HFF, Inc. Reports Fourth Quarter and Full Year 2012 Financial and Transaction Production Results

  HFF, Inc. Reports Fourth Quarter and Full Year 2012 Financial and
  Transaction Production Results

Business Wire

PITTSBURGH -- March 6, 2013

HFF, Inc. (NYSE: HF) reported today its financial and production volume
results for the fourth quarter and full year of 2012. Based on transaction
volume, HFF, Inc. (the Company), through its Operating Partnerships, Holliday
Fenoglio Fowler, L.P. (HFF LP) and HFF Securities L.P. (HFF Securities and,
collectively with HFF LP, the Operating Partnerships), is one of the leading
and largest full-service commercial real estate financial intermediaries in
the U.S. providing commercial real estate and capital markets services to both
the users and providers of capital in the commercial real estate sector.

Consolidated Earnings

Fourth Quarter Results

Since going public in 2007, the Company recorded its highest quarterly revenue
of $97.3 million for the fourth quarter of 2012, an increase of $21.4 million,
or approximately 28.1%, compared to $75.9 million in the fourth quarter of
2011. The Company generated operating income of $21.6 million for the fourth
quarter of 2012, which was also a new high-watermark for any quarter and
represents an increase of $3.2 million, or approximately 17.4%, compared to
$18.4 million for the fourth quarter of 2011. This increase in operating
income is primarily attributable to the $21.4 million increase in revenue
which was partially offset by (a) increases in the Company’s
compensation-related costs and expenses associated with, in part, (i) the net
growth in headcount of 76 new associates over the past twelve months, (ii) an
increase in our incentive compensation including firm and office profit
participation expenses directly tied to performance-based metrics and (iii) an
increase in compensation expenses directly tied to transaction professionals
recruited in 2009 and 2010 who have successfully achieved contractual
performance-based metrics, and (b) increased operating, administrative and
other costs related, in part, to the Company’s headcount growth and production
volume, such as office expansion-related occupancy costs and travel and
entertainment expenses.

Interest and other income, net, totaled $7.5 million in the fourth quarter of
2012, an increase of $3.8 million, or approximately 102.6%, compared to $3.7
million in the fourth quarter of 2011. This was primarily a result of
increased income recognized on the Company’s initial recording of mortgage
servicing rights as well as increased other income earned in connection with
the Company’s Freddie Mac Program Plus® Seller Servicer business.

The Company recorded an income tax benefit of $6.7 million in the fourth
quarter of 2012, compared to income tax expense of $8.6 million in the fourth
quarter of 2011, a decrease of $15.3 million, or approximately 178.5%. This
decrease in income tax expense is primarily due to the reversal of the
remaining valuation allowance on our deferred tax assets of $19.5 million
during the fourth quarter of 2012.

The impact of the Company’s adjustment to reverse the valuation allowance was
to increase the deferred tax asset by $19.5 million and to correspondingly
decrease income tax expense by $18.8 million. The reversal of the valuation
allowance and its impact on net income was partially offset by a decrease in
other income related to the increase in the payable under the tax receivable
agreement of $16.0 million.

The Company reported net income attributable to controlling interest of $19.6
million for the quarter ended December 31, 2012, an increase of $7.0 million,
or 55.2%, compared with net income attributable to controlling interest of
$12.7 million for the same period in the prior year (after a downwards
adjustment to net income of approximately $0.6 million to reflect the impact
of the noncontrolling interest of HFF Holdings LLC (Holdings) in the Operating
Partnerships). Net income attributable to controlling interest for the quarter
ended December 31, 2012 was $0.52 per diluted share compared to $0.35 per
diluted share for the fourth quarter of 2011, an increase of $0.17 per diluted
share, or 48.6%. The effect of the adjustments for the reversal of the
deferred tax asset valuation allowance and the related impact on the payable
under the tax receivable agreement resulted in an overall net increase to net
income of approximately $2.8 million, or $0.07 per share on a fully diluted
basis, for the quarter ended December 31, 2012.

Adjusted EBITDA (non-GAAP measure whose reconciliation to net income
attributable to controlling interest can be found within this release) for the
fourth quarter of 2012 was a record $27.8  million, which represents an
increase of $5.7 million, or 25.6%, as compared to $22.1 million in the fourth
quarter of 2011. The increase in Adjusted EBITDA is primarily due to the
increases in operating income and interest and other income, net, as
previously noted above.

Full Year Results

The Company reported record full year revenues of $285.0 million for the year
ended December 31, 2012, an increase of $30.3 million, or approximately 11.9%,
compared to revenues of $254.7 million during the same period in 2011.
Operating income for the year ended December 31, 2012 was $50.1 million
compared to operating income of $53.4 million for the year ended December 31,
2011, representing a decrease of $3.3 million, or 6.1%. This decline in
operating income is primarily attributable to (a) increases in the Company’s
compensation-related costs and expenses associated with, in part, (i) the net
growth in headcount of 76 new associates over the past twelve months, (ii) an
increase in our incentive compensation including firm and office profit
participation expenses directly tied to performance-based metrics, and (iii)
an increase in compensation expenses directly tied to transaction
professionals recruited in 2009 and 2010 who have successfully achieved
contractual performance-based metrics, (b) increased operating, administrative
and other costs related, in part, to the Company’s headcount growth, such as
office expansion-related occupancy costs, supplies, research and printing, and
travel and entertainment expenses, and (c) an increase in stock compensation
expense primarily related to mark-to-market adjustments on outstanding
liability-based stock awards which are required to be revalued each quarter.

Interest and other income, net, totaled $20.0 million for the year ended
December 31, 2012, an increase of $5.1 million, or approximately 33.9%,
compared to $15.0 million for the comparable period in 2011. This was
primarily a result of increased income recognized on the Company’s initial
recording of mortgage servicing rights as well as increased other income
earned in connection with the Company’s Freddie Mac Program Plus® Seller
Servicer business.

Income tax expense for the year ended December 31, 2012 was approximately $8.7
million, a decrease of $13.7 million, or approximately 61.3%, compared to
approximately $22.4 million of income tax expense for the same period in 2011.
This decrease in income tax expense is primarily due to the reversal of the
valuation allowance on our deferred tax assets of $21.9 million during the
year ended December 31, 2012.

The impact of reversal of the valuation allowance and the effect of changes in
the rates used to measure the deferred tax assets on income tax expense for
the years ended December 31, 2012 and 2011 was a decrease of $20.7 million and
$4.6 million, respectively. The adjustment to the Company’s deferred tax asset
and its impact on the Company’s tax expense was partially offset by a
corresponding decrease in other income related to the increase in the
liability “payable under the tax receivable agreement” which reduced income
before income taxes by $17.4 million and $3.9 million during the years ended
December 31, 2012 and 2011, respectively, as reflected in the “(Increase)
decrease in payable under tax receivable agreement” (as shown on the
consolidated operating results before the line item “Income before income
taxes”).

The Company reported net income attributable to controlling interest for the
year ended December 31, 2012 of $43.9 million (after a downwards adjustment to
net income of $0.2 million to reflect the impact of the noncontrolling
ownership interest of Holdings in the Operating Partnerships), an increase of
$3.8 million, or 9.6%, compared with $40.0 million for the year ended December
31, 2011 (after a downwards adjustment to net income of $2.0 million to
reflect the impact of the noncontrolling ownership interest of Holdings in the
Operating Partnerships). Net income attributable to controlling interest for
the year ended December 31, 2012 was $1.18 per diluted share, as compared to
net income attributable to controlling interest of $1.11 per diluted share for
the same period in 2011, an increase of $0.07 per diluted share, or 6.3%. The
effect of the adjustments for the reversal of the deferred tax asset valuation
allowance and the changes in the tax rates used to measure the deferred tax
assets and the related impact on the payable under the tax receivable
agreement resulted in an overall net increase to net income of approximately
$3.3 million, or $0.09 per share on a fully diluted basis, for the year ended
December 31, 2012 and an overall net increase to net income of approximately
$0.7 million, or an estimated $0.02 per share on a fully diluted basis, for
the year ended December 31, 2011.

Adjusted EBITDA for the year ended December 31, 2012 was $70.0  million, which
represents an increase of $1.0 million, or 1.5%, as compared $69.0 million for
the year ended December 31, 2011. The increase in Adjusted EBITDA is primarily
attributable to the previously-noted changes in operating income and interest
and other income, net. Adjusted EBITDA for 2012 represented a new
high-watermark for the Company.

                                                                  
HFF, Inc.
Consolidated Operating Results
(dollars in thousands, except per share data)
(Unaudited)
                                                                          
                                                                          
                     For the Three Months Ended Dec.     For the Year Ended Dec. 31,
                     31,
                     2012             2011               2012             2011
                                                                          
Revenue              $ 97,303         $ 75,939           $ 284,974        $ 254,679
                                                                          
Operating
expenses:
Cost of                53,896           42,199             163,937          143,979
services
Operating,
administrative         20,329           13,921             65,153           52,701
and other
Depreciation
and                   1,514          1,449            5,767          4,627      
amortization
Total expenses         75,739           57,569             234,857          201,307
                                                                          
Operating              21,564           18,370             50,117           53,372
income
                                                                          
Interest and
other income,          7,506            3,704              20,049           14,968
net
Interest               (10        )     (7         )       (42        )     (29        )
expense
(Increase)
decrease in
payable under         (16,145    )    (210       )      (17,358    )    (3,890     )
the tax
receivable
agreement
Income before          12,915           21,857             52,766           64,421
income taxes
                                                                          
Income tax
(benefit)              (6,732     )     8,581              8,661            22,371
expense
                                                                       
Net income             19,647           13,276             44,105           42,050
                                                                          
Net income
attributable
to                    –              614              243            2,031      
noncontrolling
interest (1)
Net income
attributable         $ 19,647        $ 12,662          $ 43,862        $ 40,019     
to controlling
interest
                                                                          
Earnings per         $ 0.53           $ 0.35             $ 1.19           $ 1.12
share - basic
Earnings per
share -              $ 0.52           $ 0.35             $ 1.18           $ 1.11
diluted
Weighted
average shares         37,171,214       36,066,224         36,917,096       35,867,610
outstanding -
basic
Weighted
average shares         37,531,407       36,334,087         37,151,792       36,125,173
outstanding -
diluted
                                                                       
Adjusted             $ 27,823        $ 22,145          $ 70,002        $ 68,995     
EBITDA
                                                                                       

Production Volume and Loan Servicing Summary

The reported volume data presented below (provided for informational purposes
only) is unaudited and is estimated based on the Company’s internal database.

Fourth Quarter Production Volume Results

                 Unaudited Production Volume by Platform
                   (dollars in thousands)
                   For the Three Months Ended December 31,
By Platform      2012                           2011
                   Production      # of          Production    # of
                   Volume           Transactions   Volume         Transactions
Debt Placement     $  7,915,564     309            $ 4,565,431    168
Investment            5,008,831     138              4,500,939    122
Sales
Structured            1,440,247     22               1,048,188    24
Finance
Loan Sales           184,255      6               207,734     12
Total
Transaction        $  14,548,897   475            $ 10,322,292  326
Volume
Average
Transaction        $  30,629                       $ 31,663
Size
                                                                  
                   Fund/Loan        # of Loans     Fund/Loan      # of Loans
                   Balance                         Balance
Private Equity
Discretionary      $  2,039,500                    $ 1,853,000
Funds
Loan Servicing
Portfolio          $  31,332,392    2,281          $ 27,200,019   2,125
Balance
                                                                  

The Company reported production volumes for the fourth quarter of 2012
totaling approximately $14.5 billion on 475 separate transactions,
representing an increase in production volumes of approximately $4.2 billion,
or 40.9%, and an increase of 149 separate transactions or approximately 45.7%
in the number of transactions when compared to fourth quarter of 2011
production of approximately $10.3 billion on 326 transactions. The average
transaction size for the fourth quarter of 2012 was $30.6 million,
approximately 3.3% lower than the comparable figure of approximately $31.7
million for the fourth quarter of 2011.

  *Debt Placement production volume was approximately $7.9 billion in the
    fourth quarter of 2012, representing an increase of 73.4% over fourth
    quarter of 2011 volume of approximately $4.6 billion.
  *Investment Sales production volume was approximately $5.0 billion in the
    fourth quarter of 2012, representing an increase of 11.3% over fourth
    quarter of 2011 volume of approximately $4.5 billion.
  *Structured Finance production volume was approximately $1.4 billion in the
    fourth quarter of 2012, an increase of 37.4% over the fourth quarter of
    2011 volume of approximately $1.0 billion.
  *Loan Sales production volume was approximately $184.3 million for the
    fourth quarter of 2012, a decrease of 11.3% from the fourth quarter of
    2011 volume of $207.7 million.
  *At the end of the fourth quarter of 2012, the amount of active private
    equity discretionary fund transactions on which HFF Securities has been
    engaged and may result in additional future revenue was approximately $2.0
    billion compared to approximately $1.9 billion at the end of the fourth
    quarter of 2011, representing a 10.1% increase.
  *The principal balance of HFF’s Loan Servicing portfolio increased $4.1
    billion to more than $31.3 billion, a new high-watermark, at the end of
    the fourth quarter of 2012 from $27.2 billion at the end of the fourth
    quarter of 2011, representing an increase of approximately 15.2%.

Full Year Production Volume Results

                 Unaudited Production Volume by Platform
                   (dollars in thousands)
                   For the Twelve Months Ended December 31,
By Platform      2012                           2011
                   Production      # of           Production    # of
                   Volume           Transactions   Volume         Transactions
Debt Placement     $  23,353,562    861            $ 18,671,548   644
Investment            15,113,037    393              12,637,607   344
Sales
Structured            2,487,811     71               1,956,478    66
Finance
Loan Sales           919,787      33              2,343,277   47
Total
Transaction        $  41,874,197   1,358          $ 35,608,910  1,101
Volume
Average
Transaction        $  30,835                       $ 32,342
Size
                                                                  
                   Fund/Loan        # of Loans     Fund/Loan      # of Loans
                   Balance                         Balance
Private Equity
Discretionary      $  2,039,500                    $ 1,853,000
Funds
Loan Servicing
Portfolio          $  31,332,392    2,281          $ 27,200,019   2,125
Balance
                                                                  

Production volumes for the year ended December 31, 2012 totaled approximately
$41.9 billion on 1,358 transactions, which was a new high-watermark for the
number of transactions and represents a 17.6% increase in production volume
and a 23.3% increase in the number of transactions when compared to the
production volumes of approximately $35.6 billion on 1,101 transactions for
the comparable period in 2011. The average transaction size for the year ended
December31, 2012 was $30.8 million, representing a 4.7% decrease from the
comparable figure of $32.3 million in the year ended December 31, 2011. It
should be noted that there was one unusually large loan sale during 2011. If
we would adjust the 2011 production volumes to exclude this one unusually
large loan sale transaction, the Company’s 2012 production volume would have
increased by approximately 21.4% as compared to the adjusted 2011 production
volumes of $34.5 billion and the Company’s average transaction size for 2012
would have only decreased by 1.6% as compared to the adjusted 2011 average
transaction size of approximately $31.3 million.

  *Debt Placement production volume was approximately $23.4 billion in 2012,
    representing an increase of 25.1% over 2011 volume of approximately $18.7
    billion.
  *Investment Sales production volume was approximately $15.1 billion in
    2012, representing an increase of 19.6% over 2011 volume of approximately
    $12.6 billion.
  *Structured Finance production volume was approximately $2.5 billion in
    2012 (a new high-watermark), an increase of 27.2% over 2011 volume of
    approximately $2.0 billion.
  *Loan Sales production volume was approximately $0.9 billion in 2012, a
    decrease of 60.7% from 2011 volume of $2.3 billion. It should be noted
    that there was one unusually large loan sale during 2011. If we would
    adjust the production volumes to exclude this transaction, the loan sales
    production volume would have decreased by 24.6%.
  *At the end of 2012, the amount of active private equity discretionary fund
    transactions on which HFF Securities has been engaged and may result in
    additional future revenue was approximately $2.0 billion compared to
    approximately $1.9 billion at the end of 2011, representing a 10.1%
    increase.
  *The principal balance of HFF’s Loan Servicing portfolio increased $4.1
    billion to more than $31.3 billion, a new high-watermark, at the end of
    2012 from $27.2 billion at the end of 2011, representing an increase of
    approximately 15.2%.

Business Comments

Pursuant to its strategic growth initiatives, the Company continued to expand
its total employment and production ranks to their respective highest levels
since the Company went public in January 2007. The Company’s total employment
reached 574 associates as of December 31, 2012, which represents a net
increase of 76, or 15.3%, over the comparable total of 498 associates as of
December 31, 2011. HFF’s total number of transaction professionals reached 229
as of December 31, 2012, which represents a net increase of 38, or 19.9%, over
the comparable total of 191 as of December 31, 2011. Over the past twelve
months, we strategically opened new offices in Denver, CO and Orlando, FL and
continued to add transaction professionals to our existing lines of business
and product specialties through the promotion and recruitment of associates in
our Atlanta, GA, Austin, TX, Boston, MA, Chicago, IL, Dallas, TX, Denver, CO,
Los Angeles, CA, Miami, FL, New York City, NY, Orange County, CA, Pittsburgh,
PA, Portland, OR, San Diego, CA, and Washington, DC offices. Our significant
growth in both our associate and transaction professional ranks illustrates
the Company’s investment and commitment to strategically grow its business by
taking advantage of all appropriate opportunities in an effort to better serve
its clients and grow its market share.

“Due primarily to the ongoing and unprecedented quantitative easing by the
U.S. Federal Reserve, whose balance sheet has now grown to more than $3
trillion, as well as continued quantitative easing by other global central
banks, we continued to see improvement in the public and private sectors of
the U.S. commercial real estate capital markets. These improved conditions
coupled with an economy that continues to slowly improve continue to benefit
certain sectors of the U.S. commercial real estate market, especially core and
core plus properties in the major tier-one markets and distressed assets in
select major markets,” said John H. Pelusi, Jr., the Company’s chief executive
officer.

“As we have noted in previous quarters, there are a number of macro headwinds
which have the potential to negatively impact these improving conditions in
the global economy as well as transaction volumes in the U.S. capital and
commercial real estate markets. The Eurozone’s continued inability to resolve
its sovereign debt problems and the inter-related tier-one capital issues in
the majority of the European banks, the continued tensions in the Middle East
as well as in North Korea, the future reversal of the quantitative easing of
all of the global central banks, especially the U.S. Federal Reserve whose
balance sheet has increased by more than $2 trillion since 2008, the
continuing and growing deficits and the unresolved budget and sequestration
issues in the U.S. coupled with serious budget choices at the state and local
levels and combined with still stubbornly high unemployment levels, have the
potential to derail the improving economic and capital market conditions in
the U.S. Generally speaking, the U.S. commercial real estate property level
fundamentals, while continuing to improve modestly in select property types in
most major markets, especially in the multi-housing sector which has
significantly outperformed other property types, remain vulnerable to any
changes in the macro conditions noted above. Given that property level
fundamentals have historically lagged the U.S. economy, with the exception of
multi-housing fundamentals, which we believe will continue to outperform other
asset classes, we expect flat to modest improvement in property level
fundamentals for most property types, especially in secondary and tertiary
markets through the remainder of 2013,” said Mr. Pelusi.

“As we reported in past quarters, since January 1, 2010, we have continuously
invested in our business and aggressively pursued our strategic growth
initiatives through both organic promotions and recruitment, even in the face
of the above-mentioned macro headwinds which we have successfully navigated
since 2008. Since January 1, 2010, we have grown our headcount by nearly 53%
with the addition of a net total of 198 highly talented associates, including
a 44% increase in our production ranks with the addition of 70 net transaction
professionals. As a result of our continued strategic growth initiatives
coupled with our Leadership Team’s strong discipline of managing our business
and our strong balance sheet to support our growth initiatives, we are very
pleased to report that we were able to continue to successfully build upon our
past achievements as we had a record fourth quarter and full year 2012 in many
aspects of our business,” said Mr. Pelusi.

“During 2012, we grew our head count by slightly more than 15% with the
addition of a net total of 76 high-quality, talented associates, including a
nearly 20% increase in our production ranks with the addition of 38 net
transaction professionals. We also added a senior housing team to the Company
and during the fourth quarter of 2012 we organized a group of our existing
transaction professionals with expertise in healthcare properties to
strategically formalize our national healthcare practice group to better serve
clients who are attempting to take advantage of the strong macro demographics
in this area, as well as assist institutions who are facing significant
challenges related to how healthcare will be delivered and funded in the
future. Our current headcount of 574 associates, including 229 transaction
professionals, are both new high-watermarks for the Company,” said Mr. Pelusi.

“Our record number of 1,358 separate transactions produced full year
transaction volume of nearly $42 billion, which nearly equaled the Company’s
previous high-watermark of $43.5 billion in 2007. Excluding one unusually
large loan sale transaction in the third quarter of 2011, our transaction
volumes in the fourth quarter and full year of 2012 were up nearly 41% and
21.4%, respectively, when compared to the prior year comparable periods. Given
our strong debt placement activities, which were up over 25% over 2011, we
were also able to grow our loan servicing portfolio by approximately $4.1
billion, or more than 15%, to $31.3 billion, which was also a new
high-watermark. Based on these strong production totals and our significant
headcount growth of new associates and transaction professionals, we believe
we again grew our market share relative to the industry during the fourth
quarter and full year of 2012,” said Mr. Pelusi.

“We believe our significant headcount and production growth translated into
strong and impressive operating results during the reporting period, many of
which were new high-watermarks for the Company. During the fourth quarter and
full year of 2012, we generated record quarterly and full year revenues of
$97.3 million and $285.0 million, respectively, which were up over 28% and
nearly 12% from the comparable periods in 2011. Notwithstanding the fact that
potentially 5% to 10% of our fourth quarter revenues may have been
attributable to tax-related activity due to the legislative increases in
capital gain tax rates, which became effective January 1, 2013, we believe our
revenues for both the fourth quarter and full year 2012 would have still been
high-watermarks even after giving effect to these possible tax-related
transactions. For the fourth quarter and full year 2012, we generated record
Adjusted EBITDA of $27.8 million and $70.0 million, respectively, with margins
of 28.6% and 24.6%, respectively, which we believe are significant
achievements in light of our significant headcount growth and the uncertain
global environment in which we were operating. Finally, after giving effect to
the payment of the special dividend of approximately $56.3 million in December
2012, we believe we further strengthened our balance sheet when compared to
the fourth quarter and full year in 2011, as evidenced by our strong cash and
cash equivalent position of $126.3 million at year end 2012, compared to the
comparable cash and cash equivalent position of $141.8 million at year end
2011,” added Mr. Pelusi.

“We believe our significant, prudent and continuing investment in our talented
associates combined with the ongoing mentoring by our deep Leadership Team
will continue to pay long-term dividends, as we believe they have since 2010
as evidenced by our significant growth in revenues and earnings, which we
believe the market has likewise recognized based on our ranking in Fortune as
the 5^th fastest growing company overall and the 3^rd based on profit growth,
as reported in September 2012. We also believe our strong balance sheet and
the continued investment of money, time and experience has and will continue
to enable us to better serve our clients, best position the Company to take
advantage of future strategic opportunities as they arise, capture additional
market share, and take advantage of the forecasted transaction volumes that
are likely to arise from the nearly $1.7 trillion of commercial real estate
loans that are set to mature between 2013 and 2017,” said Mr. Pelusi.

“We believe our 229 transaction professionals, who have an average tenure of
approximately 17.4 years in the commercial real estate industry, coupled with
our enhanced disciplined management oversight from our Leadership Team, will
enable us to continue to provide value-add winning solutions for our clients
as they navigate these constantly changing inefficient capital markets. We
remain grateful to our clients who continue to show their confidence in our
ability to create and execute winning strategies for them. We would also like
to thank our associates who continue to demonstrate their ability to quickly
adapt, innovate and share their collective knowledge from each transaction to
provide superior value-added services to our clients,” added Mr. Pelusi.

Non-GAAP Financial Measure

This earnings press release contains a non-GAAP measure, Adjusted EBITDA,
which, as calculated by the Company is not necessarily comparable to
similarly-titled measures reported by other companies. Additionally, Adjusted
EBITDA is not a measurement of financial performance or liquidity under GAAP
and should not be considered as an alternative to the Company’s other
financial information determined under GAAP. For a description of the
Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA with
net income attributable to controlling interest, see the section of this press
release titled “Adjusted EBITDA Reconciliation.”

Earnings Conference Call

The Company’s management will hold a conference call to discuss fourth quarter
and full year 2012 financial results on Wednesday, March 6, 2013, at 6:00 p.m.
Eastern Time. To listen, participants should dial 866-270-6057 in the U.S. and
617-213-8891 for international callers approximately 10 minutes prior to the
start of the call and enter participant code 65942579. A replay will become
available after 8:00 p.m. Eastern Time on Wednesday, March 6, 2013 and will
continue through April 6, 2013, by dialing 888-286-8010 (U.S. callers) and
617-801-6888 (international callers) and entering participant code 67895911.

The live broadcast of the Company’s quarterly conference call will be
available online on its website at www.hfflp.com on Wednesday, March 6, 2013
beginning at 6:00 p.m. Eastern Time. The broadcast will be available on the
Company’s website for one month. Related presentation materials will be posted
to the “Investor Relations” section of the Company’s website prior to the
call. The presentation materials will be available in Adobe Acrobat format.

About HFF, Inc.

Through its subsidiaries, Holliday Fenoglio Fowler, L.P. and HFF Securities
L.P., the Company operates out of 21 offices nationwide and is one of the
leading and largest full-service commercial real estate financial
intermediaries in the U.S. providing commercial real estate and capital
markets services to both the users and providers of capital in the commercial
real estate sector. The Company offers clients a fully integrated national
capital markets platform including debt placement, investment sales, private
equity and structured finance, investment banking and advisory services, loan
sales and commercial loan servicing.

Certain statements in this earnings press release are “forward-looking
statements” within the meaning of the federal securities laws. Statements
about our beliefs and expectations and statements containing the words “may,”
“could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,”
“estimate,” “target,” “project,” “intend” and similar expressions constitute
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the Company’s
actual results and performance in future periods to be materially different
from any future results or performance suggested in forward-looking statements
in this earnings press release. Investors, potential investors and other
readers are urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue reliance on
such forward-looking statements. Any forward-looking statements speak only as
of the date of this earnings press release and, except to the extent required
by applicable securities laws, the Company expressly disclaims any obligation
to update or revise any of them to reflect actual results, any changes in
expectations or any change in events. If the Company does update one or more
forward-looking statements, no inference should be drawn that it will make
additional updates with respect to those or other forward-looking statements.
Factors that could cause results to differ materially include, but are not
limited to: (1) general economic conditions and commercial real estate market
conditions, including the recent conditions in the global markets and, in
particular, the U.S. debt markets; (2) the Company’s ability to retain and
attract transaction professionals; (3) the Company’s ability to retain its
business philosophy and partnership culture; (4) competitive pressures; (5)
the Company’s ability to integrate and sustain its growth; and (6) other
factors discussed in the Company’s public filings, including the risk factors
included in the Company’s most recent Annual Report on Form 10-K.

Additional information concerning factors that may influence HFF, Inc.'s
financial information is discussed under "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Quantitative and
Qualitative Disclosures About Market Risk" and "Forward-Looking Statements" in
the Company’s most recent Annual Report on Form 10-K, as well as in the
Company's press releases and other periodic filings with the Securities and
Exchange Commission. Such information and filings are available publicly and
may be obtained from the Company's web site at www.hfflp.com or upon request
from the HFF, Inc. Investor Relations Department at
investorrelations@hfflp.com.

                                                             
HFF, Inc.
Consolidated Balance Sheets (1)
(dollars in thousands)
(Unaudited)
                                                                  
                                                 December 31,     December 31,
                                                 2012             2011
ASSETS
Cash, cash equivalents and restricted cash       $  126,331       $  141,843
(2)
Accounts receivable, receivable from                4,485            3,918
affiliate and prepaids
Mortgage notes receivable                           261,272          154,449
Property, plant and equipment, net                  4,800            4,315
Deferred tax asset, net (3)                         169,929          155,780
Intangible assets, net                              21,611           16,849
Other noncurrent assets                            771            1,297   
Total assets                                     $  589,199      $  478,451 
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse line of credit                         $  261,272       $  154,449
Accrued compensation, accounts payable and          46,867           39,725
other current liabilities
Long-term debt (includes current portion)           578              569
Deferred rent credit and other liabilities          4,516            3,508
Payable under the tax receivable agreement         154,944        149,800 
(3)
Total liabilities                                   468,177          348,051
Class A Common Stock, par value $0.01 per
share, 175,000,000 shares authorized,               371              360
37,063,844 and 35,983,965 shares
outstanding, respectively
Class B Common Stock, par value $0.01 per
share, 1 share authorized, 0 and 1 share            –                –
outstanding, respectively
Additional paid in capital (3)                      71,267           64,049
Treasury stock                                      (1,055  )        (490    )
Retained earnings (2)                              50,439         62,914  
Total parent stockholders' equity                   121,022          126,833
Noncontrolling interest (3)                        –              3,567   
Total equity                                       121,022        130,400 
Total liabilities and stockholders' equity       $  589,199      $  478,451 


Notes
      The noncontrolling interest adjustment on the consolidated financial
      statements of HFF, Inc. relates to the ownership interest of Holdings in
      the Operating Partnerships as a result of the Company’s 2007 initial
      public offering and after giving effect to the Operating Partnerships
      units held by Holdings that have been subsequently exchanged for shares
      of Class A common stock of HFF, Inc. As the sole stockholder of Holliday
      GP (the sole general partner of the Operating Partnerships), the Company
      has since its initial public offering, operated and controlled all of
(1)  the business and affairs of the Operating Partnerships. The Company
      consolidates the financial results of the Operating Partnerships, and
      the ownership interest of Holdings in the Operating Partnerships is
      reflected as a noncontrolling interest in HFF, Inc.’s consolidated
      financial statements. The noncontrolling interest presented in the
      Company’s Consolidated Operating Results is calculated based on the
      income from the Operating Partnerships. As of August 31, 2012, Holdings
      exchanged all of its remaining interests in the Operating Partnerships
      and the Company, through its wholly-owned subsidiaries, became the only
      equity holder of the Operating Partnerships.
      
      On December 20, 2012, the Company paid a special cash dividend of $1.52
(2)   per Common Share, or $56.3 million in aggregate, to shareholders of
      record on December 10, 2012.
      
      During the year ended December 31, 2012, Holdings exercised its exchange
      right under the Company’s amended and restated certificate of
      incorporation and exchanged its remaining 997,089 units in each of the
      Operating Partnerships for 997,089 shares of HFF, Inc.’s Class A common
      stock. As in the past, the Company intends to make an election under
      Section 754 of the Internal Revenue Code which allows for the step-up in
      basis of the Operating Partnerships assets to fair market value at the
      time of the exchanges. As a result of this increase in tax basis, the
      Company is entitled to additional future tax benefits of approximately
      $6.5 million and has recorded this amount as a deferred tax asset on its
      consolidated balance sheet. Additionally, during 2012, the Company
      reversed the remaining valuation allowance on the deferred tax assets of
      $21.9 million and updated the tax rates used to measure the deferred tax
      assets. The Company is obligated, however, pursuant to its tax
      receivable agreement with Holdings, to pay to Holdings 85% of the amount
      of cash savings, if any, in U.S. federal, state and local taxes that the
      Company actually realizes as a result of the increases in tax basis and
(3)   as a result of certain other tax benefits arising from the Company
      entering into the tax receivable agreement and making payments under
      that agreement. As such, the Company increased its payable under the tax
      receivable agreement by approximately $24.1 million which reflects 85%
      of the increase in the deferred tax assets of $6.5 million for the
      step-up in basis from the exchanges and the $21.9 million reversal of
      the valuation allowance. These increases were partially offset by a
      $17.7 million payment to Holdings for the 2011 tax year and by $1.3
      million due to updates to the tax rates used to measure the deferred tax
      assets resulting in a net year over year increase to the payable under
      the tax receivable agreement of $5.1 million. Additionally, due to the
      exchange transactions that occurred during the year ended December 31,
      2012, the Company acquired the remaining 2.7% in the Operating
      Partnerships and therefore the Company increased its Class A common
      stock at par value by $10,000 and increased its additional paid in
      capital by $2.7 million while decreasing the noncontrolling interest by
      $2.7 million to reflect the ownership change. As of December 31, 2012,
      the Company owned 100% of the Operating Partnerships.

Adjusted EBITDA Reconciliation

The Company defines Adjusted EBITDA as net income attributable to controlling
interest before (i) interest expense, (ii) income tax expense, (iii)
depreciation and amortization, (iv) net income attributable to the
noncontrolling interest, (v) stock-based compensation expense, which is a
non-cash charge, (vi) income recognized on the initial recording of mortgage
servicing rights that are acquired with no initial consideration, which is
also a non-cash income amount that can fluctuate significantly based on the
level of mortgage servicing right volumes, and (vii) the increase (decrease)
in payable under the tax receivable agreement, which represents changes in a
liability recorded on the Company’s consolidated balance sheet determined by
the ongoing remeasurement of related deferred tax assets and, therefore, can
be income or expense in the Company’s consolidated statement of income in any
individual period. The Company uses Adjusted EBITDA in its business operations
to, among other things, evaluate the performance of its business, develop
budgets and measure its performance against those budgets. The Company also
believes that analysts and investors use Adjusted EBITDA as supplemental
measures to evaluate its overall operating performance. However, Adjusted
EBITDA has material limitations as an analytical tool and should not be
considered in isolation, or as a substitute for analysis of the Company’s
results as reported under GAAP. The Company finds Adjusted EBITDA as a useful
tool to assist in evaluating performance because it eliminates items related
to capital structure and taxes, including, the Company’s tax receivable
agreement. Note that the Company classifies the interest expense on its
warehouse lines of credit as an operating expense and, accordingly, it is not
eliminated from net income attributable to controlling interest in determining
Adjusted EBITDA. Some of the items that the Company has eliminated from net
income attributable to controlling interest in determining Adjusted EBITDA are
significant to the Company’s business. For example, (i)interest expense is a
necessary element of the Company’s costs and ability to generate revenue
because it incurs interest expense related to any outstanding indebtedness,
(ii)payment of income taxes is a necessary element of the Company’s costs and
(iii)depreciation and amortization are necessary elements of the Company’s
costs.

Any measure that eliminates components of the Company’s capital structure and
costs associated with the Company’s operations has material limitations as a
performance measure. In light of the foregoing limitations, the Company does
not rely solely on Adjusted EBITDA as a performance measure and also considers
its GAAP results. Adjusted EBITDA is not a measurement of the Company’s
financial performance under GAAP and should not be considered as an
alternative to net income, operating income or any other measures derived in
accordance with GAAP. Because Adjusted EBITDA is not calculated in the same
manner by all companies, it may not be comparable to other similarly titled
measures used by other companies.

Set forth below is an unaudited reconciliation of consolidated net income
attributable to controlling interest to Adjusted EBITDA for the Company for
the three and twelve months ended December 31, 2012 and 2011:

                                                             
Adjusted EBITDA for the Company is calculated as follows:
(dollars in thousands)
                                                                    
                     For the Three Months Ended     For the Twelve Months
                     December 31,                   Ended
                                                    December 31,
                     2012            2011           2012            2011
                                                                    
Net income
attributable to      $  19,647       $ 12,662       $  43,862       $ 40,019
controlling
interest
Add:
Interest expense        10             7               42             29
Income tax              (6,732  )      8,581           8,661          22,371
expense
Depreciation and        1,514          1,449           5,767          4,627
amortization
Net income
attributable to         –              614             243            2,031
noncontrolling
interest
Stock-based             743            622             3,442          2,053
compensation (a)
Initial
recording of            (3,504  )      (2,000 )        (9,373  )      (6,025 )
mortgage
servicing rights
Increase
(decrease) in
payable under          16,145       210           17,358       3,890  
the tax
receivable
agreement
Adjusted EBITDA      $  27,823      $ 22,145      $  70,002      $ 68,995 
                                                                             

          Amounts do not reflect expense associated with the stock component
          of estimated incentive payouts under the Company’s firm profit
          participation bonus plan or office profit participation bonus plans
          that are anticipated to be paid in respect of the applicable year.
          Such expense is recorded as incentive compensation expense within
          personnel expenses in the Company’s consolidated statements of
          income during the year to which the expense relates. Following the
          award, if any, of the related incentive payout, the stock component
          expense is reclassified as stock compensation costs within personnel
          expenses. For further information regarding the Company’s accounting
          policies to its firm profit participation bonus plan and office
          profit participation bonus plans, see Note 2 to the Company’s
          consolidated financial statements that will be included in the
  (a)  annual report on Form 10-K for the year ended December 31, 2012 to
          be filed with the Securities and Exchange Commission. Stock-based
          compensation expense for the three and twelve month periods ended
          December 31, 2012 reflects $0.3 million and $1.0 million of expense,
          respectively, recognized during such periods that was associated
          with restricted stock granted in March 2012 under the Company’s firm
          profit participation bonus plan or office profit participation bonus
          plans in respect of 2011. Stock-based payments under such plans were
          first made in 2012 in respect of 2011. For further information
          regarding the Company’s accounting policies relating to its stock
          compensation, see Note 3 to the Company’s consolidated financial
          statements that will be included in the annual report on Form 10-K
          for the year ended December 31, 2012 to be filed with the Securities
          and Exchange Commission.

Contact:

HFF, Inc.
John H. Pelusi Jr., (412) 281-8714
Chief Executive Officer
jpelusi@hfflp.com
or
Gregory R. Conley, (412) 281-8714
Chief Financial Officer
gconley@hfflp.com
or
Myra F. Moren, (713) 852-3500
Director, Investor Relations
mmoren@hfflp.com
 
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