuable) of
the class so adversely affected. Any provision may be waived if, but only if,
such waiver is in writing and is signed by or on behalf of the party waiving
such provision.

Section 6.10 Termination. Upon such time as either of Cendant or
-----------
Sponsors ceases to beneficially own any shares of the Common Stock or the
Convertible Preferred Stock, this Agreement shall terminate and be of no further
force and effect; provided, however, that (i) the obligations of the parties
-------- -------
under Article II shall terminate when either of Cendant or Apollo beneficially
owns less than 5% of the outstanding shares of the Company's voting stock, (ii)
the obligations of the parties pursuant to Articles IV and V shall continue and
shall not terminate and (iii) Cendant shall continue to have the right to
designate one director for election to the Board pursuant to Article II, and the
Company shall cause such designee to be nominated for election to the Board, so
long as any of the Master Franchise Agreements remains in effect.

Section 6.11 Expenses. All costs and expenses incurred by Sponsors,
--------
Cendant and Bear, Stearns & Co., Inc. in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Company.

Section 6.12 Effect on Prior Agreement; References. (a) This
-------------------------------------
Agreement amends, restates and supercedes the 1997 Agreement in its entirety
and, upon the effective date hereof, all provisions of the 1997 Agreement shall
terminate and have no further force or effect.

(b) All references to the 1997 Agreement in any other agreement to
which any of the parties hereto are a party shall from and after the date hereof
be deemed to be references to this Agreement.

23
<PAGE>

IN WITNESS HEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.

CENDANT CORPORATION

By:_______________________________
Name:
Title:

CENDANT OPERATIONS, INC.

By:_______________________________
Name:
Title:

For purposes of Article III only,
APOLLO MANAGEMENT L.P.

By:_______________________________
Name:
Title:

APOLLO INVESTMENT FUND III, L.P.

By: APOLLO ADVISORS II, L.P.
------------------------
its General Partner

By: APOLLO CAPITAL MANAGEMENT II, INC.
----------------------------------
its General Partner

By:_______________________________
Name:
Title:

24
<PAGE>

APOLLO OVERSEAS PARTNERS III, L.P.

By: APOLLO ADVISORS II, L.P.
------------------------
its General Partner

By: APOLLO CAPITAL MANAGEMENT II, INC.
----------------------------------
its General Partner

By:_______________________________
Name:
Title:

APOLLO (UK) PARTNERS III, L.P.

By: APOLLO ADVISORS II, L.P.
------------------------
its General Partner

By: APOLLO CAPITAL MANAGEMENT II, INC.
----------------------------------
its General Partner

By:__________________________
Name:
Title:

25
<PAGE>

Schedule A to
Stockholders Agreement
----------------------

<TABLE>
<CAPTION>
Class Number
Stockholder of Stock of Shares
----------- -------- ---------
<S> <C> <C>

Apollo Investment Fund III, L.P. Common Stock 9,116,263

Apollo Overseas Partners III, L.P. Common Stock 545,832

Apollo (UK) Partners III, L.P. Common Stock 337,905

Cendant Operations, Inc. Senior Preferred Stock 157,591

Cendant Operations, Inc. Convertible Preferred Stock 24,000

Apollo Investment Fund III, L.P. Junior Preferred Stock 62,459

Apollo Overseas Partners III, L.P. Junior Preferred Stock 3,738

Apollo (UK) Partners III, L.P. Junior Preferred Stock 2,313
</TABLE>

<PAGE>

EXHIBIT 10.19

FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------

FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of May 4, 1999
among NRT Incorporated (the "Borrower"), the Banks from time to time party to
the Credit Agreement referred to below, BANKERS TRUST COMPANY ("BTCo") as Lead
Arranger, and THE CHASE MANHATTAN BANK ("Chase") as Co-Arranger, (BTCo and
Chase, each an "Arranger" and, collectively, the "Arrangers"), BANKBOSTON, N.A.
as Co-Agent (in such capacity, "Co-Agent") and BTCo, as Administrative Agent (in
such capacity, the "Administrative Agent") and Chase, as Syndication Agent (in
such capacity, the "Syndication Agent"). All capitalized terms used herein and
not otherwise defined herein shall have the respective meanings provided such
terms in the Credit Agreement.

WITNESSETH
----------

WHEREAS, the Borrower, the Banks, the Arrangers, the
Administrative Agent, the Syndication Agent and the Co-Agent are party to a
Credit Agreement, dated as of March 31, 1999 (as amended through the date
hereof, the "Credit Agreement");

WHEREAS, the parties wish to amend the Credit Agreement as
herein provided; and

WHEREAS, subject to the terms and conditions of this Amendment,
the parties hereto agree as follows;

NOW THEREFORE, it is agreed:

1. Section 11 of the Credit Agreement is hereby amended by
inserting the following new text after the text "Section 10" appearing in the
definition of "Revolving Loan Commitment:

"or increased pursuant to Section 13.20"

2. The Credit Agreement is hereby amended by inserting the
following new Section 13.20:

"13.20 Increase of Total Revolving Loan Commitment. So long as
-------------------------------------------
no Default or Event of Default then exists or would result therefrom,
the Borrower shall have the right at any time and from time to time to
request one or more Banks (and/or one or more other Persons which will
become Banks as provided below) to increase their respective Revolving
Loan Commitments (or, in the case of other Persons which become Banks,
provide new Revolving Loan Commitments) it being understood and agreed,
however, that (i) no Bank shall be obligated to increase its Revolving
Loan Commitment (or, in the case of other Persons who become Banks,
provide a new Revolving Loan Commitment) as a result of any request by
the Borrower, (ii) any Bank (or any other

<PAGE>

Person which will qualify as an Eligible Transferee) may so increase
their Revolving Loan Commitment or provide a new Revolving Loan
Commitment, as the case may be, without the consent of any other Bank
but with the consent of the Administrative Agent, (iii) any increase in
the Total Revolving Loan Commitment pursuant to this Section 13.20 shall
be in a minimum amount (for all Banks (including Eligible Transferees
who will become Banks)) of at least $5,000,000 and in integral multiples
of $1,000,000 in excess thereof, (iv) the Total Revolving Loan
Commitment may not be increased by more than $55,000,000 pursuant to
this Section 13.20 and (v) any increase in the Revolving Loan Commitment
of any Bank (or any new Revolving Loan Commitment from Eligible
Transferees who will become Banks) pursuant to this Section 13.20 shall
be done in coordination with the Administrative Agent. At the time of
any increase in the Total Revolving Loan Commitment pursuant to this
Section 13.20, (i) the Borrower shall, in coordination with the
Administrative Agent, repay outstanding Revolving Loans of certain Banks
and, if necessary, incur additional Revolving Loans from other Banks in
each case so that the Banks continue to participate in each Borrowing of
Revolving Loans pro rata on the basis of their Revolving Loan
--------
Commitments (after giving effect to any such increase in the Total
Revolving Loan Commitment pursuant to this Section 13.20) and with the
Borrower being jointly and severally obligated to pay to the respective
Banks the costs of the type referred to in Section 1.11 in connection
with any such repayment and/or Borrowing, (ii) Schedule I shall be
deemed modified to reflect the revised Revolving Loan Commitments of the
affected Banks, (iii) upon surrender of any old Revolving Notes by those
Banks that have increased their Revolving Loan Commitments pursuant to
this Section 13.20, to the extent requested by such Banks, new Revolving
Notes will be issued, at the Borrower's expense, to such Banks (and to
Eligible Transferees who will become Banks) to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the
extent needed to reflect the revised Revolving Loan Commitments."

3. In order to induce the Banks to enter into this Amendment,
the Borrower hereby represents and warrants that (i) no Default or Event of
Default exists as of the First Amendment Effective Date both before and after
giving effect to this Amendment and (ii) on the First Amendment Effective Date,
both before and after giving effect to this Amendment, all representations and
warranties contained in the Credit Agreement and in the other Credit Documents
are true and correct in all material respects (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date).

4. This Amendment shall become effective on the date (the "First
Amendment Effective Date") when the Borrower, the Required Lenders and each Bank
whose Revolving Loan Commitment is increasing as a result of this Amendment
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent at the Notice Office.

5. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.

-2-
<PAGE>

6. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.

7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.

* * *

-3-

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date hereof.

NRT INCORPORATED

/s/
By___________________________
Tile: CFO

BANKERS TRUST COMPANY,
Individually and as
Administrative
Agent and Arranger

By____________________________
Title:

THE CHASE MANHATTAN BANK,
Individually and as Syndication Agent and
Arranger

By_____________________________
Title:

BANK BOSTON, N.A.,
as Co-Agent

By____________________________
Title:

PARIBAS

By______________________________
Title:

<PAGE>

CITY NATIONAL BANK

By_________________________
Title:

<PAGE>

EXHIBIT 11

NRT INCORPORATED AND SUBSIDIARIES
EXHIBIT TO FORM S-1 REGISTRATION STATEMENT

For the four months ended December 31, 1997, the year ended December 31, 1998
and the three months ended March 31, 1998 and 1999

COMPUTATION OF LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
Pro Pro
Forma Forma
Three Three Pro Three Three
Four Months Months Forma Months Months
Months Ended Ended Year Ended Ended Ended
Ended Year Ended March 31, March 31, December 31, March 31, March 31,
December 31, December 31, 1998 1999 1998 1998 1999
1997 1998 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------ ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss)....... $(42,243) $ 1,309 $(25,137) $(10,423) $ (9,874) $(47,017) $(11,172)
Dividends on Series A
and Series B preferred
stock.................. (9,732) (29,910) (7,255) (7,627) (15,438) (3,846) (4,553)
Accretion of Series C
preferred stock
discount and redemption
premium................ (2,257) (6,708) (1,654) (1,654) -- -- --
-------- -------- -------- -------- -------- -------- --------
Basic loss applicable to
common shareholders.... (54,232) (35,309) (34,046) (19,704) (25,312) (50,863) (15,725)
Add: Dividends on
cumulative convertible
redeemable preferred
stock.................. 210 1,200 300 301 1,200 300 301
-------- -------- -------- -------- -------- -------- --------
Diluted loss applicable
to common
shareholders........... $(54,022) $(34,109) $(33,746) $(19,403) $(24,112) $(50,563) $(15,424)
======== ======== ======== ======== ======== ======== ========

Weighted average number
of common shares and
common share
equivalents
outstanding: (A)
Weighted Average number
of common shares
outstanding............ 18,750 18,750 18,750 18,750 18,750 18,750 18,750
Add shares issued in
conjunction with the
offering(B)............ -- -- -- -- 9,666 9,666 9,666
-------- -------- -------- -------- -------- -------- --------

Weighted average number
of common shares
outstanding during the
year--basic............ 18,750 18,750 18,750 18,750 28,416 28,416 28,416

Add common share
equivalents--Weighted
average options to
purchase common stock--
net.................... -- 2,634 -- -- 2,634 -- --
Add common share
equivalents--Cumulative
convertible preferred
stock.................. 6,474 6,474 6,474 6,474 6,474 6,474 6,474
-------- -------- -------- -------- -------- -------- --------
Weighted Average number
of common shares and
common share
equivalents
outstanding--diluted... 25,224 (C) 27,858 (C) 25,224 (C) 25,224 (C) 37,524 (C) 34,890 (C) 34,890 (C)
======== ======== ======== ======== ======== ======== ========

Basic loss per common
share.................. $ (2.89)(C) $ (1.88)(C) $ (1.82)(C) $ (1.05)(C) $ (0.89)(C) $ (1.79)(C) $ (0.55)(C)
======== ======== ======== ======== ======== ======== ========

Diluted loss per common
share.................. $ (2.14)(C) $ (1.22)(C) $ (1.34)(C) $ (0.77)(C) $ (0.64)(C) $ (1.43)(C) $ (0.44)(C)
======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------------
(A) Gives effect to an intended 1.875-for-1 stock split that is expected to
be declared prior to the offering.
(B) Gives effect to the additional shares that will be outstanding as a
result of the offering and the additional shares that would be issued to
fund the repurchase of common stock from Apollo, the intended repurchase
of the convertible preferred stock from Cendant, the redemption of the
junior convertible preferred stock and the $45 million cash dividend paid
to Apollo.
(C) In accordance with SFAS No. 128, the inclusion of common stock
equivalents in the computation of earnings per share need not be
considered if the effect is antidilutive. Therefore, historical and pro
forma loss per common share and the weighted average common shares
outstanding as shown on the respective consolidated statements of
operations for the respective periods does not include common share
equivalents as their effect is antidilutive.

<PAGE>

EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No.
333-72093 of NRT Incorporated of our report dated July 1, 1998, related to the
statements of operations and retained earnings and cash flows of Barbara Sue
Seal Properties, Inc., for the year ended December 31, 1996, appearing in the
Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

Deloitte & Touche LLP
Portland, Oregon

May 11, 1999

<PAGE>

EXHIBIT 23.4

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No.
333-72093 of NRT Incorporated of our report dated June 26, 1998, related to the
combined statements of operations, owners' equity, and cash flows of Contempo
Realty, Inc., Contempo Relocation, Inc., and the Blossom Valley, Morgan Hill,
and Bascom general partnerships, for each of the three years in the period
ended December 31, 1996, appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

Deloitte & Touche LLP
San Francisco, California

May 11, 1999

<PAGE>

EXHIBIT 23.5

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No.
333-72093 of NRT Incorporated of our report dated June 19, 1998, related to the
statements of operations, shareholders' equity, and cash flows of Cornish &
Carey Residential, Inc., for the years ended December 31, 1995 and 1996,
appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

Deloitte & Touche LLP
San Francisco, California

May 11, 1999

<PAGE>

EXHIBIT 23.6

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No.
333-72093 of NRT Incorporated of our report dated July 10, 1998, related to the
combined statements of operations, shareholders' deficit, and cash flows of Jon
Douglas Company, San Vicente Escrow Company, Equity Title Company, Douglas
Referral Associates, and Jon Douglas Financial for the period January 1, 1995
through November 14, 1995, appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

Deloitte & Touche LLP
Costa Mesa, California

May 11, 1999

<PAGE>

EXHIBIT 23.7

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No.
333-72093 of NRT Incorporated of our report dated July 10, 1998, related to the
consolidated statements of operations, shareholders' deficit, and cash flows of
Jon Douglas Real Estate Services Group, Inc., for the nine months ended
September 30, 1997, appearing in the Prospectus, which is part of this
Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Prospectus.

Deloitte & Touche LLP
Costa Mesa, California

May 11, 1999

<PAGE>

EXHIBIT 23.8

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated March 19, 1997 and to all references to our Firm included or made a part
of this Form S-1 Registration Statement filed by NRT Incorporated.

Arthur Andersen LLP

Los Angeles, California

May 11, 1999