HFF, Inc. Reports Full Year 2007 Financial and Transaction Production Results

PITTSBURGH--(Business Wire)--
HFF, Inc. (NYSE:HF) reported today its financial and production
volume results for the full year 2007. HFF, Inc. (the Company),
through its Operating Partnerships, Holliday Fenoglio Fowler, L.P.
(HFF LP) and HFF Securities L.P. (HFF Securities), is a leading
provider of commercial real estate and capital markets services to the
U.S. commercial real estate industry based on transaction volume and
is one of the largest full-service commercial real estate financial
intermediaries in the country.

Consolidated Earnings

Full Year Results

The Company reported revenues of $255.7 million for the year ended
December 31, 2007, an increase of $26.0 million, or 11.3% compared to
the same period last year. Operating income was $48.0 million compared
to $54.3 million for 2006, representing a decrease of $6.3 million, or
11.6%. This decrease in operating income is attributable to increased
operating expenses incurred to support the ongoing costs and expenses
related to (i) the growth in our capital market services platforms
(primarily, the addition of new associates and increased occupancy
costs related to the expansion of several of our offices as well as
the addition of our San Francisco office which opened in late 2006),
(ii) support of our public company structure following the Company's
initial public offering on January 30, 2007, and (iii) certain other
cost increases spread among our other expense categories. The Company
reported net income of $14.4 million (after an adjustment to the full
year results of $29.7 million to reflect the impact of the minority
ownership interest of Holdings in the Operating Partnerships) for the
year ended December 31, 2007, compared with net income of $51.6
million for the same period last year (during which time Holdings
owned 100% of the Operating Partnerships and, accordingly, there were
no adjustments to reflect the impact of minority ownership interests
or associated corporate federal and state income taxes). Net income
attributable to Class A common stockholders for the year ended
December 31, 2007 was $12.5 million, or $0.84 per diluted share. The
Company's net income reported for the full year 2007 and 2006 are not
directly comparable due primarily to the minority interest adjustment,
which reflects HFF Holdings, LLC's (Holdings) ownership interest in
the Operating Partnerships as well as the change in income tax
structure following the reorganization transactions and initial public
offering on January 30, 2007.

EBITDA was $58.3 million for the year ended December 31, 2007, an
increase of $0.1 million or 0.1% compared to last year.

Fourth Quarter Highlights

In the face of very challenging domestic and global capital
markets credit and liquidity conditions, the Company generated fourth
quarter total revenue of $52.3 million, a decrease of $20.9 million or
28.5% from the fourth quarter of 2006. Operating income of $7.3
million for the fourth quarter of 2007 declined by approximately $11.8
million, or 61.8%, when compared to the fourth quarter of 2006. This
decrease in operating income is directly attributable to the decreases
in production volumes from the prior year in several of the Company's
capital markets service platforms, including our debt placement,
investment sales, and note sales and note sale advisory services and
to increased operating expenses incurred to support the ongoing costs
and expenses related to the growth in our capital markets services
platforms and our public company structure following the initial
public offering transaction on January 30, 2007 as noted above.

The Company's net income reported for the fourth quarter 2007 was
$2.1 million compared with net income of $18.3 million for the same
period in 2006. The Company's net income reported for the fourth
quarter 2007 and 2006 are not directly comparable due primarily to the
minority interest adjustment, which reflects HFF Holdings, LLC's
(Holdings) ownership interest in the Operating Partnerships as well as
the change in income tax structure following the reorganization
transactions and initial public offering on January 30, 2007. This
quarter's net income includes a $5.5 million adjustment to the fourth
quarter results to reflect the impact of the minority ownership
interest of Holdings in the Operating Partnerships. In 2006, Holdings
owned 100% of the Operating Partnerships and, accordingly, there were
no adjustments to reflect the impact of minority ownership interests
or associated corporate federal and state income taxes. Net income
attributable to Class A common stockholders for the fourth quarter
2007 was $0.13 per diluted share.

Income tax expense for the fourth quarter 2007 was $2.0 million,
compared to $0.1 million of income tax expense for the fourth quarter
2006 when there was no similar provision for corporate federal and
state income taxes. This increase is attributable to the change in tax
structure following the initial public offering. These corporate tax
amounts are reflected in the Company's consolidated financial
statements for the fourth quarter 2007 and are applicable for the
period following the initial public offering on January 30, 2007.

EBITDA for the fourth quarter 2007 was $10.6 million, a decrease
of $9.7 million or 47.7% compared to the same period last year. This
decrease is primarily attributable to the decrease in our operating
income as discussed above.

The financial results presented in this earnings press release
reflect the consolidated financial position and results of operations
of Holliday GP Corp., HFF, Inc.'s wholly-owned subsidiary and sole
general partner of each of the Operating Partnerships (Holliday GP),
HFF Partnership Holdings LLC, the Operating Partnerships, and HFF,
Inc. for all periods presented. The minority interest relates to the
ownership interests of Holdings in the Operating Partnerships
following the initial public offering. For a discussion of the
adjustments relating to the reorganization transactions and the
initial public offering, see Note (1) to the financial statements
included in this earnings press release. For more information
regarding the transactions associated with the initial public
offering, please refer to the Company's prospectus filed with the
Securities and Exchange Commission on January 31, 2007.

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HFF, Inc.
Consolidated Operating Results(1)
(dollars in thousands, except per share data)
(Unaudited)

For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
------------------ -------------------
2007 2006 2007 2006
-------- --------- --------- ---------

Revenue $52,306 $ 73,160 $255,666 $229,697

Operating expenses:
Cost of services 31,172 41,368 148,026 130,708
Operating, administrative and
other 12,877 11,940 55,799 41,896
Depreciation and amortization 970 767 3,861 2,806
-------- --------- --------- ---------
Total expenses 45,019 54,075 207,686 175,410

Operating income 7,287 19,085 47,980 54,287

Interest and other income, net
(2) 2,383 510 6,469 1,139
Interest expense (3) (1,164) (407) (3,541)
-------- --------- --------- ---------
Income before income taxes and
minority interest 9,667 18,431 54,042 51,885

Income tax expense 2,035 119 9,874 332

-------- --------- --------- ---------
Income before minority interest 7,632 18,312 44,168 51,553

Minority interest (3) 5,519 - 29,748 -
-------- --------- --------- ---------
Net income $ 2,113 $ 18,312 $ 14,420 $ 51,553
======== ========= ========= =========

Less net income earned prior to
IPO and reorganization - (18,312) (1,893) (51,553)
-------- --------- --------- ---------
Net income available to
stockholders $ 2,113 $ - $ 12,527 $ -
======== ========= ========= =========

Earnings per share - basic $ 0.13 $ 0.84
======== =========
Earnings per share - diluted $ 0.13 $ 0.84
======== =========

EBITDA $10,640 $ 20,362 $ 58,310 $ 58,232
======== ========= ========= =========
*T

Production Volume and Loan Servicing Summary

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

Full Year Production Volume

The Company reported record production volumes for the full year
2007 which totaled more than $43.5 billion on 1,251 transactions,
representing a 23.2% increase in production volume and a 3.3% decrease
in the number of transactions when compared to full year 2006
production of approximately $35.3 billion on 1,294 transactions. The
average transaction size for the full year 2007 was $34.8 million,
approximately 27.4% higher than the comparable figure for the full
year 2006. It should be noted that a portion of the 23.2% increase in
production volume was achieved due to four large investment sales
portfolio transactions which closed during the full year 2007. If
these large portfolio transactions were excluded, our production
volume would have increased by 2.2% and our average transaction size
for the full year 2007 would have been approximately $29.0 million, or
approximately 6.0% higher than the average transaction size for the
comparable period in 2006.

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Unaudited Production Volume by Platform
----------------------------------------------------------------------

(dollars in thousands)
For the Twelve Months Ended Dec. 31
---------------------------------------------------
By Platform 2007 2006
-------------------------------------------- -------------------------
Production # of Production # of
Volume Transactions Volume Transactions
----------- ------------- ----------- -------------
Debt Placement (a) $23,480,967 936 $22,070,988 1,010
Investment Sales 17,117,933 204 10,141,200 186
Structured Finance
(b) 2,320,291 102 2,714,617 96
Note Sales & Note
Sale Advisory 608,549 9 414,045 2
------------------------- -------------------------
Total Transaction
Volume $43,527,740 1,251 $35,340,850 1,294
========================= =========================
Average
Transaction Size $ 34,794 $ 27,311

Fund/Loan Fund/Loan
Balance # of Loans Balance # of Loans
----------- ------------- ----------- -------------
Private Equity
Discretionary
Funds $ 2,020,500 $ 1,315,500
Loan Servicing
Portfolio Balance $23,233,246 2,053 $18,025,182 1,752

------------------
(a) Previously reported unaudited debt placement production volume for
the twelve months ended December 31, 2006 was overstated by $45
million.
(b) The total number of unaudited Structured Finance transactions
previously reported in the third quarter of 2007 was understated by
one transaction. The production volume was properly reported.
*T

Fourth Quarter Production Volume Highlights

The continued domestic and global re-pricing of debt and equity
risk, the credit and liquidity issues in all of the domestic and
global debt markets, including the commercial real estate debt capital
markets, as well as the lack of investor confidence in all of the
fixed income debt markets including those related to the commercial
real estate sector had an adverse impact on the Company's production
volume for the fourth quarter 2007. Production volume for the quarter
totaled approximately $7.2 billion on 270 transactions, compared to
fourth quarter 2006 production volume of approximately $12.3 billion
on 385 transactions. This represents a 41.6% decrease in production
volume and a decrease of 29.9% in the number of transactions. The
average transaction size for the fourth quarter 2007 was approximately
$26.7 million, or 16.8% lower than the comparable figure in the fourth
quarter 2006.

-- Debt Placement production volume was approximately $4.5
billion in the fourth quarter of 2007, representing a 41.4%
decrease from fourth quarter 2006 volume of approximately $7.6
billion.

-- Investment Sales production volume was approximately $1.7
billion in the fourth quarter of 2007, representing a 54.2%
decrease from fourth quarter 2006 volume of nearly $3.7
billion.

-- Structured Finance production volume was approximately $968.5
million in the fourth quarter of 2007, increasing 63.0% over
the fourth quarter 2006 volume of approximately $594.3
million.

-- Note Sales and Note Sale Advisory Services production volume
was approximately $67.0 million for the fourth quarter 2007, a
decrease of 83.8% from fourth quarter 2006 volume of
approximately $414.0 million.

-- The amount of active private equity discretionary fund
transactions on which HFF Securities has been engaged and may
recognize additional future revenue at the end of the fourth
quarter 2007 is approximately $2.0 billion compared to
approximately $1.3 billion at the end of fourth quarter of
2006, representing a 53.6% increase.

-- The principal balance of HFF's Loan Servicing portfolio
increased approximately 28.9% to approximately $23.2 billion
at the end of the fourth quarter 2007 from approximately $18.0
billion at the end of the fourth quarter 2006.

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Unaudited Production Volume by Platform
----------------------------------------------------------------------

(dollars in thousands)
For the Three Months Ended Dec. 31
---------------------------------------------------
By Platform 2007 2006
-------------------------------------------- -------------------------
Production # of Production # of
Volume Transactions Volume Transactions
----------- ------------------------- -------------
Debt Placement $ 4,483,443 199 $ 7,647,852 305
Investment Sales 1,687,040 38 3,686,979 49
Structured Finance 968,486 32 594,259 29
Note Sales & Note
Sale Advisory 67,000 1 414,045 2
------------------------- -------------------------
Total Transaction
Volume $ 7,205,969 270 $12,343,135 385
========================= =========================
Average
Transaction Size $ 26,689 $ 32,060

Fund/Loan Fund/Loan
Balance # of Loans Balance # of Loans
----------- ------------- ----------- -------------
Private Equity
Discretionary
Funds $ 2,020,500 $ 1,315,500
Loan Servicing
Portfolio Balance $23,233,246 2,053 $18,025,182 1,752
*T

Business Expansion Highlights

HFF continued to expand during fourth quarter 2007 through the
addition of 16 new positions, including 11 production support
personnel and 2 transaction professionals. The Company's total number
of employees increased from 409 at the end of 2006 to 468 at the end
of 2007, representing a net increase of 59 employees. This net
increase included 32 production support personnel and 12 transaction
professionals.

"We are pleased with the operating results achieved during the 12
month period in the face of very strong headwinds in nearly all of the
domestic and global capital markets, including the commercial real
estate markets, caused by the lack of investor confidence in nearly
every aspect of the fixed income debt markets, the resulting credit
and liquidity issues and the resulting increased pressures on the
re-pricing of debt and equity risk. In spite of these strong
headwinds, we were able to capitalize on the stable fundamentals in
the domestic commercial real estate markets, as well as the strength
of our relationships with existing clients and our expanding
relationships with new clients, each of whom rely on us to help them
navigate these very volatile and challenging capital markets," said
John H. Pelusi, Jr., HFF, Inc.'s chief executive officer.

"We would like to express our appreciation to our clients who have
continued to show their confidence in our ability to perform value-add
services for their commercial real estate and capital markets needs,
especially in these ever challenging times. We would like to also
thank each of our associates who have consistently demonstrated their
ability to quickly adapt to this challenging environment by sharing
their collective knowledge from each transaction with their fellow
associates to provide superior value-added services to our clients,"
added Mr. Pelusi.

Non-GAAP Financial Measures

This earnings press release contains a Non-GAAP measure, EBITDA,
which as calculated by the Company, is not necessarily comparable to
similarly titled measures reported by other companies. Additionally,
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 EBITDA and a reconciliation of
EBITDA with Net Income, see the section of this press release titled
"EBITDA Reconciliation."

Earnings Conference Call

The Company's management will hold a conference call to discuss
fourth quarter 2007 financial results on Tuesday, March 11th, at 8:30
a.m. Eastern Time. To listen, participants should dial 866-356-3377 in
the U.S and 617-597-5392 for international callers approximately 10
minutes prior to the start of the call and enter participant code
38342268. A replay will become available after 11:30 a.m. Eastern Time
on March 11th and will continue through April 7, 2008, by dialing
888-286-8010 (U.S. callers) and 617-801-6888 (international callers)
and entering participant code 62593891.

The live broadcast of the Company's quarterly conference call will
be available online on its website at www.hfflp.com on Tuesday, March
11th, beginning at 8:30 a.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 18 offices nationwide and
is one of the leading providers of commercial real estate and capital
markets services, by transaction volume, to the U.S. commercial real
estate industry. The Company offers clients a fully integrated
national capital markets platform including debt placement, investment
sales, structured finance, private equity, investment banking and
advisory services, note sales and note sale advisory services 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; (2) the Company's ability to retain and attract
transaction professionals; (3) the Company's ability to retain its
business philosophy and partnership culture and other risks associated
with our transformation to a public company; (4) competitive
pressures; (5) risks related to our organizational structure; and (6)
other factors discussed in our 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.

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HFF, Inc.
Consolidated Balance Sheets (1)
(dollars in thousands)
(Unaudited)

December 31, December 31,
2007 2006
------------ ------------
ASSETS
Cash, cash equivalents and restricted cash $ 44,109 $ 5,785
Accounts receivable, receivable from
affiliate and prepaids 6,742 10,044
Mortgage notes receivable 41,000 125,700
Property, plant and equipment, net 6,789 5,040
Deferred tax asset, net (4) 131,752 -
Intangible assets, net (2) 9,481 7,005
Other noncurrent assets 603 728
------------ ------------
Total assets $ 240,476 $ 154,302
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY/
PARTNERS' CAPITAL/(DEFICIENCY)
Warehouse line of credit $ 41,000 $ 125,700
Accrued compensation, accounts payable,
payable to affiliate and other current
liabilities 17,379 13,854
Long-term debt (includes current portion)
(5) 189 56,484
Deferred rent credit and other liabilities 4,674 2,582
Payable to minority interest holder under
tax receivable agreement (4) 117,406 -
------------ ------------
Total liabilities 180,648 198,620
Minority interest (3) 21,784 -
Class A Common Stock, par value $0.01 per
share, 175,000,000 and 1,000 shares
authorized, 16,445,000 and 1 share(s)
issued and outstanding, respectively 164 -
Class B Common Stock, par value $0.01 per
share, 1 share authorized, 1 share issued
and outstanding - -
Additional paid in capital 25,353 -
Partners deficiency - (44,318)
Retained earnings 12,527 -
------------ ------------
Total stockholders' equity/partners'
capital/(deficiency) 38,044 (44,318)
------------ ------------
Total liabilities and stockholders'
equity/partners' capital/(deficiency) $ 240,476 $ 154,302
============ ============
*T

Notes

(1) The Company's consolidated operating results and balance
sheets for all periods presented herein give effect to the
reorganization transactions made in connection with its initial public
offering. In connection with the initial public offering consummated
on January 30, 2007, the purchase of shares of Holliday GP and
partnership units in each of the Operating Partnerships are treated as
a reorganization of entities under common control for financial
reporting purposes. Accordingly, the net assets of Holdings purchased
by the Company are reported in the consolidated financial statements
of HFF, Inc. at Holdings' historical cost. For more information
regarding the transactions associated with the initial public
offering, please refer to the Company's prospectus filed with the
Securities and Exchange Commission on January 31, 2007.

(2) Effective January 1, 2007, the Company adopted the provisions
of the Statement of Financial Accounting Standards Board (SFAS)
No. 156, Accounting for Servicing of Financial Assets -- an amendment
of FASB Statement No. 140, or SFAS 156. Under SFAS 156, the standard
requires an entity to recognize a servicing asset or servicing
liability at fair value each time it undertakes an obligation to
service a financial asset by entering into a servicing contract,
regardless of whether explicit consideration is exchanged. The
statement also permits a company to choose to either subsequently
measure servicing rights at fair value and to report changes in fair
value in earnings, or to retain the amortization method whereby
servicing rights are recorded at the lower of cost or fair value and
are amortized over their expected life, including servicing contracts
with no recorded value. The Company retained the amortization method
upon adoption of SFAS 156, but began recognizing the fair value of
servicing contracts involving no consideration assumed after
January 1, 2007. Prior to the adoption of FAS 156, the Company
capitalized servicing rights on loans it originated and sold to FHMLC
(Freddie Mac) where the servicing was retained by the Company
following the sale of the loan to Freddie Mac. The Company continues
to capitalize servicing rights on the Freddie Mac loans subsequent to
its adoption of FAS 156. As such, the fair value of all servicing
rights recognized by the Company resulted in the Company recording
intangible assets and a corresponding amount to income upon the
initial recognition of the servicing rights of $2.7 million and $5.4
million for the three month and twelve month periods ended December
31, 2007, respectively, and $0.3 and $0.5 million for the three month
and twelve month periods ended December 31, 2006, respectively. These
income amounts are recorded in "Interest and other income, net" in the
Consolidated Income Statement. The 2007 Consolidated Balance Sheet and
Consolidated Operating Results reflect a $1.1 million impairment
charge on certain mortgage servicing rights.

(3) The minority interest adjustment on the consolidated
financials statements of HFF, Inc. relates to the ownership interest
of Holdings in the Operating Partnerships as a result of the initial
public offering. As the sole stockholder of Holliday GP (the sole
general partner of the Operating Partnerships), the Company operates
and controls all of 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 minority interest in HFF,
Inc's consolidated financial statements. The minority interest
presented in the Company's Consolidated Operating Results is
calculated based on the income from the Operating Partnerships. In
connection with the reorganization transactions, the initial public
offering on January 30, 2007, and the underwriters' exercise of their
option to purchase an additional 2,145,000 shares of Class A common
stock on February 22, 2007, the first quarter 2007 is segregated into
three distinct periods representing different ownership interests in
the Operating Partnerships by HFF, Inc. and Holdings during each of
these three periods.

The table below sets forth the minority interest reported on the
Company's Consolidated Operating Results during the year ended
December 31, 2007:

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Minority Interest Calculation
(dollars in thousands)

Period Period Period
1/1/07 1/31/07 2/22/07
through through through
1/30/07 2/21/07 3/31/07
------- ------- -------

Net income from operating partnerships $ 1,922 $ 1,683 $ 5,206

Minority interest ownership percentage 61.14% 55.31%

------- -------
Minority interest $ 1,029 $ 2,879
======= =======

Three Three Three Three Twelve
months months months months months
ended ended ended ended ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2007 2007 2007 2007 2007
--------- -------- --------- -------- --------

Net income from
operating partnerships $ 8,811 $ 20,814 $ 15,925 $ 9,979 $ 55,529

Minority interest
ownership percentage 55.31% 55.31% 55.31%

--------- -------- --------- -------- --------
Minority interest $ 3,908 $ 11,513 $ 8,808 $ 5,519 $ 29,748
========= ======== ========= ======== ========
*T

(4) The deferred tax asset on HFF, Inc.'s Consolidated Balance
Sheet represents the net of deferred tax assets and deferred tax
liabilities. Included within this account is a deferred tax asset
representing the future tax benefits associated with HFF, Inc.'s tax
basis step-up from its Section 754 election of the Internal Revenue
Code. The increase in tax basis, and the election under Section 754 of
the Internal Revenue Code, allow the Company to reduce the amount of
future tax payments to the extent that it has future taxable income.
As a result of the initial increase in tax basis, the Company is
currently entitled to future tax benefits of $131.8 million and has
recorded this amount as a deferred tax asset on its December 31, 2007
Consolidated Balance Sheet. The Company is obligated, however,
pursuant to its tax receivable agreement with Holdings, to pay to
Holdings, on an after-tax basis, 85% of the amount of cash savings, if
any, in U.S. federal, state and local income tax that the Company
actually realizes as a result of these increases in tax basis and as a
result of certain other tax benefits arising from entering into the
tax receivable agreement and making payments under that agreement.

The Company has estimated that the payments that will be made to
Holdings will be $117.4 million and has recorded this obligation to
Holdings as a liability on the Consolidated Balance Sheets. The
Company has recorded the $20.7 million difference between the initial
$138.1 million benefit and the initial $117.4 million liability to
Holdings as an increase in Stockholders' Equity.

(5) Holdings used a portion of the proceeds it received in
connection with the initial public offering to repay all outstanding
borrowings under HFF, LP's credit agreement.

EBITDA Reconciliation

The Company defines EBITDA as net income (loss) before interest
expense, income taxes, depreciation and amortization and income
reported to the minority interest. The Company uses 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 EBITDA as a supplemental measure to evaluate its overall operating
performance. However, EBITDA has material limitations as an analytical
tool and you should not consider this in isolation, or as a substitute
for analysis of our results as reported under GAAP. The Company finds
it as a useful tool to assist in evaluating performance because it
eliminates items related to capital structure and taxes. The items
that the Company has eliminated from net income in determining EBITDA
are interest expense, income taxes, depreciation of fixed assets and
amortization of intangible assets, and minority interest. Note that
the Company classifies the interest on the warehouse line of credit as
an operating expense and, accordingly, it is not eliminated from net
income in determining EBITDA. In addition, note that the Company
includes in net income the income upon the initial recognition of
mortgage servicing rights and, accordingly, it is included in net
income in determining EBITDA. However, some of these eliminated items
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 carrying significant amounts of fixed assets on its
balance sheet has material limitations as a performance measure. In
light of the foregoing limitations, the Company does not rely solely
on EBITDA as a performance measure and also considers its GAAP
results. 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 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 to EBITDA for HFF, Inc. for the three and twelve months ended
December 31:

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EBITDA for the Company is calculated as follows:
(dollars in thousands)

For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
----------------- -----------------
2007 2006 2007 2006
--------- ------- --------- -------

Net income $ 2,113 $18,312 $ 14,420 $51,553
Add:
Interest expense 3 1,164 407 3,541
Income tax expense 2,035 119 9,874 332
Depreciation and amortization 970 767 3,861 2,806
Minority interest 5,519 - 29,748 -
--------- ------- --------- -------
EBITDA $ 10,640 $20,362 $ 58,310 $58,232
========= ======= ========= =======
*T

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

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