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: December 31, 1996
(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
______________________________________
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Item 5. Other Events
The information set forth in the exhibit to this Report is hereby incorporated
herein by reference.
Item 7. Financial Statement and Exhibits
(c) Exhibits
Exhibit No.
99.1 Press Release issued on February 25, 1997
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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: March 5, 1997
Exhibit 99.1
FOR IMMEDIATE RELEASE FOR INFORMATION CONTACT:
James A. Aston
Office of the Chairman and
Chief Financial Officer
(864) 239-1661
http://www.INSIGNIAFINANCIAL.COM
Insignia Announces 90% Increase in
1996 EBITDA/FFO
Greenville, S.C., February 25, 1997 -- Insignia Financial Group, Inc. (NYSE:
IFS) announced results today for the year ended 1996, reporting an increase of
90% in combined EBITDA and FFO, from $32.9 million for 1995 to $62.4 million for
1996. The Company uses combined EBITDA and FFO as a primary indicator of its
financial performance, with EBITDA being defined as earnings of the service
operations before interest, taxes, depreciation and amortization (excluding
equity earnings and minority interests); and FFO being defined as a measure of
real estate operations, which represents net income or loss in accordance with
generally accepted accounting principles excluding gains or losses from debt
restructuring, sales of property, and minority interests plus depreciation and
provisions for impairment.
Net EBITDA for the year increased 94% from $24.6 million for 1995 to $47.7
million for 1996. Net EBITDA is combined EBITDA and FFO (as defined above) less
interest expense and earnings allocable to preferred securities. FFO is
generated primarily from investments in real estate limited partnerships. Net
EBITDA per common share (common shares outstanding increased 39% to 31.6 million
shares from the sale of 4.9 million shares in the fourth quarter of 1995, the
issuance of 2.6 million shares from the conversion of convertible securities, as
well as the securities issued in the E.S. Gordon acquisition) was $1.51 for 1996
compared to $1.09 for 1995, an increase of 39%. Net income increased 48% from
$5.8 million for 1995 to $8.6 million for 1996, on an 80% increase in revenues
from $123.0 million for 1995 to $221.1 million for 1996. Earnings per share
before extraordinary item were $.29 for 1996 compared to $.22 for 1995, an
increase of 32%. Earnings per share were $.27 for 1996 compared to $.20 for
1995, an increase of 35%. The NPI, ESG and Paragon acquisitions contributed
significantly to the increase in 1996 results.
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Combined EBITDA and FFO increased 150% for the fourth quarter of 1996, from $8.2
million for 1995 to $20.5 million. This increase was attributable to the
acquisitions completed throughout the year, the increase in commercial
transaction revenue which is cyclical, and the increased ownership in real
estate limited partner interests. Net EBITDA increased 181% for the fourth
quarter of 1996, from $5.8 million for 1995 to $16.2 million for 1996, and net
EBITDA per share increased 123% from $.22 for the 1995 fourth quarter to $.49
for the 1996 fourth quarter. Net income for the fourth quarter was $3.5 million
for 1996 compared to $502,000 for 1995, with earnings per share of $.11 for 1996
compared to $.01 for 1995.
On December 31, 1996, Insignia successfully completed the acquisition of 25
multifamily properties in a joint venture with Blackstone Real Estate Advisors,
a New York based investment banking group, for approximately $109 million, of
which Insignia will own a 25% interest, net of existing liabilities, through an
initial investment of $18.4 million. These assets, known as the GSSW Portfolio,
were formerly owned by a joint venture between Great Southern Life Insurance
Company and Southwestern Life Insurance Company, and consist of 5,710
multifamily apartment units. The majority of the properties are based in the
Southeast and Mid-Atlantic regions, with concentrations in the Houston, San
Antonio, Newport News, and Greensboro/Winston-Salem markets. These properties
are being refinanced in February 1997, with an anticipated $105.5 million loan.
In addition to being a general partner in the acquiring entity, Insignia became
the property manager for the properties effective January 1, 1997.
In addition, Insignia has strategically formed joint ventures and limited
liability companies to invest in various real estate joint venture partnerships.
The Company has invested $5.6 million in such joint ventures. Also, Insignia has
invested in several commercial opportunities where it has co- invested capital
to obtain an ownership interest with various general partner rights and the
right to provide the day to day services, with additional rights to back end
compensation if and when the real estate is disposed. Over the course of 1996,
the Company has invested approximately $2.8 million in various commercial
co-investments, with all of the co-investments designating Insignia as the
manager of each of the properties. Including the GSSW purchase, Insignia's
investments in real estate interests, other than its interests in IPT described
below, approximate $31.9 million.
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During the fourth quarter of 1996 the Company formed Insignia Properties Trust
("IPT") and Insignia Properties, L.P. ("IPLP") which together comprise an
umbrella partnership real estate investment trust. IPT and IPLP are expected to
function as the Company's primary vehicles for acquiring and owning interests in
multifamily real estate assets. Insignia and certain of its affiliates have
initially contributed to IPT virtually 100% of the limited partnership interests
acquired by Insignia over the course of the past 18 months, as well as the
general partnership interests in those partnerships in which Insignia has
acquired limited partnership interests. Insignia will initially own virtually
100% of the stock in IPT, with IPT owning 100% of the general partnership
interest in IPLP. IPT was formed to continue Insignia's business of acquiring
and owning interests in multifamily real estate and to permit the election of
REIT status for income tax purposes. This type of organization is believed to be
the most efficient for attracting equity capital from third party investors for
acquisitions of real estate interests. While Insignia does not currently have
any plans to reduce its investment in multifamily real estate interests, the
Company does intend to attract third party equity into IPT for the future growth
of that business.
In November 1996, Insignia Financing I, a Delaware business trust (the "Trust"),
issued and sold 2,990,000 of its 6 1/2% Trust Convertible Preferred Securities
with an aggregate liquidation amount of $149.5 million (the "Convertible
Preferred Securities"). All of the outstanding common securities of the Trust
are owned by the Company. The Convertible Preferred Securities were sold by
Lehman Brothers, Dillon, Read & Co. Inc., Goldman, Sachs & Co. and A.G. Edwards
& Sons, Inc. for $149.5 million to "qualified institutional buyers." The
Preferred Securities may be converted at the option of the holder into shares of
the Company's Class A Common Stock ("Common Stock") at a conversion price of
$26.50 per share of Common Stock.
Commenting on the Company's performance for the year ended December 31, 1996,
Andrew L. Farkas, Chairman and Chief Executive Officer, said, "The results for
the year show strong ability to perform in difficult circumstances. The Company
was able to deliver significant growth in all material financial respects, as
well as the completion of two very important acquisitions and a security
offering. These results were delivered in spite of the continued sales of the
Balcor assets, the majority of which were completed by the end of 1996. Insignia
has actively pursued the replacement of the revenue stream with internal growth,
and as a result has concentrated on the third party business of the Company. We
are confident in our ability to continue to grow the
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Company in the future in numerous ways as we pursue both our traditional
acquisition objectives, and as we develop new ways to capitalize on
opportunities presented by our dominant position in the real estate markets we
service."
Insignia is a fully integrated real estate services company specializing in the
ownership and operation of securitized real estate assets. As a full service
real estate management organization, Insignia performs property management,
asset management, investor services, partnership accounting, real estate
investment banking, and real estate brokerage services for various types of
owners including approximately 900 limited partnerships having approximately
360,000 limited partners.
Insignia is the largest manager of multifamily residential properties in the
United States and is among the largest managers of commercial properties.
Insignia commenced operations in December 1990 and since then has grown to
provide property and/or asset management and other real estate services for over
2,400 properties which include approximately 260,000 residential units
(including cooperative and condominium units), and approximately 110 million
square feet of commercial space located in over 500 cities and 48 states.
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INSIGNIA FINANCIAL GROUP, INC.
Financial Highlights
(In thousands, except per share amounts)
For the Quarter Ended
December 31,
1996 1995 % Change
Revenues(1) $77,147 $36,233 112.9%
EBITDA - Service Division 17,351 7,196 141.1%
FFO from Real Estate Operations 3,163 1,019 210.4%
Net EBITDA(2) 16,221 5,776 180.8%
Income Before Extraordinary Items 4,246 954 345.1%
Net Income 3,544 502 606.0%
Preferred Dividend Requirements -- (327) (100.0)%
Earnings Available for Common
Stockholders 3,544 175 1925.1%
Earnings Per Share Amounts:
Income Before Extraordinary Item .13 .02 550.0%
Net Income .11 .01 1000.0%
Net EBITDA per Common Share(3) .49 .22 122.7%
Weighted Average Common Shares
Outstanding and Dilutive Common
Stock Equivalents 32,909,389 25,915,794 27.0%
For the Year Ended
December 31,
1996 1995 % Change
Revenues(1) $221,054 $123,032 79.7%
EBITDA - Service Division 49,008 28,305 73.1%
FFO from Real Estate Operations 13,441 4,611 191.5%
Net EBITDA(2) 47,713 24,622 93.8%
Income Before Extraordinary Items 9,266 6,258 48.1%
Net Income 8,564 5,806 47.5%
Preferred Dividend Requirements (199) (1,245) (84.0)%
Earnings Available for Common
Stockholders 8,365 4,561 83.4%
Earnings Per Share Amounts:
Income Before Extraordinary Item .29 .22 31.8%
Net Income .27 .20 35.0%
Net EBITDA per Common Share(3) 1.51 1.09 38.5%
Weighted Average Common Shares
Outstanding and Dilutive Common
Stock Equivalents 31,560,650 22,681,158 39.1%
(1) Excludes apartment properties revenue and equity earnings.
(2) Net EBITDA is combined EBITDA and FFO less interest expense and earnings
allocated to preferred security holders.
(3) Net EBITDA per common share is net EBITDA divided by the weighted average
common shares outstanding and dilutive common stock equivalents. This is a
measure the Company uses to evaluate its performance, and the per share
amount used by analysts who follow the Company.
