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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-33280
  HFF, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

51-0610340(State of
    incorporation)

(I.R.S. Employer
    Identification No.)One Oxford Centre301 Grant Street, Suite 600
    Pittsburgh, Pennsylvania 15219(Address of principal
    executive offices,
    including zip code)

(412) 281-8714(Registrants telephone
    number,
    including area code)   Securities registered pursuant to Section 12 (b) of the
    Act:
  Title of Each Class

Name of Exchange on Whichto be Registered

Class is to be RegisteredClass A Common Stock, par value $.01 per share


New York Stock Exchange   Securities registered pursuant to Section 12 (g) of the
    Act:
    NONE
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    Company o   Rule 12b-2).  Yes o þ
    Rule 12b-2
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1.


Business


1Item 1A.


Risk Factors


8Item 1B.


Unresolved Staff Comments


19Item 2.


Properties


19Item 3.


Legal Proceedings


19Item 4.


Submission of Matters to a Vote of Security
    Holders


19PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


20Item 6.


Selected Financial Data


21Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


23Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


38Item 8.


Consolidated Financial Statements and
    Supplementary Data


39Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


72Item 9A.


Controls and Procedures


72Item 9B.


Other Information


72PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


72Item 11.


Executive Compensation


73Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


73Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


73Item 14.


Principal Accountant Fees and Services


73PART IVItem 15.


Exhibits and Financial Statement Schedules


73SIGNATURES


74EXHIBIT INDEX


75EX-10.13EX-23.1EX-31.1EX-31.2EX-32.1   i




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K.
  SPECIAL
    NOTE REGARDING THE REGISTRANT
  Form 10-K Form 10-K
  Form 10-K Form 10-K
 ii




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PART I  Item 1.
    Business  Overview
      
    Debt placement;
    Investment sales;
    Structured finance;
    Private equity, investment banking and advisory services;
    Note sales and note sale advisory services; and
    Commercial loan servicing.  transaction-by-transaction
      (412) 281-8714.
 1




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Reportable
    Segments
    Our
    Competitive Strengths
    People,
    Expertise and Culture
      Integrated
    Capital Markets Services Platform
  
    2




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Independent
    Objective Advice
    Extensive
    Cross-Selling Opportunities
    Broad
    and Deep Network of Relationships
    Proprietary
    Transaction Database
   3




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Our
    Strategic Growth Plan
    Expand
    Our Geographic Footprint
      Increase
    Market Share Across Each of our Capital Markets
    Services
    
    Debt Placement.  Our transaction volume in debt
    placements was approximately $23.5 billion and
    $22.1 billion in 2007 and 2006, respectively. According to
    the Mortgage Bankers Associations Commercial Real
    Estate/Multifamily Finance: Annual Origination Volume
    Summation report, debt issuances in 2006 and 2005 were
    $406 billion and $345 billion, respectively.
    Investment Sales.  In 2007, we completed
    investment sales of approximately $17.1 billion, an
    increase of approximately 69.3% over the approximately
    $10.1 billion completed in 2006. According to Real Capital
    Analytics, commercial real estate sales volume for office,
    industrial, multifamily and retail properties in the
    U.S. in 2007 and 2006 were $438 billion and
    $327 billion, respectively.
    Structured Finance and Advisory Services.  In
    2007 and 2006, we completed approximately $2.3 billion and
    $2.7 billion, respectively, of structured finance and
    advisory services transactions (which includes amounts that we
    internally allocate to the structured finance reporting
    category, even though the transaction may have been funded
    through a single mortgage note) for our clients.
    In April 2004, we formed our broker-dealer subsidiary, HFF
    Securities, to undertake both discretionary and
    non-discretionary private equity raises, select property
    specific joint ventures, and select investment banking
    activities for our clients. At December 31, 2007 and 2006,
    we had $2.0 billion and $1.3 billion of active private
    equity discretionary fund transactions on which HFF Securities
    was engaged and may recognize additional future revenue. 4




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
    Note Sales and Note Sale Advisory
    Services.  Since formalizing our note sales and
    note sale advisory services platform in 2004, we have
    consummated over $1.3 billion in note sales and note sale
    advisory transactions. We see growth in this market due to the
    desire of lenders  seeking to diversify concentration risk
    (geographic, borrower or product type), manage potential
    problems in their loan portfolios or sell loans rejected from
    Commercial Mortgage Backed Securities (CMBS)
    securitization pools.
    Loan servicing.  The principal balance of
    HFFs loan servicing portfolio increased nearly 28.9% from
    approximately $18.0 billion at December 31, 2006, to
    over $23.2 billion at December 31, 2007. We have
    approximately 38 formal correspondent lender relationships with
    life insurers and 18 CMBS sub servicing agreements. The majority
    of the CMBS contracts have been put in place over the past
    36 months due to our increased focus on growing our
    servicing platform to better serve our clients.  Continue
    to Capitalize on Cross-Selling Opportunities
      Our
    Services
  Debt
    Placement Services
      Investment
    Sales Services
   5




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Structured
    Finance Services
  and/or and/or and/or
  Private
    Equity, Investment Banking and Advisory Services
    
    Joint Ventures.  Equity capital for our
    commercial real estate clients to establish joint ventures
    relating to either identified properties or properties to be
    acquired by a fund sponsor. These joint ventures typically
    involve the acquisition, development, recapitalization or
    restructuring of multi-asset commercial real estate portfolios,
    and include a variety of property types and geographic areas.
    Private Placements.  Private placements of
    common, perpetual preferred and convertible preferred
    securities. Issuances involve primary or secondary shares that
    may be publicly registered, listed and traded.
    Advisory Services.  Entity-level advisory
    services for various types of transactions including mergers and
    acquisition, sales and divestitures, management buyouts, and
    recapitalizations and restructurings.
    Marketing and Fund-Raising.  Institutional
    marketing and fund-raising for public and private commercial
    real estate companies, with a focus on opportunity and
    value-added commercial real estate funds. In this capacity, we
    undertake private equity raises, both discretionary and
    non-discretionary, and offer advisory services.  Note
    Sales and Note Sale Advisory Services
    Commercial
    Loan Servicing
      Competition
   6




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Regulation
    Rule 15c3-1,
    Seasonality
   7




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History
        Available
    Information
  www.hfflp.com Form 10-K. Form 10-K, Form 10-Q, Form 8-K,
  
    our Code of Conduct and Ethics;
    the charter of its Nominating and Corporate Governing Committee;
    the charter of its Compensation Committee;
    the charter of its Audit Committee; and
    our Corporate Governance Guidelines.  Item 1A.
    Risk
    Factors  Form 10-K,
  Risks
    Related to Our Business
  General
    economic conditions and commercial real estate market
    conditions, both globally and domestically, can have a negative
    impact on our business.
   8




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and/or
    
    Slowdowns in economic activity could cause tenant demand for
    space to decline, which would adversely affect the operation and
    income of commercial real estate properties and thereby affect
    investor demand and the supply of capital for debt and equity
    investments in commercial real estate.
    Declines in the regional or local demand for commercial real
    estate, or significant disruptions in other segments of the real
    estate market, could adversely affect our results of operations.
    During 2007, approximately 25.8%, 6.1%, 5.9% and 8.8% of our
    capital markets services revenues was derived from transactions
    involving commercial real estate located in Texas, California,
    Illinois and the region consisting of the District of Columbia,
    Maryland and Virginia, respectively. As a result, a significant
    portion of our business is dependent on the economic conditions
    in general and the markets for commercial real estate in these
    areas, which, like other commercial real estate markets, have
    experienced price volatility or economic downturns in the past.
    Global and domestic credit and liquidity issues, significant
    fluctuations in interest rates as well as steady and protracted
    increases or decreases of interest rates could adversely affect
    the operation and income of commercial real estate properties as
    well as the demand from investors for commercial real estate
    investments. Both of these events could adversely affect
    investor demand and the supply of capital for debt and equity
    investments in commercial real estate. In particular, increased
    interest rates may reduce the number of acquisitions,
    dispositions and loan originations, as well as the respective
    transaction volumes, which could also adversely affect our
    servicing revenue. All of the above could cause prices to
    decrease due to the reduced amount of financing available as
    well as the increased cost of obtaining financing and could lead
    to a decrease in purchase and sale activity.
    Significant disruptions or changes in capital market flows, as
    well as credit and liquidity issues in the global and domestic
    capital markets, regardless of their duration, could adversely
    affect the supply
    and/or
    demand for capital from investors for commercial real estate
    investments. In particular, while commercial real estate is now
    viewed as an accepted asset class for portfolio diversification,
    if this perception changes there could be a significant
    reduction in the amount of debt and equity capital available in
    the commercial real estate sector.    Our
    business has been, and may continue to be, adversely affected by
    recent restrictions in the availability of credit and the risk
    of continued deterioration of the credit markets and commercial
    real estate markets.
  and/or
 9




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and/or and/or
  If we
    are unable to retain and attract qualified and experienced
    transaction professionals and associates, our growth may be
    limited and our business and operating results could
    suffer.
    lock-ups,
     10




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Our
    business could be hurt if we are unable to retain our business
    philosophy and partnership culture as a result of becoming a
    public company, and efforts to retain our philosophy and culture
    could adversely affect our ability to maintain and grow our
    business.
      We
    have numerous significant competitors and potential future
    competitors, some of which may have greater resources than we
    do, and we may not be able to continue to compete
    effectively.
    We
    could be adversely affected if the Terrorism Risk Insurance Act
    of 2002 is not renewed beyond 2014, or is adversely amended, or
    if insurance for other natural or manmade disasters is
    interrupted or constrained.
   11




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We
    have experienced significant growth over the past several years,
    which may be difficult to sustain and which may place
    significant demands on our administrative, operational and
    financial resources.
      If we
    acquire companies or significant groups of personnel in the
    future, we may experience high transaction and integration
    costs, the integration process may be disruptive to our business
    and the acquired businesses and/or personnel may not perform as
    we expect.
  and/or
   12




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A
    failure to appropriately deal with actual or perceived conflicts
    of interest could adversely affect our businesses.
    A
    majority of our revenue is derived from capital markets services
    transaction fees, which are not
    long-term
    contracted sources of revenue and are subject to intense
    competition, and declines in those engagements could have a
    material adverse effect on our financial condition and results
    of operations.
  transaction-by-transaction
  Additional
    indebtedness or an inability to obtain indebtedness may make us
    more vulnerable to economic downturns and limit our ability to
    withstand competitive pressures.
      
    a substantial portion of our cash flow from operations will be
    dedicated to debt service and may not be available for other
    purposes;
    our cash flow from operations may be insufficient for us to
    continue to fund our business operations and our inability to
    obtain financing will make it more difficult to fund our
    operations;
    making it more difficult for us to satisfy our obligations;
    limiting our flexibility in planning for, or reacting to,
    changes in our business and the industry in which we operate;
    obtaining financing in the future for our warehouse lending
    activities related to our Freddie Mac Program Plus Seller
    Servicer business, working capital, capital expenditures and
    general corporate purposes, including acquisitions, and may
    impede our ability to process our capital markets platform
    services as well as to secure favorable lease terms; 13




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
    making us more vulnerable to economic downturns and may limit
    our ability to withstand competitive pressures;
    making it more difficult to continue to fund our strategic
    growth initiatives and retain and attract key
    individuals; and
    placing us at a competitive disadvantage compared to our
    competitors with less debt and greater financial resources.    Significant
    fluctuations in our revenues and net income may make it
    difficult for us to achieve steady earnings growth on a
    quarterly or an annual basis, which may make the comparison
    between periods difficult and may cause the price of our
    Class A common stock to decline.
      Our
    results of operation vary significantly among quarters during
    each calendar year, which makes comparisons of our quarterly
    results difficult.
    Employee
    misconduct, which is difficult to detect and deter, could harm
    us by impairing our ability to attract and retain clients and
    subjecting us to significant legal liability and reputational
    harm.
   14




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Compliance
    failures and changes in regulation could result in an increase
    in our compliance costs or subject us to sanctions or
    litigation.
      Risks
    Related to Our Organizational Structure
  Our
    only material asset is our units in the Operating Partnerships,
    and we are accordingly dependent upon distributions from the
    Operating Partnerships to pay our expenses, taxes and dividends
    (if and when declared by our board of directors).
    We
    will be required to pay HFF Holdings for most of the benefits
    relating to any additional tax depreciation or amortization
    deductions we may claim as a result of the tax basis
    step-up we
    receive, subsequent sales of our common stock and related
    transactions with HFF Holdings.
     15




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If
    HFF, Inc. was deemed an investment company under the
    Investment Company Act of 1940 as a result of its ownership of
    the Operating Partnerships, applicable restrictions could make
    it impractical for us to continue our business as contemplated
    and could have a material adverse effect on our
    business.
     16




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Risks
    Related to Our Class A Common Stock
  Control
    by HFF Holdings of the voting power in HFF, Inc. may give rise
    to conflicts of interests and may prevent new investors from
    influencing significant corporate decisions.
          Transformation
    into a public company may increase our costs and may disrupt the
    regular operations of our business.
       17




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If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report financial results or
    prevent fraud.
      If
    securities analysts do not publish research or reports about our
    business or if they downgrade our company or our sector, the
    price of our Class A common stock could
    decline.
    Our
    share price may decline due to the large number of shares
    eligible for future sale and for exchange.
       18




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The
    market price of our Class A common stock may be volatile,
    which could cause the value of your investment to decline or
    subject us to litigation.
      Anti-takeover
    provisions in our charter documents and Delaware law could delay
    or prevent a change in control.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   19




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
      2007High


Low1st Quarter

$
21.35


$
15.002nd Quarter


18.15



14.373rd Quarter


15.75



9.704th Quarter


12.90



5.66   Form 10-K.
  Holders
    Dividends
     20




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Performance
    Graph
      COMPARISON
    OF 11-MONTH
    CUMULATIVE TOTAL RETURN
    Among HFF, Inc., The S&P 500 Index, and A Peer
    Group
  
  1/31/07


3/31/07


6/30/07


9/30/07


12/31/07l HFF,
    Inc.


100.00



80.21



82.94



63.48



41.39n S&P
    500 Index


100.00



98.79



104.53



106.15



102.095 Peer
    Group


100.00



95.33



103.00



86.33



63.04   Recent
    Sales of Unregistered Securities
    Issuer
    Purchases of Equity Securities
    Item 6.
    Selected
    Financial Data   21




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Form 10-K. Form 10-K. Form 10-K. Form 10-K Form 10-K.
  SuccessorFor The Year Ended






Predecessor(a)December 31,


6/16/03 -



1/1/03 -2007


2006


2005


2004


12/31/03



6/15/03(Unaudited)(In thousands)(In thousands)Statement of Income Data:Total revenue

$
255,666


$
229,697


$
205,848


$
143,691


$
72,474



$
36,725Operating expenses


207,686



175,410



157,759



113,961



58,579




32,461Operating income


47,980



54,287



48,089



29,730



13,895




4,264Interest and other income, net


6,469



1,139



414



67



63




Interest expense


(407
)


(3,541
)


(80
)


(86
)


(38
)



Income before income taxes and minority interest


54,042



51,885



48,423



29,711



13,920




4,264Income taxes(b)


9,874



332



288



296








Income before minority interest


44,168



51,553



48,135



29,415



13,920




4,264Minority interest


29,748




















Net income

$
14,420


$
51,553


$
48,135


$
29,415


$
13,920




4,264Less net income earned prior to IPO and reorganization


(1,893
)


(51,553
)


(48,135
)


(29,415
)


(13,920
)



(4,264
)Income available to common stockholders

$
12,527


$



$



$



$




$
Diluted earnings per common share

$
0.84




















Balance Sheet Data:Total assets

$
240,476


$
154,302


$
38,630


$
23,940


$
34,361Long term debt, excluding current portion

$
111


$
91


$
150


$
193


$
243Total liabilities

$
180,648


$
198,620


$
29,521


$
11,568


$
10,205     (a)
    
    The financial information for the period from January 1,
    2003 through June 15, 2003, is derived from unaudited
    financial information and general ledger reports provided by HFF
    LPs parent company at that time. Prior to June 15,
    2003, HFF LP was an indirect wholly-owned subsidiary of Lend
    Lease, an Australian company with a June 30 fiscal year. The
    acquisition of HFF LP on June 16, 2003 by HFF Holdings
    created a new basis of accounting and, accordingly, the
    financial information for the periods through December 31,
    2003 are not 22




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comparable to recent periods and comparisons of those periods to
    recent periods may not be accurate indicators of our relative
    financial performance.  (b)
    
    Prior to the Reorganization Transactions in January 2007, we
    operated as two limited liability companies (HFF Holdings and
    Holdings Sub), a corporation (Holliday GP) and two limited
    partnerships (HFF LP and HFF Securities), which two partnerships
    we refer to as the Operating Partnerships. As a result, our
    income was subject to limited U.S. federal income taxes and our
    income and expenses were passed through and reported on the
    individual tax returns of the members of HFF Holdings. Income
    taxes shown on the Companys consolidated statements of
    income reflect federal income taxes of the corporation and
    business and corporate income taxes in various jurisdictions.
    Following the initial public offering, the Company became
    subject to additional entity-level taxes that are reflected in
    our consolidated financial statements. See
    Managements Discussion and Analysis of Financial
    Condition and Results of Operation  Key Financial
    Measures and Indicators  Costs and
    Expenses  Income Tax Expense.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K.
  Overview
  Our
    Business
    transaction-by-transaction
    
    Economic and commercial real estate market
    downturns.  Our business is dependent on
    international and domestic economic conditions and the demand
    for commercial real estate and related services in the markets
    in which we operate and even a regional economic downturn could
    adversely affect our business. A general decline in acquisition
    and disposition activity can lead to a reduction in fees and
    commission for arranging 23




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such transactions, as well as in fees and commissions for
    arranging financing for acquirers and property owners that are
    seeking to recapitalize their existing properties. Likewise, a
    general decline in commercial real estate investment activity
    can lead to a reduction in fees and commissions for arranging
    acquisitions, dispositions and financings for acquisitions as
    well as for recapitalizations for existing property owners as
    well as a significant reduction in our loan servicing
    activities, due to increased delinquencies and defaults and lack
    of additional loans that we would have otherwise added to our
    loan servicing portfolio, all of which would have an adverse
    effect on our business.  
    Decreased investment allocation to commercial real estate
    class.  Allocations to commercial real estate as
    an asset class for investment portfolio diversification may
    decrease for a number of reasons beyond our control, including
    but not limited to poor performance of the asset class relative
    to other asset classes or superior performance of other asset
    classes when compared with continued good performance of the
    commercial real estate asset class. In addition, while
    commercial real estate is now viewed as an accepted and valid
    class for portfolio diversification, if this perception changes,
    there could be a significant reduction in the amount of debt and
    equity capital available in the commercial real estate sector.
    Credit and liquidity issues.  Credit and
    liquidity issues could lead to a decrease in transaction
    activity and lower values. Restrictions on the availability of
    capital, both debt
    and/or
    equity, can create significant reductions in the liquidity in
    and flow of capital to the commercial real estate markets. In
    particular, global and domestic credit and liquidity issues may
    reduce the number of acquisitions, dispositions and loan
    originations, as well as the respective transaction volumes,
    which could also adversely affect our servicing revenue. These
    restrictions could also cause prices to decrease due to the
    reduced amount of equity capital and debt financing available.
    Fluctuations in interest rates.  Significant
    fluctuations in interest rates as well as steady and protracted
    movements of interest rates in one direction (increases or
    decreases) could adversely affect the operation and income of
    commercial real estate properties as well as the demand from
    investors for commercial real estate investments. Both of these
    events could adversely affect investor demand and the supply of
    capital for debt and equity investments in commercial real
    estate. In particular, increased interest rates may cause prices
    to decrease due to the increased costs of obtaining financing
    and could lead to decreases in purchase and sale activities
    thereby reducing the amounts of investment sales and loan
    originations and related servicing fees.      Form 10-K.
  Key
    Financial Measures and Indicators
  Revenues
  transaction-by-transaction
 24




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Total
    Revenues:
  Capital markets services revenues.
  
    Origination fees.  Our origination fees are
    earned through the placement of debt, equity and structured
    financing. Debt placements represent the majority of our
    business, with approximately $23.5 billion and
    $22.1 billion of debt transaction volume in 2007 and 2006,
    respectively. Fees earned by HFF Securities for discretionary
    and non-discretionary equity capital raises and other investment
    banking services are also included with capital markets services
    revenue in our consolidated statements of income. We recognize
    origination revenues at the closing of the applicable financing
    and funding of capital, when such fees are generally collected.
    We recognize fees earned by HFF Securities at the time the
    capital is funded unless collectibility of our fees are not
    reasonably assured, in which case, we recognize fees as they are
    collected.
    Investment sales fees.  We earn investment
    sales fees by acting as a broker for commercial real estate
    owners seeking to sell a property(ies) or an interest in a
    property(ies). We recognize investment sales revenues at the
    close and funding of the sale, when such fees are generally
    collected.
    Loan servicing fees.  We generate loan
    servicing fees through the provision of collection, remittance,
    recordkeeping, reporting and other related loan servicing
    functions, activities and services. We also earn fees through
    escrow balances maintained as a result of required reserve
    accounts and tax and insurance escrows for the loans we service.
    We recognize loan servicing revenues at the time services are
    rendered, provided the loans are current and the debt service
    payments are actually made by the borrowers. We recognize the
    other fees related to escrows and other activities at the time
    the fees are paid.
    Note sales, note sale advisory and other production
    fees.  We generate note sales, note sale advisory
    and other production fees through assisting our clients in their
    efforts to sell all or portions of commercial real estate debt
    notes. We recognize note sales, note sale advisory and other
    production revenues at the close and funding of the capital to
    consummate sale, when such fees are generally collected.  Interest on mortgage notes receivable.
  Other.
  transaction-by-transaction
  Costs
    and Expenses
   25




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Operating
    Expenses:
  Cost of Services.
  Personnel.
  Stock Based Compensation.
  Occupancy.
  Travel and entertainment.
  Supplies, research and printing.
  Other.
   26




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Interest
    and Other Income, net:
    Interest
    Expense:
    Income
    Tax Expense:
          Minority
    Interest:
   27




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##### Table of Contents



Results
    of Operations
    Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  For The Year Ended December 31,2007


2006


Total


Total% of





% of


Dollar


PercentageDollars


Revenue


Dollars


Revenue


Change


Change(Dollars in thousands, unless percentages)RevenuesCapital markets services revenue

$
250,576



98.0
%

$
225,242



98.1
%

$
25,334



11.2
%Interest on mortgage notes receivable


1,585



NM



1,354



NM



231



17.1
%Other


3,505



1.4
%


3,101



1.4
%


404



13.0
%Total revenues


255,666



100
%


229,697



100
%


25,969



11.3
%Operating expensesCost of services


148,026



57.9
%


130,708



56.9
%


17,318



13.2
%Personnel


17,224



6.7
%


13,471



5.9
%


3,753



27.9
%Occupancy


8,009



3.1
%


6,319



2.8
%


1,690



26.7
%Travel and entertainment


6,810



2.7
%


5,789



2.5
%


1,021



17.6
%Supplies, research and printing


8,776



3.4
%


6,463



2.8
%


2,313



35.8
%Other


18,841



7.4
%


12,660



5.5
%


6,181



48.8
%Total operating expenses


207,686



81.2
%


175,410



76.4
%


32,276



18.4
%Operating income


47,980



18.8
%


54,287



23.6
%


(6,307
)


(11.6
)%Interest and other income, net


6,469



2.5
%


1,139



NM



5,330



468.0
%Interest expense


(407
)


NM



(3,541
)


1.5
%


(3,134
)


(88.5
)%Income before taxes and minority interest


54,042



21.1
%


51,885



22.6
%


2,157



4.2
%Income tax expense


9,874



3.9
%


332



NM



9,542



2,874.1
%Income before minority interest


44,168



17.3
%


51,553



22.4
%


(7,385
)


(14.3
)%Minority interest


29,748



11.6
%






0.0
%


29,748



Net income

$
14,420



5.6
%

$
51,553



22.4
%

$
(37,133
)


(72.0
)%       Revenues.
  
    The revenues we generated from capital markets services for the
    year ended December 31, 2007 increased $25.3 million,
    or 11.2%, to $250.6 million from $225.2 million for
    the same period in 2006. The increase is primarily attributable
    to increased production.
    The revenues derived from interest on mortgage notes was
    $1.6 million for the year ended December 31, 2007
    compared to $1.4 million for the same period in 2006, an
    increase of $0.2 million. The increase is due to an
    increase in the number of loans originated and increased average
    loan values during the year ended December 31, 2007,
    compared to the same period in 2006.
    The other revenues we earned were $3.5 million for the year
    ended December 31, 2007 compared to $3.1 million for
    the same period in 2006, an increase of $0.4 million, or
    13.0%. Other revenues increased 28




---



##### Table of Contents



Total Operating Expenses.
  
    The costs of services for the year ended December 31, 2007
    increased $17.3 million, or 13.2%, to $148.0 million
    from $130.7 million for the same period in 2006. The
    increase is most significantly a result of commissions on
    increased capital markets services provided for clients.
    Personnel expenses that are not directly attributable to
    providing services to our clients for the year ended
    December 31, 2007 increased $3.7 million, or 27.9%, to
    $17.2 million from $13.5 million for the same period
    in 2006. The increase is primarily related to higher profit
    participation and other bonus payouts in 2007 as well as
    increased headcount.
    The stock compensation cost that has been charged against income
    for the year ended December 31, 2007, was
    $0.8 million. At December 31, 2007, there was
    approximately $2.1 million of unrecognized compensation
    cost related to share based awards. The weighted average
    remaining contractual term of the nonvested restricted stock
    units is 3 years as of December 31, 2007. The weighted
    average remaining contractual term of the nonvested options is
    12 years as of December 31, 2007.
    Occupancy, travel and entertainment, and supplies, research and
    printing expenses for the year ended December 31, 2007
    increased $5.0 million, or 27.1%, to $23.6 million
    compared to the same period in 2006. These increases are
    primarily due to increased business activity, and additional
    space occupied, higher rents and new office space.
    Other expenses, including costs for insurance, professional
    fees, depreciation and amortization, interest on our warehouse
    line of credit and other operating expenses, were
    $18.8 million in the year ended December 31, 2007, an
    increase of $6.1 million, or 48.8%, versus
    $12.7 million in the year ended December 31, 2006.
    This increase is primarily related to costs associated with
    increased professional fees in relation to the Reorganization
    Transactions, increased amortization on intangible assets and
    increased insurance costs.  Operating income.
  Interest and other income, net.
  Net Income.
  
    Our income tax expense increased $9.5 million, or 2,874.1%,
    to $9.9 million in 2007 compared with $0.3 million in
    2006. This increase was principally the result of changes in our
    tax treatment following the Reorganization Transactions.
    Minority interest equaled $29.7 million in the year ended
    December 31, 2007, representing the minority interest
    relating to the ownership interest of HFF Holdings in the
    Operating Partnerships. We did not record any minority interest
    prior to the Reorganization Transactions, including in the year
    ended December 31, 2006.   29




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##### Table of Contents



Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  For the Year Ended December 31,2006


2005


Total


Total% of





% of


Dollar


PercentageDollars


Revenue


Dollars


Revenue


Change


Change(Dollars in thousands, unless percentages)RevenuesCapital markets services revenue

$
225,242



98.1
%

$
203,457



98.8
%

$
21,785



10.7
%Interest on mortgage notes receivable


1,354



NM



412



NM



942



228.6
%Other


3,101



1.4
%


1,979



1.0
%


1,122



56.7
%Total revenues


229,697



100
%


205,848



100
%


23,849



11.6
%Operating expensesCost of services


130,708



56.9
%


119,106



57.9
%


11,602



9.7
%Personnel


13,471



5.9
%


14,019



6.8
%


(548
)


(3.9
)%Occupancy


6,319



2.8
%


5,357



2.6
%


962



18.0
%Travel and entertainment


5,789



2.5
%


5,067



2.5
%


722



14.2
%Supplies, research and printing


6,463



2.8
%


5,089



2.5
%


1,374



27.0
%Other


12,660



5.5
%


9,121



4.4
%


3,539



38.8
%Total operating expenses


175,410



76.4
%


157,759



76.6
%


17,651



11.2
%Operating income


54,287



23.6
%


48,089



23.4
%


6,198



12.9
%Interest and other income, net


1,139



NM



414



NM



725



175.1
%Interest expense


(3,541
)


1.5
%


(80
)


NM



(3,461
)


4,326.3
%Income before taxes


51,885



22.6
%


48,423



23.5
%


3,462



7.1
%Income tax expense


332



NM



288



NM



44



15.3
%Net income

$
51,553



22.4
%

$
48,135



23.4
%

$
3,418



7.1
%       Revenues.
  
    The revenues we generated from capital markets services for the
    year ended December 31, 2006 increased $21.8 million,
    or 10.7%, to $225.2 million from $203.5 million for
    the same period in 2005. The increase is primarily attributable
    to increased production.
    The revenues derived from interest on mortgage notes were
    $1.4 million for the year ended December 31, 2006
    compared to $0.4 million for the same period in 2005, an
    increase of $1.0 million. Revenues increased primarily as a
    result of increased production of Freddie Mac loans.
    The other revenues we earned were $3.1 million for the year
    ended December 31, 2006 compared to $2.0 million for
    the same period in 2005, an increase of $1.1 million, or
    56.7%. Other revenues increased primarily as a result of expense
    reimbursements on a larger number of transactions with expense
    reimbursement compared to the number of transactions with
    expense reimbursement in 2005. 30




---



##### Table of Contents



Total Operating Expenses.
  
    The costs of services for the year ended December 31, 2006
    increased $11.6 million, or 9.7%, to $130.7 million
    from $119.1 million for the same period in 2005. The
    increase is most significantly a result of commissions on
    increased capital markets services provided for clients.
    Personnel expenses that are not directly attributable to
    providing services to our clients for the year ended
    December 31, 2006 decreased $0.5 million, or 3.9%, to
    $13.5 million from $14.0 million for the same period
    in 2005. The decrease is primarily related to a lower profit
    participation payout in 2006.
    Occupancy, travel and entertainment, and supplies, research and
    printing expenses for the year ended December 31, 2006
    increased $3.1 million, or 19.7%, to $18.6 million
    compared to the same period in 2005. These increases are
    primarily due to increased business activity, and additional
    space occupied, higher rents and new office space.
    Other expenses, including costs for insurance, professional
    fees, depreciation and amortization, interest on our warehouse
    line of credit and other operating expenses, were
    $12.7 million in the year ended December 31, 2006, an
    increase of $3.5 million, or 38.8%, versus
    $9.1 million in the year ended December 31, 2005. This
    increase is primarily related to costs associated with increased
    Freddie Mac volume resulting in interest expense on our
    warehouse line and increased professional fees in relation to
    the Reorganization Transactions.  Operating income.
  Net Income.
  
    Interest and other income, net, partially offsetting the costs
    we incurred in these periods, increased $0.7 million, to
    $1.1 million versus $0.4 million earned in the year
    ended December 31, 2005. This increase is principally
    attributable to increased cash balances as a result of increased
    production and gains on the sale of loans.
    The interest expense we incurred in the year ended
    December 31, 2006 totaled $3.5 million, an increase of
    $3.4 million from $0.1 million of similar expenses
    incurred in the year ended December 31, 2005. This increase
    resulted from the term loan of $60.0 million funded in
    March 2006.
    Expenses from income tax were approximately $0.3 million
    for the years ended December 31, 2006 and 2005.  Financial
    Condition
    
    The recognition of $131.4 million of deferred tax assets
    related to the basis
    step-up of
    the Reorganization Transactions.
    An increase in cash and cash equivalents to $43.7 million
    at December 31, 2007 compared to $3.3 million at
    December 31, 2006.
    A decrease in mortgage notes receivable to $41.0 million at
    December 31, 2007 from $125.7 million at
    December 31, 2006 due to the timing of sales of loans to
    FHLMC. 31




---



##### Table of Contents




    The repayment of $56.3 million of debt using the proceeds
    from the initial public offering.
    A reduction in the warehouse line of credit due to the timing of
    the sale of loans to FHLMC and the corresponding draws on the
    line of credit.
    An increase in the payable to HFF Holdings under the Tax
    Receivable Agreement entered into in connection with the
    Reorganization Transaction.    Cash
    Flows
    2007
    2006
    Liquidity
    and Capital Resources
       32




---



##### Table of Contents



transaction-by-transaction
     33




---



##### Table of Contents



Critical
    Accounting Policies; Use of Estimates
  and/or and/or and/or
  Goodwill. Goodwill and Other Intangible Assets,
  Intangible Assets.
 34




---



##### Table of Contents



Accounting for Servicing of
    Financial Assets  an amendment of FASB Statement
    No. 140
  Income Taxes.
    and/or
   35




---



##### Table of Contents



Leases.
    Certain
    Information Concerning Off-Balance Sheet Arrangements
    Contractual
    and Other Cash Obligations
    Payments Due by PeriodLess Than


1-3


3-5


More ThanTotal


1 Year


Years


Years


5 YearsLong-term debt

$



$



$



$



$
Capital lease obligations


189



6



183







Operating lease obligations


24,779



136



12,780



6,255



5,608Purchase obligations


















Other long-term liabilities reflected on the balance sheet


















Total contractual obligations

$
24,968


$
142


$
12,963


$
6,255


$
5,608   Seasonality
  quarter-by-quarter
  Effect of
    Inflation
   36




---



##### Table of Contents



Recent
    Accounting Pronouncements
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51.
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115. Disclosures
    About Fair Value of Financial Instruments Fair Value Measurements,
  Fair Value Measurements
      
    level 1:  Quoted market prices for
    identical assets or liabilities in active markets;
    level 2:  Observable market-based inputs
    or unobservable inputs corroborated by market data; and
    level 3:  Unobservable inputs that are not
    corroborated by market data.   37




---



##### Table of Contents



Form 10-Q.
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk   38




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data   
 PageHFF, Inc.Managements Report on Internal Control Over
    Financial Reporting


40Report of Independent Registered Public
    Accounting Firm


41Report of Independent Registered Public Accounting Firm


42Consolidated Balance Sheets as of
    December 31, 2007 and 2006


43Consolidated Statements of Income for the years
    ended December 31, 2007, 2006 and 2005


44Consolidated Statements of Stockholders
    Equity/Partners Capital (Deficiency) for the years ended
    December 31, 2007, 2006 and 2005


45Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006 and 2005


46Notes to Consolidated Financial Statements


47   39




---



##### Table of Contents



Managements
    Report on Internal Control Over Financial
    Reporting  Rule 13a-15(f)
       Dated: March 14, 2008

/s/  John
    H. Pelusi, Jr.John H.
    Pelusi, Jr.
    Chief Executive OfficerDated: March 14, 2008

/s/  Gregory
    R. ConleyGregory
    R. Conley
    Chief Financial Officer  40




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Accounting for Servicing of Financial Assets, an
    amendment of FASB Statement No. 140
    
    41




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                 
    42




---



##### Table of Contents



HFF,
    Inc.
  Consolidated
    Balance Sheets
  December 312007


2006(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
43,739


$
3,345Restricted cash (Note 6)


370



2,440Accounts receivable


1,496



2,508Receivable from affiliate (Note 17)


1,210



3,003Mortgage notes receivable (Note 7)


41,000



125,700Prepaid expenses and other current assets


4,036



4,533Deferred tax asset, net


344



Total current assets


92,195



141,529Property and equipment, net (Note 4)


6,789



5,040Deferred tax asset


131,408



Goodwill


3,712



3,712Intangible assets, net (Note 5)


5,769



3,293Other noncurrent assets


603



728Total assets

$
240,476


$
154,302LIABILITIES AND STOCKHOLDERS EQUITY/PARTNERS
    CAPITALCurrent liabilities:Current portion of long-term debt (Note 6)

$
78


$
56,393Warehouse line of credit (Note 7)


41,000



125,700Accrued compensation and related taxes


12,952



10,836Accounts payable


1,946



856Other current liabilities


2,481



2,162Total current liabilities


58,457



195,947Deferred rent credit


4,600



2,404Payable to Holdings  TRA


117,406



Other long-term liabilities


74



178Long-term debt, less current portion (Note 6)


111



91Total liabilities


180,648



198,620Minority interest


21,784



Stockholders equity/partners capital:Class A common stock, par value $0.01 per share,
    175,000,000 shares authorized, 16,445,000 shares
    outstanding


164



Class B common stock, par value $0.01 per share,
    1 share authorized and outstanding






Additional
    paid-in-capital


25,353



Partners capital (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    43




---



##### Table of Contents



HFF,
    Inc.
  Consolidated Statements of Income
  Years Ending December 31,2007


2006


2005(Dollars in thousands)RevenuesCapital markets services revenue

$
250,576


$
225,242


$
203,457Interest on mortgage notes receivable


1,585



1,354



412Other


3,505



3,101



1,979255,666



229,697



205,848ExpensesCost of services


148,026



130,708



119,106Personnel


17,224



13,471



14,019Occupancy


8,009



6,319



5,357Travel and entertainment


6,810



5,789



5,067Supplies, research, and printing


8,776



6,463



5,089Insurance


1,900



1,457



1,459Professional fees


5,576



2,023



1,101Depreciation and amortization


3,861



2,806



2,595Interest on warehouse line of credit


1,680



1,375



409Other operating


5,824



4,999



3,557207,686



175,410



157,759Operating income


47,980



54,287



48,089Interest and other income, net


6,469



1,139



414Interest expense


(407
)


(3,541
)


(80
)Income before taxes and minority interest


54,042



51,885



48,423Income tax expense


9,874



332



288Income before minority interest


44,168



51,553



48,135Minority interest


29,748







Net income

$
14,420


$
51,553


$
48,135Less net income earned prior to IPO and Reorganization
    Transactions


(1,893
)


(51,553
)


(48,135
)Income available to common stockholders

$
12,527


$



$
Earnings per share of Class A common stockBasic

$
.84Weighted average shares outstanding for basic income per share


14,968,389Diluted

$
.84Weighted average shares outstanding for diluted income per share


14,968,389    44




---



##### Table of Contents



HFF,
    Inc.
  Consolidated
    Statements of Stockholders Equity/Partners Capital
    (Deficiency)
  AdditionalCommon Stock


Partners


Paid in


RetainedShares


Amount


Capital


Capital


Earnings


TotalStockholders equity/partners capital,
    December 31, 2004





$



$
12,372


$



$



$
12,372Net income










48,135











48,135Distributions










(51,398
)










(51,398
)Stockholders equity/partners capital,
    December 31, 2005










9,109











9,109Issuance of class A common stock


1



















Net income










51,553











51,553Distributions










(104,980
)










(104,980
)Stockholders equity/partners capital (deficiency),
    December 31, 2006


1


$



$
(44,318
)

$



$



$
(44,318
)Net income for the period January 1 to January 30, 2007










1,893











1,893Distributions










(5,299
)










(5,299
)Repurchase of Class A common stock


(1
)


















Net proceeds received from the issuance of 16,445,000
    Class A common stock in the initial public offering (IPO),
    less the utilization of net IPO proceeds for the repayment
    of the bank term debt and the purchase of HFF Holdings interest
    in Holliday GP and 45% of HFF Holdings interest in the
    Operating Partnerships resulting in the elimination of
    partners capital and the recording of minority interest to
    effectuate the reorganization, as more fully described in
    Note 1


16,445,000



164



47,724



3,997







51,885Record the adjustment to give effect to the tax receivable
    agreement with HFF Holding as more fully discussed in
    Note 12














20,716







20,716Stock compensation and other, net














640







640Net income for the period January 31 to December 31, 2007


















12,527



12,527Stockholders equity/partners capital (deficiency),
    December 31, 2007


16,445,000


$
164


$



$
25,353


$
12,527


$
38,044    45




---



##### Table of Contents



HFF,
    Inc.
  Consolidated
    Statements of Cash Flows
  Year Ended December 312007


2006


2005(Dollars in thousands)Operating activitiesNet income

$
14,420


$
51,553


$
48,135Adjustments to reconcile net income to net cash provided by
    operating activities:Minority interest


29,748







Stock based compensation


813







Deferred income taxes


6,371







Depreciation and amortization:Property and equipment


2,304



1,728



1,611Intangibles


1,557



1,078



984(Gain) loss on sale or disposition or impairment of assets


(343
)






(140
)Mortgage service rights assumed


(3,637
)


(507
)


Increase (decrease) in cash from changes in:Restricted cash


2,070



(2,051
)


392Accounts receivable


1,012



(1,587
)


(721
)Payable to/(receivable from) affiliate


2,381



(2,535
)


567Mortgage notes receivable


84,700



(111,000
)


(14,700
)Prepaid expenses and other current assets


497



(2,862
)


(569
)Other noncurrent assets


125



40



(449
)Accrued compensation and related taxes


2,116



36



2,935Accounts payable


1,090



526



25Other accrued liabilities


319



1,257



466Other long-term liabilities


2,092



290



(162
)Net cash provided by (used in) operating activities


147,635



(64,034
)


38,374Investing activitiesPurchases of property and equipment


(4,315
)


(2,624
)


(1,447
)Net cash used in investing activities


(4,315
)


(2,624
)


(1,447
)Financing activitiesNet borrowings on warehouse line of credit


(84,700
)


111,000



14,700Borrowings on long-term debt






60,000



Payments on long-term debt


(56,398
)


(3,878
)


(86
)Issuance of common stock


272,118







Purchase of ownership interests in operating partnerships


(215,931
)






Deferred financing costs


(276
)


(975
)


(14
)Distributions to members and minority interest holder


(17,739
)


(104,980
)


(51,398
)Net cash (used in) provided by financing activities


(102,926
)


61,167



(36,798
)Net increase (decrease) in cash


40,394



(5,491
)


129Cash and cash equivalents, beginning of period


3,345



8,836



8,707Cash and cash equivalents, end of period

$
43,739


$
3,345


$
8,836Supplemental disclosure of cash flow informationCash paid for income taxes

$
4,090


$
362


$
288Cash paid for interest

$
2,528


$
4,442


$
444Supplemental disclosure of non-cash financing activitiesProperty acquired under capital leases

$
103


$
90


$
89    46




---



##### Table of Contents



HFF,
    Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Basis of Presentation  Organization
    Business Combinations,
    Initial
    Public Offering and Reorganization
  Form S-1 Form S-1
       47




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      see Notes 13 and 14 see Note 15
  Basis of Presentation
        Reclassifications
   48




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  2.
    Summary
    of Significant Accounting Policies  Consolidation
  Consolidation of
    Variable Interest Entities (revised December 2003) 
    an interpretation of ARB No. 51 (Issued 12/03) 04-5, Determining Whether a General Partner, or General Partners as
    a Group, Controls a Limited Partnership or Similar Entity When
    the Limited Partners Have Certain Rights
    Concentrations
    of Credit Risk
    Cash
    and Cash Equivalents
    Revenue
    Recognition
  and/or case-by-case
  EITF 01-14, Income Statement Characterization of Reimbursements Received
    for Out-of-Pocket Expenses Incurred,
 49




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Mortgage
    Notes Receivable
  ®
  Accounting for
    Certain Mortgage Banking Activities
  see
    Note 6
  Advertising
    Property
    and Equipment
  Accounting
    Changes and Error Corrections,
       50




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Leases
  Accounting for Leases
  Computer
    Software Costs
  98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
  Goodwill
  Goodwill and Other
    Intangible Assets
  Prepaid
    Compensation Under Employment Agreements
  sign-up sign-up
  Producer
    Draws
   51




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Intangible
    Assets
      Accounting for Servicing of
    Financial Assets  an amendment of FASB Statement
    No. 140
   52




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Earnings
    Per Share
    Stock
    Based Compensation
    Income
    Taxes
   53




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Cost
    of Services
    Segment
    Reporting
    Use of
    Estimates
   54




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Recent
    Accounting Pronouncements
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51.
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115. Disclosures
    About Fair Value of Financial Instruments Fair Value Measurements,
  Fair Value Measurements
      
    level 1:  Quoted market prices for
    identical assets or liabilities in active markets;
    level 2:  Observable market-based inputs
    or unobservable inputs corroborated by market data; and
    level 3:  Unobservable inputs that are not
    corroborated by market data.   55




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Form 10-Q.
  3.
    Stock
    Compensation    Omnibus
    Incentive Compensation Plan
  Form S-1
      Dividend yield


0.0
%Expected volatility


50.0
%Risk-free interest rate


4.5
%Expected life (in years)


6.5   56




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicOptions


Price


Term


ValueBalance at January 1, 2007













$
Granted


23,177


$
17.73



13.0 years



228Exercised














Forfeited or expired














Balance at December 31, 2007


23,177


$
17.73



12.1 years


$
228     WeightedAverageExerciseOptions


PriceNonvested at January 1, 2007






Granted


23,177


$
17.73Vested






Forfeited or expired






Nonvested at December 31, 2007


23,177


$
17.73       RestrictedStockUnitsBalance at January 1, 2007


Granted


148,612Converted to common stock


Forfeited or expired


Vested


(11,110
)Balance at December 31, 2007


137,502      57




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Property
    and Equipment    December 312007


2006Furniture and equipment

$
3,314


$
3,202Computer equipment


1,147



1,530Capitalized software costs


717



831Leasehold improvements


7,458



5,005Subtotal


12,636



10,568Less accumulated depreciation and amortization


(5,847
)


(5,528
)$
6,789


$
5,040     5.
    Intangible
    Assets    December 31, 2007


December 31, 2006Gross








GrossCarrying


Accumulated


Net Book


Carrying


Accumulated


Net BookAmount


Amortization


Value


Amount


Amortization


ValueAmortizable intangible assets:Mortgage servicing rights

$
6,085


$
(742
)

$
5,343


$
6,085


$
(3,695
)

$
2,390Deferred financing costs


523



(197
)


326



988



(185
)


803Unamortizable intangible assets:FINRA license


100







100



100







100Total intangible assets

$
6,708


$
(939
)

$
5,769


$
7,173


$
(3,880
)

$
3,293          58




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                FV atCategory

12/31/06


Capitalized


Amortized


Impairment


12/31/07


12/31/07FHLMC

$
600


$
1,800


$
(217
)

$



$
2,183


$
3,001CMBS






2,677



(263
)






2,414



2,867Life company  limited






126



(14
)






112



161Life company


1,790



834



(897
)


(1,093
)


634



701Total

$
2,390


$
5,437


$
(1,391
)

$
(1,093
)

$
5,343


$
6,730   FV atCategory

12/31/05


Capitalized


Amortized


Impairment


12/31/06


12/31/06FHLMC

$
139


$
508


$
(47
)

$



$
600


$
1,353CMBS






















Life company  limited






















Life company


2,636







(846
)






1,790



2,248Total

$
2,775


$
508


$
(893
)

$



$
2,390


$
3,601    59




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          2008

$
1,4722009


1,1962010


7812011


6352012


545     6.
    Long-Term
    Debt and Capital Lease Obligations    December 312007


2006Bank term note payable

$



$
56,250Capital lease obligations


189



234Total long-term debt and capital leases


189



56,484Less current maturities


78



56,393Long-term debt and capital leases

$
111


$
91   (a)
    The
    Credit Agreement   60




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  30-day
    (b)
    Letters
    of Credit and Capital Lease Obligation      2008

$
782009


732010


38$
189   7.
    Warehouse
    Line of Credit  transaction-by-transaction 30-day
 61




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    ® ®
  8.
    Lease
    Commitments      2008

$
5,0192009


4,1462010


3,7512011


3,2232012


3,032Thereafter


5,608$
24,779         9.
    Retirement
    Plan   62




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    10.
    Servicing      11.
    Legal
    Proceedings  Accounting for
    Contingencies
  12.
    Income
    Taxes    Current


Deferred


TotalYear Ended December 31, 2007:Federal

$
2,117


$
5,399


$
7,516State


1,568



790



2,358$
3,685


$
6,189


$
9,874     Pre-tax book income

$
54,042Less: income earned prior to IPO and Reorganization Transactions


(1,893
)Less: income allocated to minority interest holder


(30,350
)Pre-tax book income after minority interest

$
21,799   63




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Income Tax expense




RateTaxes computed at federal rate

$
7,412



34.0
%State and local taxes, net of federal tax benefit


2,182



10.0
%Meals and entertainment


213



1.0
%Other permanent items


36



0.2
%Adjustment to prior years taxes


31



0.1
%$
9,874



45.3
%       Deferred income tax assetsSection 754 election tax basis
    step-up

$
150,007Tenant improvements


405Goodwill


27Restricted stock units


204Compensation


293Other


34150,970Less: valuation allowance


(18,177
)Deferred income tax asset


132,793Deferred income tax liabilitiesServicing rights


(830
)Deferred rent


(211
)Deferred income tax liability


(1,041
)Net deferred income tax asset (liability)

$
131,752      64




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Tax
    Receivable Agreement
    No. 94-10 (EITF 94-10),
   65




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    13.
    Supplemental
    Statements of Income   66




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  HFF,
    Inc.
  Consolidated
    Operating Results
  Period


Period


Period


Three


Three


Three


Three1/1/07


1/31/07


2/22/07


Months


Months


Months


Months


Yearthrough


through


through


Ended


Ended


Ended


Ended


Ended1/30/07


2/21/07


3/31/07


3/31/07


6/30/07


9/30/07


12/31/07


12/31/07(Dollars in thousands, except per share data)Revenue

$
17,467


$
12,308


$
25,770


$
55,545


$
79,786


$
68,029


$
52,306


$
255,666Operating expenses:Cost of services


10,817



8,160



14,560



33,537



44,151



39,166



31,172



148,026Operating, administrative and other


4,427



2,663



6,184



13,274



15,378



14,270



12,877



55,799Depreciation and amortization


358



273



389



1,020



878



993



970



3,861Total Expenses


15,602



11,096



21,133



47,831



60,407



54,429



45,019



207,686Operating income


1,865



1,212



4,637



7,714



19,379



13,600



7,287



47,980Interest and other income, net


401



169



352



922



994



2,170



2,383



6,469Interest expense


(373
)


(14
)


(7
)


(394
)


(6
)


(4
)


(3
)


(407
)Income before income taxes and minority interest


1,893



1,367



4,982



8,242



20,367



15,766



9,667



54,042Provision for income taxes






151



945



1,096



3,796



2,947



2,035



9,874Income before minority interest


1,893



1,216



4,037



7,146



16,571



12,819



7,632



44,168Minority interest






1,029



2,879



3,908



11,513



8,808



5,519



29,748Net income

$
1,893


$
187


$
1,158


$
3,238


$
5,058


$
4,011


$
2,113


$
14,420Less net income earned prior to IPO and reorganization


(1,893
)










(1,893
)














(1,893
)Income available to common stockholders

$



$
187


$
1,158


$
1,345


$
5,058


$
4,011


$
2,113


$
12,527Net income per share  basic













$
0.13


$
0.31


$
0.24


$
0.13


$
0.84Net income per share  diluted













$
0.13


$
0.31


$
0.24


$
0.13


$
0.84   14.
    Minority
    Interest   67




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Period








Three


Three


Three


Three1/1/07


Period


Period


Months


Months


Months


Months


Yearthrough


1/31/07


2/22/07


Ended


Ended


Ended


Ended


Ended1/30/07


through 2/21/07


through 3/31/07


3/31/07


6/30/07


9/30/07


12/31/07


12/31/07Net income from operating partnerships

$
1,922


$
1,683


$
5,206


$
8,811


$
20,814


$
15,925


$
9,979


$
55,529Minority interest ownership percentage






61.14
%


55.31
%






55.31
%


55.31
%


55.31
%Minority interest





$
1,029


$
2,879


$
3,908


$
11,513


$
8,808


$
5,519


$
29,748     Number of


Percentage ofAdditional


HFFShares


Holdingsof Class A


PartnershipCommon


Units in theStock Expected


Operatingto


PartnershipsBecome


BecomingAvailable


EligibleExchangeability Date:

for Exchange


for ExchangeJanuary 31, 2009


5,088,750



25
%January 31, 2010


5,088,750



25
%January 31, 2011


5,088,750



25
%January 31, 2012


5,088,750



25
%Total


20,355,000



100
%    68




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  15.
    Earnings
    Per Share  (dollars in thousands)
  YearEndedDecember 31,2007Net Income

$
14,420Net income available for Class A common stockholders

$
12,527Weighted Average Shares Outstanding:Basic


14,968,389Diluted


14,968,389     Basic
    Net Income per Share
  Numerator
  Denominator
  Diluted
    Net Income per Share
  Numerator
  Denominator
  69




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  YearThree Months


EndedEnded


December 31,December 31, 2007


2007Basic Earnings Per Share of Class A Common StockNumerator:Net income attributable to Class A common stockholders

$
2,113


$
12,527Denominator:Weighted average number of shares of Class A common stock
    outstanding


16,456,110



14,968,389Basic net income per share of Class A common stock

$
0.13


$
0.84Diluted Earnings Per Share of Class A Common StockNumerator:Net income attributable to Class A common stockholders

$
2,113


$
12,527Add  dilutive effect of:Income allocated to minority interest holder upon assumed
    exercise of exchange right






Denominator:Basic weighted average number of shares of Class A common
    stock


16,456,110



14,968,389Add  dilutive effect of:Unvested restricted stock units






Stock options






Minority interest holder exchange right






Weighted average common shares outstanding  diluted


16,456,110



14,968,389Diluted earnings per share of Class A common stock

$
0.13


$
0.84   16.
    Concentrations    17.
    Related
    Party Transactions   70




---



##### Table of Contents



HFF,
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    18.
    Selected
    Quarterly Financial Data (unaudited)    Quarter Ended2007

March 31


June 30


September 30


December 31Net Sales

$
55,545


$
79,786


$
68,029


$
52,306Operating Income


7,714



19,379



13,600



7,287Interest and other income, net


922



994



2,170



2,383
(2)Net Income


3,238



5,058



4,011



2,113Income available to common stockholders


1,345



5,058



4,011



2,113Per share data(1)Basic earnings per share

$
0.13


$
0.31


$
0.24


$
0.13Diluted earnings per share

$
0.13


$
0.31


$
0.24


$
0.13     (1)
    
    Earnings per share were computed independently for each of the
    periods presented; therefore, the sum of the earnings per share
    amounts for the quarters may not equal the total for the year.(2)
    
    Includes $0.7 million correction related to an error in the
    valuation of mortgage servicing rights during the nine months
    ended September 30, 2007, which increased interest and
    other income, net, in the fourth quarter of 2007.  Quarter Ended2006

March 31


June 30


September 30


December 31Net Sales

$
44,528


$
57,078


$
54,930


$
73,161Operating Income


7,523



13,532



14,147



19,085Interest and other income, net


198



246



185



510Net Income


7,581



12,482



13,178



18,312Per share data(3)Basic earnings per share

$



$



$



$
Diluted earnings per share

$



$



$



$
   (3)
    
    Prior to the reorganization and the initial public offering, the
    Company operated as a series of related partnerships and limited
    liability companies. There was no single capital structure upon
    which to calculate historical earnings per share information.
    Therefore, earnings per share information has not been presented
    for periods prior to the initial public offering. 71




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and Procedures.
    Rule 13a-15(e) Form 10-K.
    Limitations on the Effectiveness of Controls.
    Changes in Internal Control Over Financial Reporting.
    Form 10-K.
  Item 9B.
    Other
    Information    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance     72




---



##### Table of Contents



Form 8-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships, Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Exhibits
   73




---



##### Table of Contents



SIGNATURES      By:
    /s/  John
    H. Pelusi, Jr.       Signature

Capacity

Date/s/  John
    H. Pelusi, Jr.John
    H. Pelusi, Jr.

Chief Executive Officer, Director and Executive Managing
    Director
    (Principal Executive Officer)

March 14, 2008/s/  Gregory
    R. ConleyGregory
    R. Conley

Chief Financial Officer
    (Principal Financial and 
    Accounting Officer)

March 14, 2008/s/  John
    P. FowlerJohn
    P. Fowler

Director

March 14, 2008/s/  Mark
    D. GibsonMark
    D. Gibson

Director

March 14, 2008/s/  John
    Z. KukralJohn
    Z. Kukral

Director

March 14, 2008/s/  Deborah
    H. McAnenyDeborah
    H. McAneny

Director

March 14, 2008/s/  George
    L. Miles, Jr.George
    L. Miles, Jr.

Director

March 14, 2008/s/  Lenore
    M. SullivanLenore
    M. Sullivan

Director

March 14, 2008/s/  Joe
    B. Thornton, Jr.Joe
    B. Thornton, Jr.

Director

March 14, 2008/s/  McHenry
    T. Tichenor, Jr.McHenry
    T. Tichenor, Jr.

Director

March 14, 2008  74




---



##### Table of Contents



Exhibit Index  2
.1

Sale and Merger Agreement, dated January 30, 2007
    (incorporated by reference to Exhibit 10.5 to the
    Registrants Registration Statement on
    Form S-l
    (File
    No. 333-138579)
    (Form S-l)
    filed with the SEC on December 22, 2006)3
.1

Amended and Restated Certificate of Incorporation of the
    Registrant (incorporated by reference to Exhibit 3.1 to the
    Form S-l
    filed with the SEC on December 22, 2006)3
.2

Amended and Restated Bylaws of the Registrant (incorporated by
    reference to Exhibit 3.2 to the
    Form S-1
    filed with the SEC on December 22, 2006)10
.1

Holliday Fenoglio Fowler, L.P. Partnership Agreement, dated
    February 5, 2007 (incorporated by reference to
    Exhibit 10.1 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.2

HFF Securities L.P. Partnership Agreement, dated
    February 5, 2007 (incorporated by reference to
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.3

Tax Receivable Agreement, dated February 5, 2007
    (incorporated by reference to Exhibit 10.3 to the
    Form S-1
    filed with the SEC on December 22, 2006)10
.4

Registration Rights Agreement, dated February 5, 2007
    (incorporated by reference to Exhibit 10.4 to the
    Form S-1
    filed with the SEC on December 22, 2006)10
.5

HFF, Inc. 2006 Omnibus Incentive Compensation Plan, dated
    January 30, 2007 (incorporated by reference to
    Exhibit 10.9 to the
    Form S-l
    filed with the SEC on January 8, 2007)10
.6

Holliday Fenoglio Fowler, L.P. Profit Participation Bonus Plan
    (incorporated by reference to Exhibit 10.10 to the
    Form S-1
    filed with the SEC on January 8, 2007)10
.7

HFF Securities, L.P. Profit Participation Bonus Plan
    (incorporated by reference to Exhibit 10.11 to the
    Form S-l
    filed with the SEC on January 8, 2007)10
.8

Employment Agreement between the Registrant and John H. Pelusi,
    Jr., dated January 30, 2007 (incorporated by reference to
    Exhibit 10.8 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.9

Employment Agreement between the Registrant and Gregory R.
    Conley, dated January 30, 2007 (incorporated by reference
    to Exhibit 10.9 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.10

Employment Agreement between the Registrant and Nancy Goodson,
    dated January 30, 2007 (incorporated by reference to
    Exhibit 10.10 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.11

Amended and Restated Credit Agreement dated January 5, 2007
    (incorporated by reference to Exhibit 10.11 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)10
.12

First Amendment to Amended and Restated Credit Agreement, dated
    as of October 30, 2007, by and among Holliday Fenoglio
    Fowler, L.P., the lenders from time to time party thereto, and
    Bank of America, N.A., as administrative agent (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    (File
    No. 001-33280)
    filed with the SEC on November 5, 2007)10
.13

Form of Contribution Agreement with John H. Pelusi, Jr., John P.
    Fowler, Mark D. Gibson, John Z. Kukral, Deborah H.
    McAneny, George L. Miles, Jr., Lenore M. Sullivan, Joe B.
    Thornton, Jr. and McHenry T. Tichenor, Jr.18
.1

Letter, dated November 9, 2007, from Ernst &
    Young LLP to the Board of Directors and Stockholders of HFF,
    Inc. (incorporated by reference to Exhibit 18.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 001-33280)
    filed with the SEC on November 14, 2007)21
.1

Subsidiaries of the registrant (incorporated by reference to
    Exhibit 21.1 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006 (File
    No. 001-33280)
    filed with the SEC on March 16, 2007)23
.1

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  75