SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
________________________________________
FORM 8-K
________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 14, 1997
(Date of earliest event reported)
INSIGNIA FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19066 13-3591193
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification
Number)
One Insignia Financial Plaza
Post Office Box 1089
Greenville, South Carolina 29602
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (864) 239-1000
______________________________________
<PAGE>
Item 5. Other Events
Item 7. Financial Statement and Exhibits
(c) Exhibits
Exhibit No.
99.1 Press Release dated August 14, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ John K. Lines
---------------------------
John K. Lines
General Counsel
Date: August 28, 1997
FOR IMMEDIATE RELEASE: CONTACT: Mr. Frank M. Garrison
Executive Managing Director
Insignia Financial Group, Inc.
(615) 783-1022
INSIGNIA FINANCIAL GROUP ANNOUNCES AGREEMENT WITH HUD
Greenville, South Carolina, August 14, 1997 - Insignia Financial Group
(NYSE:IFS) today announced an agreement with the United States Department of
Housing and Urban Development (HUD) to resolve certain matters concerning
services provided to certain HUD-supported affordable housing projects.
The matters concern certain management fee arrangements at properties owned
by an unaffiliated third party to which a unit of Insignia provides management
services. The management contracts at issue were originally purchased from
Associated Financial Corporation (AFC) by an affiliate of U.S. Shelter
Corporation, a company Insignia acquired in December 1990, and were subsequently
renewed by Insignia in 1995 (the AFC Transaction).
Although no legal action was initiated against Insignia, the Company
determined it to be in the best interests of Insignia and the various
constituencies that it serves to come to a voluntary agreement and eliminate any
uncertainty. Insignia has not admitted to any liability or wrongdoing in the
matter, and it has affirmatively stated that it relied on the advice of legal
counsel that the contractual agreements were proper. Under the terms of the
agreement, Insignia has remitted $5 million to HUD, and HUD has provided
Insignia with a full and final release of any potential claims they may have
asserted in connection with the AFC Transaction. HUD and the Company further
agreed that should there be any issues on any other properties managed by
Insignia, they would pursue resolution of such issues through a private
mediation process. Insignia stated that it believes that any resolution of such
issues would not have a material impact on its financial condition and that it
will continue to be active in the acquisition and management of HUD properties
well into the future.
Insignia said that as a result of the agreement it would record a one-time
charge of $5 million (pre-tax) for its third quarter ended September 30, 1997.
Insignia stated: "Although we believe that Insignia acted properly in these
transactions, we have agreed to resolve the matter expeditiously to avoid
potential complex, costly and disruptive litigation. Moreover, by resolving the
matter quickly, we believe that we have maintained our competitive position as a
leader in the market for HUD management services. As a result of our strong
record as efficient and effective managers -- a record that is recognized by HUD
- -- and our good faith in resolving this matter, we expect to expand our
opportunities to serve as managers of affordable housing for many years to come.
Insignia wants to be supportive of Secretary Cuomo's ongoing efforts to improve
HUD-supported housing in the United States.
"Insignia's core business operations continue to be very strong, and our
acquisition pipeline is extremely active. Our agreement with HUD is not expected
to have any material effect on our operations or financial condition. Management
of affordable housing continues to be a relatively small but important part of
Insignia's overall business - less than 9% of our operating profit. But we are
very good at what we do, and we look forward to continuing to serve this
critical component of the American housing market."
Inquiries regarding the agreement may be directed to Frank M. Garrison
(615) 783- 1022 for Insignia. This agreement was entered into with HUD through
its counsel Anne-Christine Massullo (415) 436-6842 and John H. Hemann (415)
436-6991.
With corporate headquarters in Greenville, South Carolina, Insignia
Financial Group, Inc. is a fully-integrated real estate services company.
Insignia is the largest manager of multifamily residential properties in the
United States and is also among the largest managers of commercial properties.
Insignia commenced operations in December 1990 and has since grown to provide
property and/or asset management services for approximately 2,600 properties
which include approximately 270,000 residential units (including cooperative and
condominium units), and approximately 147 million square feet of commercial
space located in over 500 cities and 48 states.
Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 (the
"Reform Act") and as such may involve known and unknown risks, uncertainties and
other factors (including HUD's actions regarding the Company and other property
managers) which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
forward-looking statements speak only as of the date of this press release. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based.
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