<PAGE>

--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the Transition Period from _______ to ________

                         Commission File Number 1-14373

                         INSIGNIA FINANCIAL GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                 DELAWARE                                56-2084290
         (State of Incorporation)           (I.R.S. Employer Identification No.)

200 PARK AVENUE, NEW YORK, NEW YORK                        10166
(Address of Principal Executive Offices)                 (Zip Code)

                                 (212) 984-8033
              (Registrant's Telephone Number, Including Area Code)

                             ----------------------

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No_____

At May 1, 2002, the Registrant had 23,012,347 shares of common stock
outstanding.

--------------------------------------------------------------------------------

<PAGE>

                         INSIGNIA FINANCIAL GROUP, INC.

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2002

                                 --------------

                                      INDEX

                                 --------------

                                                                            Page
                                                                            ----
PART I-- FINANCIAL INFORMATION

      Item 1.  Financial Statements                                           2

           Condensed Consolidated Statements of Operations for the
              Three Months Ended March 31, 2002 and 2001 ..................  2-3

           Condensed Consolidated Balance Sheets
               at March 31, 2002 and December 31, 2001.....................   4

           Condensed Consolidated Statements of Cash Flows
               for the Three Months Ended March 31, 2002 and 2001..........   5

           Notes to Condensed Consolidated Financial Statements............   6

      Item 2.  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations.............  22

      Item 3.  Quantitative and Qualitative Disclosure of Market Risk......  34

PART II-- OTHER INFORMATION

      Item 1.  Legal Proceedings...........................................  35

      Item 6.  Exhibits and Reports on Form 8-K............................  35

SIGNATURES.................................................................  36


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                         INSIGNIA FINANCIAL GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                                                      MARCH 31
                                                                                      --------
                                                                              2002                2001
                                                                              ----                ----
<S>                                                                   <C>                  <C>
REVENUES
    Real estate services                                                  $   147,994          $   175,097
    Property operations                                                         2,374                1,404
                                                                       -------------------   -----------------
                                                                              150,368              176,501
                                                                       -------------------   -----------------
COSTS AND EXPENSES
    Real estate services                                                      139,613              156,629
    Property operations                                                         1,365                  365
    Administrative                                                              2,782                3,400
    Depreciation                                                                4,293                3,479
    Property depreciation                                                         491                  348
    Amortization of intangibles                                                 1,721                6,259
                                                                       -------------------   -----------------
                                                                              150,265              170,480
                                                                       -------------------   -----------------

     Operating income                                                             103                6,021

OTHER INCOME AND EXPENSES:

    Losses from Internet investments                                               --               (4,452)
    Interest income                                                             1,063                1,851
    Interest expense                                                           (2,202)              (2,880)
    Property interest                                                            (561)                (823)
    Foreign currency transaction gains                                             16                   57
    Equity earnings in real estate ventures                                       912                  424
                                                                       -------------------   -----------------

(Loss) income from continuing operations before income taxes                     (669)                 198

    Income tax benefit                                                           (261)                 (18)
                                                                       -------------------   -----------------

(Loss) income from continuing operations                                         (408)                 216

Discontinued operations:
    (Loss) from discontinued operation, net of applicable taxes                    --               (2,750)
    Adjustment to loss on disposal, net of applicable taxes                       265                   --
                                                                       -------------------   -----------------

Net loss                                                                         (143)              (2,534)

Preferred stock dividends                                                        (250)                (250)
                                                                       -------------------   -----------------

Net loss available to common shareholders                              $         (393)         $    (2,784)
                                                                       ===================   =================
</TABLE>



                                       2
<PAGE>

                         INSIGNIA FINANCIAL GROUP, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31
                                                                                          --------
                                                                                   2002               2001
                                                                                   ----               ----
<S>                                                                          <C>                <C>
PER SHARE AMOUNTS:
  Earnings per common share - basic and diluted:
     (Loss) income from continuing operations                                   $   (0.03)        $         --
     Income (loss) from discontinued operations                                      0.01             (0.13)
                                                                              ---------------    --------------
     Net loss                                                                   $   (0.02)        $   (0.13)
                                                                              ===============    ==============

  Weighted average common shares:
     - Basic and diluted                                                            22,902            21,687
                                                                              ===============    ==============
</TABLE>

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.










                                       3
<PAGE>

                         INSIGNIA FINANCIAL GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      MARCH 31,           DECEMBER 31,
                                                                                         2002                 2001
                                                                                         ----                 ----
                                                                                     (Unaudited)             (Note)
<S>                                                                               <C>                     <C>
ASSETS
  Cash and cash equivalents                                                          $    66,636           $   131,860
   Receivables                                                                           144,647               176,120
   Restricted cash                                                                        23,886                21,617
   Property and equipment, net                                                            58,856                62,198
   Real estate investments                                                               105,123                95,710
   Goodwill, less accumulated amortization of $57,992 at December 31, 2001               291,981               288,353
   Acquired intangible assets, less accumulated amortization of $59,038 and
      $57,145 at March 31, 2002 and December 31, 2001, respectively                       20,345                21,462
  Deferred taxes                                                                          44,661                43,132
  Other assets                                                                            21,310                20,069
  Assets of discontinued operation                                                            --                57,822
                                                                                   -----------------     ----------------
Total assets                                                                         $   777,445           $   918,343
                                                                                   =================     ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Accounts payable                                                                   $    10,702          $     12,876
  Commissions payable                                                                     50,128                86,387
  Accrued incentives                                                                      14,098                63,911
  Accrued and sundry liabilities                                                          98,744               100,863
  Deferred taxes                                                                          13,690                12,636
  Notes payable                                                                          137,573               169,972
  Real estate mortgage notes payable                                                      53,732                37,269
  Liabilities of discontinued operation                                                       --                34,572
                                                                                   -----------------     ----------------
Total liabilities                                                                        378,667               518,486

Stockholders' Equity:
   Common stock, par value $.01 per share - authorized 80,000,000 shares,
   22,925,549 (2002) and 22,852,034 (2001) issued and outstanding shares,
     net of 1,502,600 (2002 and 2001) shares held in treasury                                230                   229
   Preferred stock, par value $.01 per share - authorized 20,000,000 shares,
     250,000 (2002 and 2001) issued and outstanding shares                                     3                     3
   Additional paid-in capital                                                            422,409               422,309
   Notes receivable for common stock                                                      (1,298)               (1,882)
   Accumulated deficit                                                                   (12,305)              (11,912)
   Accumulated other comprehensive loss                                                  (10,261)               (8,890)
                                                                                   -----------------     ----------------
Total stockholders' equity                                                               398,778               399,857
                                                                                   -----------------     ----------------
Total liabilities and stockholders' equity                                           $   777,445           $   918,343
                                                                                   =================     ================

</TABLE>
NOTE: The Balance Sheet at December 31, 2001 has been derived from the audited
      financial statements at that date but does not include all the information
      and footnotes required by accounting principles generally accepted in the
      United States (GAAP) for complete financial statements.

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.



                                       4
<PAGE>

                         INSIGNIA FINANCIAL GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                           MARCH 31,
                                                                                           ---------
                                                                                     2002             2001
                                                                                     ----             ----
<S>                                                                               <C>              <C>
OPERATING ACTIVITIES
(Loss) income from continuing operations                                           $   (408)        $     216

Adjustments to reconcile (loss) income from continuing operations to net cash
  used in operating activities:
     Depreciation and amortization                                                    6,505            10,085
     Equity earnings in real estate ventures                                           (912)             (424)
     Foreign currency transaction gains                                                 (16)              (57)
     Losses from Internet investments                                                    --             4,452
     Changes in operating assets and liabilities:
       Accounts receivable                                                           31,695            19,028
       Other assets                                                                  (2,339)           (8,014)
       Accrued incentives                                                           (49,813)          (62,659)
       Accounts payable and accrued expenses                                        (12,418)            1,152
       Commissions payable                                                          (36,259)          (20,786)
                                                                                  ------------     -------------
Net cash used in operating activities                                               (63,965)          (57,007)
                                                                                  ------------     -------------

INVESTING ACTIVITIES
     Payments made for acquisition of businesses                                         --            (2,307)
     Proceeds from sale of real estate                                               24,287            40,240
     Proceeds from sale of discontinued operation                                    23,250                --
     Investment in real estate                                                           --            (4,574)
     Distributions from real estate investments                                       4,139             1,317
     Additions to property and equipment, net                                          (951)           (2,287)
     Increase in restricted cash                                                       (328)          (21,766)
                                                                                  ------------     -------------
Net cash provided by investing activities                                            50,397            10,623
                                                                                  ------------     -------------

FINANCING ACTIVITIES
     Proceeds from issuance of common stock                                             152               290
     Proceeds from exercise of stock options                                            281               910
     Preferred stock dividends                                                         (250)             (500)
     Payments on notes payable                                                      (32,000)             (387)
     Payments on real estate mortgage notes payable                                 (21,424)          (33,143)
     Proceeds from real estate mortgage notes payable                                    --               513
                                                                                  ------------     -------------
Net cash used in financing activities                                               (53,241)          (32,317)
                                                                                  ------------     -------------

Net cash provided by (used in) discontinued operation                                 1,715              (732)
Effect of exchange rate changes in cash                                                (130)           (1,541)
                                                                                  ------------     -------------

Net decrease in cash and cash equivalents                                           (65,224)          (80,974)
Cash and cash equivalents at beginning of period                                    131,860           124,527
                                                                                  ------------     -------------
Cash and cash equivalents at end of period                                         $ 66,636         $  43,553
                                                                                  ============     =============
</TABLE>

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Business

ORGANIZATION

     Insignia Financial Group, Inc. ("Insignia" or the "Company"), a Delaware
corporation headquartered in New York, New York, is an international real estate
services company with market leading operations in the United States, the United
Kingdom and France, as well as other operations in continental Europe, Asia and
Latin America. Insignia's principal executive offices are located at 200 Park
Avenue, New York, New York 10166, and its telephone number is (212) 984-8033.

     Insignia's real estate service businesses specialize in commercial leasing,
sales brokerage, corporate real estate consulting, property management, property
development and re-development, apartment brokerage and leasing, condominium and
cooperative apartment management, real estate oriented financial services,
equity co-investment and other services. Insignia's primary real estate service
businesses include the following: Insignia/ESG (U.S. commercial real estate
services), Insignia Richard Ellis (U.K. commercial real estate services),
Insignia Bourdais (French commercial real estate services; acquired in December
2001), Insignia Douglas Elliman (apartment brokerage and leasing) and Insignia
Residential Group (condominium and cooperative apartment management).

     Insignia also offers commercial real estate services in other key markets
throughout continental Europe, Asia and Latin America in the following
locations: Madrid, Spain; Frankfurt, Germany; Milan, Italy; Brussels, Belgium;
Dublin, Ireland; Belfast, Northern Ireland; Amsterdam, the Netherlands; Tokyo,
Japan; Hong Kong, Beijing and Shanghai, China; Bangkok, Thailand; Mumbai,
Hyderabad, Bangalore, Chennai and Delhi, India; Manila, Philippines; and Mexico
City, Mexico.

     Insignia was recently ranked as the number one "Most Powerful Brokerage
Firms" for 2001, as published in the April 16, 2002 issue of Commercial Property
News. On a worldwide basis, the Company completed commercial transactions valued
at over $45 billion (excluding transactions of affiliate companies),
substantially more than any other firm that reported 2001 results.

      Insignia's acquisition of Insignia Bourdais (formerly Groupe Bourdais) in
France in December 2001 added a third key link to the Company's market-leading
New York/London axis, which anchors the Company's network of strategic business
centers around the globe. With the addition of Insignia Bourdais, Insignia now
enjoys a position of prominence in the three world financial capitals of New
York-London-Paris. These cities represent key centers for international
investing and global corporate headquarters. Insignia also enjoys a unique
position in New York, where it is one of the preeminent service providers of
real estate services in New York City through Insignia/ESG in commercial real
estate services and Insignia Douglas Elliman and Insignia Residential Group in
residential real estate services.

     In addition to traditional real estate services, Insignia deploys its own
capital, together with the capital of third party investors, in principal real
estate oriented ventures, including co-investment in existing property assets,
real estate development and managed private investment funds. The Company's real
estate service operations and real estate principal investment activities are
more fully described below.



                                       6
<PAGE>

REAL ESTATE SERVICES

Commercial Real Estate Services

     The Company's commercial real estate services are performed through
Insignia/ESG in the United States, Insignia Richard Ellis in the United Kingdom,
Insignia Bourdais in France and other Insignia subsidiaries in continental
Europe, Asia and Latin America. The Company's commercial services operations
generated aggregate service revenues of $120.7 million in the first quarter of
2002, representing 82% of the Company's total service revenues for the period.

     United States

     All commercial real estate services in the U.S. are rendered under the
Insignia/ESG brand. Through Insignia/ESG, the Company is among the leading
providers of commercial real estate services in the U.S. with a leadership
position in the New York metropolitan marketplace and a significant presence in
other major markets, including Washington, D.C., Philadelphia, Boston, Chicago,
Atlanta, Phoenix, Los Angeles, San Francisco, Dallas and Miami. Insignia's U.S.
commercial real estate services operation represents the Company's largest
business unit, generating service revenues of $86.5 million for the first
quarter of 2002. This performance represented 58% of the Company's total service
revenues for the period.

     During 2001, Insignia/ESG sustained its market-leading position in New York
City with responsibility for 22 of Manhattan's 50 largest office-leasing
transactions, including the top two, according to a list published in the
February 2002 issue of Crain's New York Business. This represented the fifth
consecutive year that Insignia/ESG held the number one position in this survey.

     The Company provides a broad spectrum of commercial real estate services
throughout the U.S. to corporations and other major space users, property owners
and investors. These services include tenant representation, property leasing
and management, property acquisition and disposition services, investment sales,
mortgage financing, equity co-investment, development, redevelopment and
corporate real estate consulting services. The Company serves tenants, owners
and investors in office, industrial, retail, hospitality and mixed-use
properties. During 2001, the Company completed U.S. sales and leasing
transactions valued at approximately $33 billion, including more than $4.3
billion of commercial property sales and financing transactions. Insignia/ESG's
major corporate clients include JP Morgan Chase, Lehman Brothers, The New York
Times Company, Marsh & McLennan, Empire Blue Cross Blue Shield, Deutsche Bank,
Metropolitan Life Insurance, and Credit Suisse First Boston. The Company
provides services for approximately 280 million square feet of commercial real
estate in the U.S., including office, industrial, retail and mixed-use
properties. The Company's clients include The Irvine Company, Metropolitan Life
Insurance Co., Teachers Insurance and Annuity Association, JP Morgan Chase, and
UBS Brinson.

     The Company prides itself on the consistent, high-quality delivery of its
services across geographic markets, property types and disciplines. The Company
has 56 U.S. offices, including markets in which it has affiliate relationships
with local service providers. Affiliate relationships are established in
secondary markets where Insignia wants to offer services for its multi-market
clients without owning the local operations. The Company currently has
affiliations in the Richmond, Baltimore, Pittsburgh and Seattle markets. In
addition, specialized divisions within the U.S. commercial services business
include Capital Advisors (investment sales and financing activities), Hotel
Partners (hotel/hospitality brokerage services), Multi Housing Properties (sales
and financing of multifamily properties) and the Development Group (fee-based
development and redevelopment services).



                                       7
<PAGE>

     Europe

     The Company's European businesses consist of commercial real estate
operations in the United Kingdom, France, Germany, Italy, Belgium, Spain,
Ireland and the Netherlands. For the 2002 first quarter, European operations
collectively produced service revenues of $33.1 million and accounted for 22% of
Insignia's total service revenues for the period.

     The Company's European operations were enhanced materially with the
December 2001 acquisition of Paris based Groupe Bourdais, one of France's
premier real estate service companies, which now operates under the Insignia
Bourdais name. Insignia Bourdais has five offices in the greater Paris region.
The Company also maintains offices in the Aix-en-Provence, Lyon and Marseille
markets and has affiliate relationships in 20 additional markets throughout
France. Based on a 2001 survey published by L'Immobiliere d'enterprise Magazine,
Insignia Bourdais commands approximately a 20% market share of leasing and
investment activity in France, representing a number two ranking behind only
Vendome Rome Auguste Thouard. Insignia Bourdais's major clients include AOL Time
Warner, Siemens, GE Capital, France Telecom, Unibail, Renault and Groupe AMA.

     The Company's U.K. subsidiary, Insignia Richard Ellis, is among the three
largest commercial real estate service providers in the United Kingdom. For
2001, Insignia Richard Ellis retained the number one position for the second
year in the highly competitive central London market for leasing and acquisition
services, according to a survey published in the March 9, 2002 issue of Estates
Gazette. Through Insignia Richard Ellis, the Company provides extensive coverage
of the entire United Kingdom market through full-service offices in London,
Glasgow, Birmingham, Leeds, Manchester, Liverpool and Jersey, and holds a
minority equity interest in an Irish real estate services company with offices
in the Republic of Ireland and Northern Ireland. The Company's U.K. operation
provides broad-ranging real estate services, including agency leasing, tenant
representation, investment sales and financing, consulting, project management,
appraisal, zoning and other general property services. The major income
components are agency leasing, tenant representation, investment sales and
financing and valuation consulting.

     The Company's unique competitive position in the U.K., France and the U.S.
is central to its global strategy. Almost half of the Fortune global 500
companies are headquartered in these three countries, and the U.K. and France
account for more than 40% of all direct foreign investment capital flowing into
the U.S.

     Asia and Latin America

     The Company commenced operations in Asia in late 2000 with the
establishment of an office in Tokyo, Japan and the subsequent acquisition of
Brooke International, a Hong Kong based commercial real estate services company.
Insignia augmented its Asian reach in April 2001 with the acquisition of Brooke
International's affiliated operations in India. The Brooke businesses now
operate under the Insignia Brooke name and collectively employ approximately 190
real estate professionals and support personnel in eleven offices in Hong Kong,
China, Thailand, the Philippines and India.

     The Company extended its service capability into Latin America with the
March 2001 acquisition of Grupo Immobilization Inova ("Inova"). Inova,
headquartered in Mexico City and founded in 1992, is a commercial real estate
service company that provides acquisition advisory and due diligence services,
project coordination and supervision, real estate valuations, tenant
representation, asset management and strategic advisory services. Inova now
operates as Insignia/ESG de Mexico and conducts business throughout the major
markets in Mexico and leading business centers of South America, including
Buenos Aires, Rio de Janeiro and Sao Paulo.

     Insignia Brooke along with the Japan operation and Insignia/ESG de Mexico
represent the Company's strategic platforms of choice from which to serve
existing clients in Asia and Latin America. These operations are expected to
create increasing international cross-selling opportunities with the U.S., the
U.K. and other European operations as they mature and begin to benefit from
their access to the Company's global network of clients.



                                       8
<PAGE>

Residential Real Estate Services

     The Company's residential real estate services are focused on the New York
City marketplace through the operations of Insignia Douglas Elliman and Insignia
Residential Group. Through these businesses, the Company provides apartment
brokerage and leasing and condominium and cooperative apartment management. The
Company's residential services operations generated aggregate service revenues
of $27.3 million in the first quarter of 2002, or approximately 18% of the
Company's total service revenues.

     New York City Apartment Sales and Rentals

Insignia Douglas Elliman, founded in 1911 and acquired by Insignia in June 1999,
provides sales and rental services in the New York City residential cooperative,
condominium and rental apartment market. In addition to New York City, Insignia
Douglas Elliman also operates in upscale suburban markets in Long Island
(Manhasset, Locust Valley and Port Washington/Sands Point). Through Insignia
Douglas Elliman, the Company commands the number two position in this market,
according to the March 11, 2002 issue of Crain's New York Business, with gross
sales volume of approximately $2.4 billion in 2001. This ranking represented a
fall from the number one position in 2000, which resulted from the combination
of three competitors - the former Brown Harris Stevens, Halstead/Feathered Nest
and Halstead Property Co. - under the ownership of Terra Holdings. Insignia
Douglas Elliman's other competitors in New York City include The Corcoran Group,
Inc. and Sotheby's International Realty. Insignia Douglas Elliman generated
service revenues of approximately $20.6 million, or 14% of the Company's total
service revenues for the first quarter of 2002.

     New York City Apartment Management

     Insignia Residential Group is the largest manager of cooperative,
condominium and rental apartments in the New York metropolitan area, according
to a survey in the February 2002 issue of The Cooperator. Insignia Residential
Group's primary competitors include several large companies, notably Charles
Greenthal, Inc. and Brown Harris Stevens, as well as, numerous small entities
that aggressively compete for management business based on price. Insignia
Residential Group provides full service third-party fee management for more than
300 properties, comprising in excess of 60,000 residential units. Among the
notable properties currently managed by Insignia Residential Group in the New
York metropolitan area are Stuyvesant Town/Peter Cooper Village, Worldwide
Plaza, and Horizon House. Stuyvesant Town/Peter Cooper Village is an 11,000-unit
residential community owned by Metropolitan Life that represents one of the
single largest property services assignments in New York City.

     Manhattan is the largest market for Insignia Residential Group, although it
also maintains a presence in three other boroughs of New York City as well as
Long Island, Westchester County and Northern New Jersey. In addition to property
management, Insignia Residential Group also offers mortgage brokerage services,
including resale and financing arrangements for cooperative and condominium
corporations through third-party financial institutions. Insignia Residential
Group generated total service revenues of $6.6 million in the first quarter of
2002.

REAL ESTATE PRINCIPAL INVESTMENT ACTIVITIES

     Insignia, through Insignia Financial Services, invests in real estate
assets and real estate debt. The Company's investment strategy generally
involves identifying investment opportunities and investing as a minority owner
or, in limited instances, by itself in the purchase of qualifying assets. The
Company's investments include operating properties, property acquired for
development and managed private investment funds that invest primarily in
secured real estate debt instruments. Insignia's co-investment partners include
the following notable business entities: Citigroup, GE Investments, ING Barings,
Blackacre Capital Management, Lennar, Praedium, Lone Star Opportunity Fund,
Prudential and Whitehall Street Real Estate.

     In addition to venture related investment returns, Insignia generates
revenues from fee-based services provided to the minority owned real estate
investment entities. Such revenues generally include property management fees,
asset management fees, development management fees, leasing commissions,
acquisition fees, sales commissions or financing fees. The Company's real estate
investments are more fully discussed in Note 6.



                                       9
<PAGE>

2.   Interim Financial Information

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.

3.   Reclassifications

     Certain amounts for the prior year have been reclassified to conform to the
2002 presentation. These reclassifications have no effect on net income.

4.   Discontinued Operations

     In late December 2001, Insignia entered into a contract to sell its Realty
One single-family home brokerage business and affiliated companies to Real
Living, Inc., effective as of December 31, 2001. Real Living, Inc. is a
privately held company formed by HER Realtors of Columbus, Ohio and Huff Realty
of Cincinnati, Ohio. The sale formally closed on January 31, 2002. Proceeds from
the sale potentially total $33 million, including approximately $29 million in
cash at closing (before extinguishment of $5.5 million of Realty One debt) and
additional payments aggregating as much as $4 million. These additional payments
include the following: (i) a $1 million reimbursement, collected in February
2002, for Realty One operating losses in January 2002; (ii) a potential earn-out
of as much as $2 million payable over the next two years (depending on the
performance of the Realty One business); and (iii) a $1 million operating lease
payable over four years for the use of proprietary software developed by
Insignia for an Internet-based residential brokerage model. Insignia
discontinued Realty One's operations for financial reporting purposes and
recognized a loss in connection with the sale of Realty One of $17.6 million
(net of applicable taxes of $4 million) for the year ended December 31, 2001.
During the first quarter of 2002, the Company reported net income of $265,000
(net of applicable tax of $1.8 million) in discontinued operations.

5.   Goodwill and Intangible Assets

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS 141 replaces APB 16 and requires
the use of the purchase method for all business combinations initiated after
June 30, 2001. It also provides guidance on purchase accounting related to the
recognition of intangible assets. Under SFAS 142, goodwill and other intangible
assets deemed to have indefinite lives are no longer amortized but are subject
to impairment tests on an annual basis, at a minimum, or whenever events or
circumstances occur indicating goodwill might be impaired. Other acquired
intangible assets continue to be amortized over their estimated useful lives.

     The Company adopted SFAS No. 141 for all business combinations completed
after June 30, 2001 and fully implemented SFAS No. 141 and SFAS No. 142
effective January 1, 2002. The Company has identified its reporting units and
has determined the carrying value of each reporting unit by assigning assets and
liabilities, including the existing goodwill and intangible assets, to those
units as of January 1, 2002 for purposes of performing a required transitional
goodwill impairment assessment within six months of adoption.

     At December 31, 2001, the Company estimated goodwill impairment of between
$20 million and $50 million based on current industry multiples and the carrying
values of tangible and intangible assets of its reporting units. Since that
time, the Company has obtained third-party appraisals that indicate the values
of the Insignia Douglas Elliman and Asian reporting units to be an aggregate $25
million less than their carrying values. SFAS No. 142 requires a second-phase
evaluation of intangibles of all affected reporting units and that evaluation is
expected to derive an overall impairment charge greater than indicated based on
asset carrying values. This second step requires that all assets and liabilities
existing as of the impairment measurement date, including intangibles that were
not separately valued and recorded at acquisition, be valued currently for
purposes of determining the amount of impairment. Insignia expects the total
pre-tax impairment charge, which should be finalized during May 2002, to



                                       10
<PAGE>

approximate $30 million. Insignia will report the measured impairment as a
cumulative change in accounting principle as of January 1, 2002 in its June 30,
2002 Form 10-Q.

     Amortization of goodwill was approximately $4.1 million for the first
quarter of 2001. Elimination of this amortization would have improved income by
approximately $2.9 million (net of applicable taxes) and earnings per share
(basic and diluted) by approximately $0.12 for the first quarter of 2001. The
following table provides pro forma information to reflect the effect of adoption
of SFAS No. 142 on earnings for the periods indicated.

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31
                                                                                          --------
                                                                                   2002               2001
                                                                                   ----               ----
                                                                           (In thousands, except per share data)
<S>                                                                          <C>                 <C>
      Reported (Loss) income from continuing operations                           $  (408)          $     216
      Less: Preferred stock dividend                                                 (250)               (250)
                                                                             -----------------    --------------
      Loss from continuing operations available to common
          shareholders                                                               (658)                (34)
      Add:
        Goodwill amortization, net of tax benefit of $1,285                            --               2,865
                                                                             -----------------    --------------
      Adjusted  (loss) income from continuing operations available to
          common shareholders                                                     $  (658)          $   2,831
                                                                             =================    ==============

      Earnings per common share - basic:


         Reported (Loss) income from continuing operations                        $ (0.03)          $      --
         Add:
           Goodwill amortization, net of tax benefit of $0.06 per share                --                0.13
                                                                             -----------------    --------------
         Adjusted (loss) income from continuing operations                        $ (0.03)          $    0.13
                                                                             =================    ==============

      Earnings per common share - diluted:

         Reported (Loss) income from continuing operations                        $ (0.03)          $      --
         Add:
           Goodwill amortization, net of tax benefit of $0.06 per share                --                0.12
                                                                             -----------------    --------------
         Adjusted (loss) income from continuing operations                        $ (0.03)          $    0.12
                                                                             =================    ==============

</TABLE>

      The table below reconciles the change in the carrying amount of goodwill,
by operating segment, for the period from December 31, 2001 to March 31, 2002,
including the effect of changes in the preliminary allocation of purchase price
for the Groupe Bourdais acquisition. The Company recorded a $5.3 million
increase in goodwill in the first quarter of 2002 related to additional purchase
consideration payable on performance of Insignia Bourdais for its fiscal year
ended March 31, 2002. This additional purchase consideration is payable in May
2002, 23% in Insignia common stock with the remainder payable in cash.

<TABLE>
<CAPTION>
   GOODWILL                                       COMMERCIAL         RESIDENTIAL            TOTAL
   --------                                    ----------------------------------------------------------
                                                                    (In thousands)
<S>                                             <C>              <C>                   <C>
   BALANCE AS OF DECEMBER 31, 2001               $   228,967        $     59,386          $  288,353

   Additional purchase price - Groupe
      Bourdais                                         5,374                 --                5,374
   Reclassification from other intangibles               375                 --                  375
   Goodwill related to sale of
      business unit                                       --               (447)                (447)
   Foreign currency translation adjustment            (1,674)                --               (1,674)
                                               ----------------------------------------------------------
   BALANCE AS OF MARCH 31, 2002                  $   233,042        $     58,939          $  291,981
                                               ==========================================================

</TABLE>



                                       11
<PAGE>



     The following tables present certain information on the Company's acquired
intangible assets as of March 31, 2002 and December 31, 2001, respectively.

<TABLE>
<CAPTION>
                                         WEIGHTED
                                          AVERAGE           GROSS
                                       AMORTIZATION       CARRYING        ACCUMULATED
ACQUIRED INTANGIBLE ASSETS                PERIOD           AMOUNT         AMORTIZATION       BALANCE
                                      -------------------------------------------------------------------
                                                                        (In thousands)
<S>                                     <C>               <C>              <C>              <C>
AS OF MARCH 31, 2002

     Property management contracts       15 years          $ 70,473         $ 55,014         $ 15,459
     Favorable premises leases           10 years             4,453            1,271            3,182
     Other                                5 years             4,457            2,753            1,704
                                                       --------------------------------------------------
     Total                                                 $ 79,383         $ 59,038         $ 20,345
                                                       ==================================================
AS OF DECEMBER 31, 2001

     Property management contracts       15 years          $ 70,926         $ 54,049         $ 16,877
     Favorable premises leases           10 years             4,453            1,099            3,354
     Other                                5 years             3,228            1,997            1,231
                                                       --------------------------------------------------
     Total                                                 $ 78,607         $ 57,145         $ 21,462
                                                       ==================================================
</TABLE>

     All intangible assets are being amortized over their estimated useful lives
with no residual value. Intangibles included in "Other" consist of customer
backlog, non-compete agreements, franchise agreements and trade names. The
aggregate acquired intangible amortization expense for the three months ended
March 31, 2002 and 2001 totaled $1.7 million and $2.1 million, respectively.
Amortization of favorable premises leases, totaling approximately $175,000 and
$100,000 for the three month periods ending March 31, 2002 and 2001,
respectively, is included in rental expense (included in real estate services
expenses) in the Company's statements of operations.

     The estimated acquired intangible amortization expense, including amounts
reflected in rental expense, for the fiscal year ending December 31, 2002 and
for the subsequent four fiscal years ending December 31, 2006 approximates $5.5
million, $2.8 million, $1.9 million, $1.3 million and $1.3 million,
respectively.

6.   Real Estate Investments

     The Company engages in real estate investment generally through: (i)
investment in operating properties through co-investments with various clients
or, in limited instances, by itself; (ii) investment in and development of
commercial real estate through co-investments with various clients; and (iii)
minority ownership in and management of private investment funds, whose
investments primarily consist of secured real estate debt securities. As of
March 31, 2002, the Company's real estate investments were $105.1 million,
including $54.4 million attributed to the three consolidated properties.

     Insignia provides incentives to certain employees through the
participation, either through equity grants (at the time investments are made)
or through granting of rights to proceeds, in its real estate investments. With
respect to real estate investments, such grants generally consist of an
aggregate grant of 50% to 60% of proceeds after Insignia has recovered its
investment plus a 10% per annum return thereon. Gains on sale of real estate are
recorded after payments pursuant to these grants. The Company's principal
investment programs are more fully described below.

Co-investment

     The Company co-invests in the purchase of operating real estate assets
including office, retail, industrial, apartment and hotel properties. As of
March 31, 2002, Insignia held investments totaling $26.3 million in 36 minority
owned property assets. These properties own over 9.5 million square feet of
commercial property, 1,372 multi-family apartment units and 875 hotel rooms. The
gross aggregate asset carrying value of these properties totals in excess of $1
billion. The Company's minority ownership interests in co-investment property
range from 1% to 30%.



                                       12
<PAGE>

     Insignia also consolidates three properties, two of which are wholly owned
retail properties and a third that represents an apartment complex in which the
Company exercises control over the property partnership through ownership of its
general partner. At March 31, 2002, the real estate carrying amounts of these
three properties totaled $54.4 million and real estate mortgage notes
encumbering the properties totaled $53.7 million. Insignia's equity investment
in the three properties totaled only $3.7 million at March 31, 2002. The real
estate mortgages are non-recourse to Insignia and the Company has no further
obligations to the properties or their creditors.

     With respect to the apartment complex, Insignia has held an interest in the
general partner of the property partnership since 1999. However, recent
transactions have been concluded that give Insignia sole ownership and authority
over the general partner. The partnership grants the general partner virtual
authority over the partnership, including sale or refinancing of its sole asset
without limited partner approval. As a result, while Insignia holds actual
ownership of only 1% in the partnership (plus an additional profits interest
after specified limited partner returns), it is being consolidated in the
Company's financial statements because generally accepted accounting principles
determine consolidation on the basis of control rather than ownership of equity.
This property had total real estate carrying value of $36.9 million and related
debt of $37.8 million and is included in Insignia's consolidated balance sheet
and statement of operations at March 31, 2002.

     During the first quarter of 2002, Insignia sold Shinsen Place, an office
building in Tokyo, Japan purchased in late 2001 and held for resale to a client
for a fee. The sale of Shinsen Place, which was consolidated by the Company at
December 31, 2001, reduced the Company's real estate investments and
corresponding real estate mortgage notes by $24.3 million and $21.4 million,
respectively.

Development

     Insignia has an ownership interest in, and directs the development of, four
office developments. The Company also owns a parcel of land, located adjacent to
one of the developments, that is held for future development. The four
development properties have investment partners, with Insignia's ownership in
each ranging from 25% to 33%. The Company's total investment at March 31, 2002
in development assets was $13.1 million. Insignia has not initiated any new
development activities since mid-2000. The Company's obligations with respect to
development assets, beyond its investment, is limited to $8.9 million in partial
guarantees of construction financing.

Private Investment Funds

     At March 31, 2002, Insignia held investments totaling $11.3 million in two
managed investment funds, Insignia Opportunity Trust ("IOT") and Insignia
Opportunity Partners II ("IOP II"), and had commitments to invest an additional
$4 million in IOP II. The gross carrying value of assets owned and managed by
these two funds total approximately $120 million.

     IOT is an Insignia-sponsored private real estate investment fund formed in
late 1999 that invests primarily in secured real estate debt securities and, to
a lesser extent, in other real estate debt and equity securities, with a focus
on below investment grade commercial mortgage-backed securities. These
investments are made through a subsidiary operating partnership, Insignia
Opportunity Partners ("IOP"). IOT and IOP's aggregate capital commitments of $72
million have been called and invested and this fund has now commenced its
liquidation phase. Insignia has an aggregate ownership interest of approximately
13%, or $10 million, in IOT and IOP. Insignia realized earnings from IOT and IOP
of approximately $322,000 and $455,000 for the first quarters of 2002 and 2001,
respectively.

     IOP II launched in September 2001 with the closing a capital-raising phase,
obtaining $50 million in aggregate capital commitments from Insignia and other
investors. IOP II intends to invest primarily in secured real estate debt
securities, similar to the investment initiatives of IOT. Insignia holds 10%
ownership in IOP II and serves as its day-to-day advisor. IOP II called $10.5
million of the total capital commitment and commenced investment activities in
December 2001. As of March 31, 2002, no material earnings had been generated by
this fund.

     As sponsor and manager of IOT and IOP II, Insignia is entitled to a 30%
promotional participation in cash distributions after investors, including
Insignia, achieve return of capital and a 10% cumulative return. Insignia
granted equity interests in the advisor or rights to distributions received by
the advisor to certain employees constituting approximately 60% of such
promotional distributions.



                                       13
<PAGE>

7.       Acquisitions

Groupe Bourdais

     In late December 2001, Insignia completed the acquisition of Groupe
Bourdais, one of France's premier commercial real estate services companies.
Groupe Bourdais now operates under the Insignia Bourdais name. Founded in 1954,
Paris-based Insignia Bourdais has a total staff of 350 and operates eight
offices, including five in the Ile de France region (Greater Paris) and regional
offices in Lyon, Aix-en-Provence and Marseille. Insignia Bourdais also has
strategic affiliations and franchise agreements with local companies in 20
markets throughout France.

     The Insignia Bourdais purchase price consists of total potential
consideration of approximately $49 million, including an initial payment of
approximately $21.4 million in cash and stock (402,645 common shares) and
additional payments totaling up to approximately $28 million over the three
years ending December 31, 2004, depending on the performance of the Bourdais
operation. Based on actual EBITDA of Insignia Bourdais for the four quarters
ending March 31, 2002, additional purchase consideration of $5.3 million became
payable and is included in accrued and sundry liabilities at March 31, 2002. The
acquisition consisted substantially of specifically identified intangible assets
and goodwill and has been allocated based upon estimates of value for such
acquired intangibles. The Company's evaluation of acquired intangibles,
consisting of property management contracts, a favorable premises lease,
non-compete agreements, customer backlog and franchise agreements, is to be
finalized during the second quarter of 2002. The results of Insignia Bourdais
have been included in the Company's financial statements since January 1, 2002.

Other Information

    Pro forma results of operations for the three months ended March 31, 2001,
assuming consummation of the Insignia Bourdais acquisition as of January 1, 2001
are as follows:

<TABLE>
<CAPTION>
                                                        2001
                                                        ----
(In thousands, except per share data)
<S>                                                  <C>
Revenues                                             $  187,821

Income from continuing operations                         1,007

Net loss                                                 (1,743)

Earnings per common share - basic:
  Income from continuing operations                  $     0.03
                                                     ==========
  Net loss                                           $    (0.09)
                                                     ==========

Earnings per common share - diluted:
  Income from continuing operations                  $     0.03
                                                     ==========
  Net loss                                           $    (0.08)
                                                     ==========
</TABLE>

     Pro forma results of operations for Baker Commercial and Brooke
International - India, each acquired in 2001, are not provided because the
impact of these acquisitions on the Company's results of operations was not
material.



                                       14
<PAGE>

8.   Earnings Per Share

     The following table sets forth the computation of the numerator and
denominator used to compute, basic and diluted earnings per common share for the
periods indicated. The potential dilutive shares from the conversion of
preferred stock and the exercise of options, warrants and unvested restricted
stock is not assumed because the inclusion of such shares would be antidilutive.

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                             MARCH 31
                                                                                        2002          2001
                                                                                        ----          ----
                                                                                           (In thousands)
<S>                                                                               <C>             <C>
NUMERATOR:
Numerator for basic earnings per share:
(Loss) income from continuing operations available                                    $   (408)    $      216
   Preferred stock dividends                                                              (250)          (250)
                                                                                    ------------- -------------
(Loss) income from continuing operations available to common stockholders                 (658)           (34)

Effect of dilutive securities:
   Preferred stock dividends                                                                --             --
                                                                                    ------------- -------------
Numerator for diluted earnings per share - loss from continuing operations
   available to common stockholders after assumed conversions                         $   (658)    $      (34)
                                                                                    ============= =============
DENOMINATOR:
Denominator for basic earnings per share - weighted average common shares               22,902         21,687

Effect of dilutive securities:
   Stock options, warrants and unvested restricted stock                                    --             --
   Convertible preferred stock                                                              --             --
                                                                                    ------------- -------------
Denominator for diluted loss per share - weighted
  average common shares and assumed conversions                                         22,902         21,687
                                                                                    ============= =============
</TABLE>




                                       15
<PAGE>

9.   Comprehensive Income (Loss)

     Total comprehensive loss for the quarters ended March 31, 2002 and 2001
totaled $1.5 million and $5.6 million, respectively. The following tables set
forth the components of accumulated other comprehensive income (loss) for the
periods indicated:

<TABLE>
<CAPTION>
                                                        FOREIGN          UNREALIZED       ACCUMULATED OTHER
                                                        CURRENCY          GAINS ON       COMPREHENSIVE INCOME
THREE MONTHS ENDED - MARCH 31, 2002                   TRANSLATION        SECURITIES             (LOSS)
                                                    -----------------------------------------------------------
                                                                       (In thousands)
<S>                                                  <C>                 <C>                <C>
Balance - December 31, 2001                           $   (8,940)         $     50           $   (8,890)

Comprehensive loss                                        (2,343)               (7)              (2,350)
Reclassification adjustment for realized gain                 --               (82)                 (82)
Income tax benefit                                         1,022                39                1,061
                                                    -----------------------------------------------------------
                                                          (1,321)              (50)              (1,371)

                                                    -----------------------------------------------------------
Balance - March 31, 2002                              $  (10,261)         $      -           $  (10,261)
                                                    ===========================================================

THREE MONTHS ENDED - MARCH 31, 2001

Balance - December 31, 2000                           $  (6,007)          $     43           $   (5,964)

Comprehensive (loss) income                              (5,417)                18               (5,399)
Income tax benefit (provision)                            2,346                 (8)               2,338
                                                    -----------------------------------------------------------
                                                         (3,071)                10               (3,061)

                                                    -----------------------------------------------------------
Balance - March 31, 2001                              $  (9,078)          $     53           $   (9,025)
                                                    ===========================================================
</TABLE>

10.  Industry Segment Data

     Insignia's operating activities encompass two reportable segments that
include (i) commercial real estate services and principal investment activities;
and (ii) residential real estate services. The Company's reportable segments are
business units that offer similar products and services and are managed
separately because of the distinction between such services. The accounting
policies of the reportable segments are the same as those used in the
preparation of the consolidated financial statements.

     The commercial segment provides services including tenant representation,
property and asset management, agency leasing and brokerage, investment sales,
development and re-development, consulting and other services. The commercial
segment also includes the Company's principal real estate investment activities.
Insignia's commercial segment in 2002 comprises the operations of Insignia/ESG
in the U.S., Insignia Richard Ellis in the U.K., Insignia Bourdais in France
(which commenced operations in January 2002) and other businesses in continental
Europe, Asia and Latin America. The residential segment provides services
including apartment brokerage and leasing, rental brokerage, property management
and mortgage brokerage services and consists of the New York based operations of
Insignia Douglas Elliman and Insignia Residential Group. The Company's
unallocated administrative expenses and corporate assets, consisting primarily
of cash and property and equipment, are included in "Other" in the segment
reporting. The Company's Internet-based initiatives launched in 1999 were
terminated in 2001. The operating impact of Internet initiatives for the 2001
first quarter was limited solely to $4.5 million of write-downs on equity
Internet investments made predominantly in 1999 and 2000.



                                       16
<PAGE>

     The following tables summarize financial information by industry segment.
In addition to financial measures defined by GAAP, Insignia management monitors
and evaluates its financial performance using two supplemental measures. The
primary measure, Net EBITDA, is defined as income from continuing operations
before depreciation, amortization, income taxes and other non-core items
(Internet, etc.). This measure deducts all interest expense and includes Funds
From Operations ("FFO") from real estate investments, which is defined as income
or loss from real estate operations before depreciation, gains or losses on
sales of property and provisions for impairment. The second measure used by
management is Income from Real Estate Operations (before income taxes). This
measure deducts depreciation and amortization from the Net EBITDA measure and
also includes gains or losses on real estate co-investments, but excludes the
Company's now concluded Internet business and investment strategy. Net EBITDA,
Real estate FFO and Income from Real Estate Operations are measures that are not
defined by GAAP and Insignia's usage of these terms may differ from other
companies' usage of the same or similar terms. This financial information should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in Item 2 of this Form 10-Q.

<TABLE>
<CAPTION>
THREE MONTHS ENDED - MARCH 31, 2002                  COMMERCIAL    RESIDENTIAL      OTHER          TOTAL
                                                --------------------------------------------------------------
                                                                       (In thousands)
<S>                                                <C>             <C>           <C>            <C>
REVENUES:
   Real estate services                             $  120,741      $  27,253     $       -      $  147,994
   Property operations                                   2,374              -             -           2,374
                                                --------------------------------------------------------------
                                                       123,115         27,253             -         150,368
                                                --------------------------------------------------------------
COSTS AND EXPENSES:
   Real estate services                                114,340         25,273             -         139,613
   Property operations                                   1,365              -             -           1,365
   Administrative                                            -              -         2,782           2,782
   Depreciation                                          3,411            859            23           4,293
   Property depreciation                                   491              -             -             491
   Amortization of intangibles                           1,534            187             -           1,721
                                                --------------------------------------------------------------
                                                       121,141         26,319         2,805         150,265
                                                --------------------------------------------------------------

   Operating income (loss)                               1,974            934        (2,805)            103

OTHER INCOME AND EXPENSE:
   Interest income                                         541              2           520           1,063
   Interest expense                                       (166)            (5)       (2,031)         (2,202)
   Property interest                                      (561)             -             -            (561)
   Foreign currency transaction gains                       (7)             -            23              16
   Equity earnings in real estate ventures                 912              -             -             912
                                                --------------------------------------------------------------
Income (loss) from continuing operations before
   income taxes                                     $    2,693      $     931     $  (4,293)     $     (669)
                                                ==============================================================

Total assets                                        $  624,646      $  88,561     $  64,238      $  777,445
Real estate interests                                  105,123              -             -         105,123
</TABLE>



                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                                  INTERNET
THREE MONTHS ENDED - MARCH 31, 2001                  COMMERCIAL    RESIDENTIAL   INITIATIVES       OTHER           TOTAL
                                                -----------------------------------------------------------------------------
                                                                               (In thousands)
<S>                                                <C>            <C>            <C>            <C>              <C>
REVENUES:
   Real estate services                             $  145,667     $   29,430     $       -      $        -       $ 175,097
   Property operations                                   1,404              -             -               -           1,404
                                                -----------------------------------------------------------------------------
                                                       147,071         29,430             -               -         176,501
                                                -----------------------------------------------------------------------------
COSTS AND EXPENSES:
   Real estate services                                128,895         27,734             -               -         156,629
   Property operations                                     365              -             -               -             365
   Administrative                                            -              -             -           3,400           3,400
   Depreciation                                          2,839            623             -              17           3,479
   Property depreciation                                   348              -             -               -             348
   Amortization of intangibles                           5,254          1,005             -               -           6,259
                                                -----------------------------------------------------------------------------
                                                       137,701         29,362             -           3,417         170,480
                                                -----------------------------------------------------------------------------

   Operating income (loss)                               9,370             68             -          (3,417)          6,021

OTHER INCOME AND EXPENSE:
   Losses on Internet investments                            -              -        (4,452)              -          (4,452)
   Interest income                                         784              -             -           1,067           1,851
   Interest expense                                       (161)           (18)            -          (2,701)         (2,880)
   Property interest                                      (823)             -             -               -            (823)
   Foreign currency transaction gains                        -              -             -              57              57
   Equity earnings in real estate ventures                 424              -             -               -             424
                                                -----------------------------------------------------------------------------

Income (loss) from continuing operations before
   income taxes                                     $    9,594     $       50     $  (4,452)     $   (4,994)       $    198
                                                =============================================================================

Total assets                                        $  558,347     $  171,619     $   5,995      $   52,002        $787,963
Real estate interests                                   65,389              -             -               -          65,389
</TABLE>

    Certain geographic information is as follows:

                                       THREE MONTHS ENDED
                         MARCH 31, 2002                  MARCH 31, 2001
                  ------------------------------ -------------------------------
                                   LONG-LIVED                      LONG-LIVED
                     REVENUES        ASSETS         REVENUES         ASSETS

                  --------------- -------------- --------------- ---------------
                                          (In thousands)

United States        $ 116,090      $ 235,105        $151,373        $ 244,882
United Kingdom          20,850        104,535          22,360          107,682
Other countries         13,428         28,360           2,768            5,501
                  --------------- -------------- --------------- ---------------
                     $ 150,368      $ 368,000       $ 176,501        $ 358,065
                  =============== ============== =============== ===============

     Long-lived assets are comprised of property and equipment, goodwill and
acquired intangible assets.



                                       18
<PAGE>

11.  Significant Accounting Policies

Revenue Recognition

     The Company's real estate services revenues are generally recorded when the
related services are performed or at closing in the case of real estate sales.
Leasing commissions that are payable upon tenant occupancy, payment of rent or
other events beyond the Company's control are recognized upon the occurrence of
such events. As certain conditions to revenue recognition for leasing
commissions are outside of the Company's control, judgment must be exercised in
determining when such required events to recognition have occurred.

     Insignia's revenue from property management services is generally based
upon percentages of the revenue generated by the properties that it manages. In
conjunction with the providing of management services, the Company customarily
employs personnel (either directly or on behalf of the property owner) to
provide services solely to the properties managed. Insignia is reimbursed, by
the owners of managed properties, for all direct payroll related costs incurred
in the employment of property personnel. The aggregate amount of payroll costs
reimbursed approximates $40 million to $50 million annually. All such payroll
reimbursements are characterized in the Company's statements of operations as a
reduction of actual expenses incurred. This characterization is based on the
following factors: (i) the property owner generally has authority over hiring
practices and the approval of payroll prior to payment by the Company; (ii)
Insignia is the primary obligor with respect to the property personnel, but
bears little or no credit risk under the terms of the management contract; (iii)
reimbursement to the Company is completed prior to or simultaneous with payment
of payroll; and (iv) the Company generally earns no margin in the arrangement,
obtaining reimbursement only for actual cost incurred.

Principles of Consolidation

     Insignia's financial statements include the accounts of all majority owned
subsidiaries and all entities over which the Company exercises voting control
over operating decisions. All significant intercompany balances and transactions
have been eliminated. Entities in which the Company owns less than the majority
interest and has substantial influence are recorded on the equity method of
accounting (net of payments to certain employees in respect of equity grants or
rights to proceeds).

     In one instance, a 1% owned partnership (with additional promotional
interests in profits depending on performance) is consolidated by virtue of near
absolute control of the partnership. Since the limited partners' investment has
been fully depreciated, the assets, liabilities and operations of the
partnership are consolidated as if Insignia completely owned the asset, even
though economically Insignia only holds a small minority interest.

Foreign Currency Translation

     The financial statements of the Company's foreign subsidiaries are measured
using the local currency as the functional currency. Revenues and expenses of
such subsidiaries have been translated into U.S. dollars at the average exchange
rates prevailing during the period. Assets and liabilities have been translated
at the rates of exchange at the balance sheet date. Translation gains and losses
are deferred as a separate component of stockholders' equity in other
comprehensive income, unless there is a sale or complete liquidation of the
underlying foreign investment. Gains and losses from foreign currency
transactions, such as those resulting from the settlement of foreign receivables
or payables, are included in the statement of operations in determining net
income.

12.  Seasonality

     Seasonal factors affecting the Company are disclosed in Item 2 of this Form
10-Q, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" under the caption "Nature of Operations".



                                       19
<PAGE>

13.  Related Party Transactions

Employee Loans

     In March 2002, Insignia made a loan in the amount of $1.5 million to its
Chairman and Chief Executive Officer. The interest rate on the loan is the same
as the interest rate applicable to funds borrowed by Insignia on its revolving
credit facility, which rate was approximately 4.5% at March 31, 2002. The loan
will become due on March 5, 2005. Insignia may deduct quarterly interest
payments due on the loan from certain amounts payable to the Chairman under the
Chairman's employment agreement. If the Chairman's employment with the Company
is terminated before the maturity date of the loan as a result of, among other
reasons, a significant transaction, the unpaid principal and all accrued
interest thereon shall be forgiven either upon the termination event or over a
two-year period thereafter.

     Pursuant to the Company's Supplemental Stock Purchase and Loan Program,
Insignia has outstanding loans to certain other officers of the Company to
purchase shares of Insignia's common stock. The loans require principal and
interest payments in 40 equal quarterly installments ending December 31, 2009
and are in part secured by the common shares. At March 31, 2002, the outstanding
principal amount of loans for common stock totaled an aggregate $1.3 million.

14.  Material Contingencies

Ordinary Course of Business Claims

     Insignia and certain subsidiaries are defendants in other lawsuits arising
in the ordinary course of business. Management does not expect that the results
of any such lawsuits will have a significant adverse effect on the financial
condition, results of operations or cash flows of the Company. All contingencies
including unasserted claims or assessments, which are probable and the amount of
loss can be reasonably estimated, are accrued in accordance with SFAS No. 5,
Accounting for Contingencies.

Indemnification

     In 1998, the Company's former parent entered into a Merger Agreement with
Apartment Investment and Management Company ("AIMCO"), and one of AIMCO's
subsidiaries, pursuant to which the former parent was merged into AIMCO. Shortly
before the merger, the former parent distributed the stock of Insignia to its
shareholders in a spin-off transaction. As a requirement of the Merger
Agreement, Insignia entered into an Indemnification Agreement with AIMCO. In the
Indemnification Agreement, Insignia agreed generally to indemnify AIMCO against
all losses exceeding $9.1 million that result from: (i) breaches by the Company
or former parent of representations, warranties or covenants in the Merger
Agreement; (ii) actions taken by or on behalf of former parent prior to the
merger, and (iii) the spin-off.

     Since the merger transaction in October 1998, there have been no related
claims except for an examination of the federal income tax returns of the former
parent being conducted by the Internal Revenue Service for the years ended
December 31, 1996 and 1997 and the period ended October 1, 1998. This
examination was concluded in November 2001. Insignia paid approximately $1.1
million upon final settlement, pursuant to the examiner's report.

     In December 2001, the Company entered into a stock purchase agreement with
Real Living, Inc., the purchaser, that provided for the sale of 100% of the
stock of Realty One and its affiliated companies. Such affiliated companies
included First Ohio Mortgage Corporation, Inc., First Ohio Escrow Corporation,
Inc. and Insignia Relocation Management, Inc. As a part of sale, the Company
agreed generally to indemnify the purchaser against all losses up to the
purchase price (subject to certain deductible amounts), resulting from the
following: (i) breaches by the Company of any representations, warranties or
covenants in the stock purchase agreement; (ii) pre-disposition obligations for
goods, services, taxes or indebtedness except for those assumed by Real Living,
Inc.; (iii) change of control payments made to employees of Realty One; and (iv)
any third party losses arising or related to the period prior to the
disposition. In addition, the Company provided an indemnification for losses
incurred by Wells Fargo Home Mortgage, Inc. ("Wells Fargo") and/or the purchaser
in respect of (i) mortgage loan files existing on the date of closing; (ii)
fraud in the conduct of its home mortgage business; and (iii) the failure to
follow standard industry practices in the home mortgage business. The aggregate
loss for which the Company is potentially liable to Wells Fargo is limited to
$10 million and the aggregate of any claims made by the purchaser and Wells
Fargo shall not



                                       20
<PAGE>

exceed the purchase price. As of May 2002, the Company is not aware of any
matters that would give rise to a material claim under these warranties and
indemnities.

Environmental

     Under various federal and state environmental laws and regulations, a
current or previous owner or operator of real estate may be required to
investigate and remediate certain hazardous or toxic substances or
petroleum-product releases at the property, and may be held liable to a
governmental entity or to third parties for property damage and for
investigation and cleanup costs incurred by such parties in connection with
contamination. In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and costs it incurs in
connection with the contamination. The owner or operator of a site may be liable
under common law to third parties for damages and injuries resulting from
environmental contamination emanating from or at the site, including the
presence of asbestos containing materials. Insurance for such matters may not be
available.

     The presence of contamination or the failure to remediate contamination may
adversely affect the owner's ability to sell or lease real estate or to borrow
using the real estate as collateral. There can be no assurance that Insignia, or
any assets owned or controlled by Insignia (as on-site property manager),
currently are in compliance with all of such laws and regulations or that
Insignia will not become subject to liabilities that arise in whole or in part
out of any such laws, rules or regulations. The liability may be imposed even if
the original actions were legal and Insignia did not know of, or was not
responsible for, the presence of such hazardous or toxic substances. Insignia
may also be solely responsible for the entire payment of any liability if it is
subject to joint and several liability with other responsible parties who are
unable to pay. Insignia may be subject to additional liability if it fails to
disclose environmental issues to a buyer or lessee of property. Management is
not currently aware of any environmental liabilities that are expected to have a
material adverse effect upon the operations or financial condition of the
Company.

15.  Equity

     During the three month period ended March 31, 2002, the Company had the
following changes in stockholders' equity:

     a)   Net loss of $143,000 for the three months ended March 31, 2002.

     b)   Payment of $250,000 in preferred stock dividends.

     c)   Exercise of stock options to purchase 45,440 shares of Common Stock at
          exercise prices ranging from $4.08 to $8.67 per share.

     d)   Sale of 25,250 shares of Common Stock, at an average price of
          approximately $8.67, under the Company's Employee Stock Purchase
          Program.

     e)   Issuance of 57,867 shares of Common Stock for vested restricted stock
          awards.

     f)   Accrued compensation of $143,000 relating to restricted stock awards.

     g)   Payments of $584,000 on notes receivable for common stock (including
          55,042 shares of Insignia common stock valued at $542,000 which have
          been cancelled).

     h)   Other comprehensive losses of $1,371,000 for the three months ended
          March 31, 2002.




                                       21
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS

     The first quarter of 2002, while in most cases meeting or exceeding
management's expectations, continued to be hindered by the effects of the 2001
recession and terrorist incidents. Soft market conditions most significantly
affected the Company's U.S. commercial services, where leasing transaction
volumes in virtually all markets were materially lower than in the 2001 first
quarter due to continued delays in corporate occupancy decision making in the
second half of 2001. On a positive note, the first quarter of 2002 was
highlighted by the stronger than expected recovery of the Company's New York
residential sales unit, Insignia Douglas Elliman, and strong contributions from
the recently acquired Insignia Bourdais in France that exceeded management's
expectations in its initial quarterly period. Nonetheless, the Company's
financial performance in the first quarter of 2002 lagged behind the same period
of 2001, as expected. In 2002, the Company reported first quarter service
revenues of $148 million, Net EBITDA of $6 million and a loss from continuing
operations of $408,000 ($0.03 per share). The comparable operating results in
the first quarter of 2001 were service revenues of $175.1 million, Net EBITDA of
$15.4 million and income from continuing operations of $216,000. The 2001 period
represented the strongest first quarter for service operations in the Company's
history.

     Insignia reported a net loss of $143,000 for the first quarter of 2002,
compared to a net loss of $2.5 million for the same period of 2001. Earnings for
2002 benefited from the adoption of new accounting standards, which resulted in
the elimination of amortization of goodwill as of January 1, 2002. The goodwill
accounting change lowered amortization by $4.1 million compared to the first
quarter of 2001. In addition, income from discontinued operations of $265,000
(offset by a tax charge of $1.8 million), representing contractual post-closing
adjustments (including contingent payments) pursuant to the Realty One sale,
enhanced net earnings for the 2002 quarter. Earnings in the 2001 first quarter
were lowered by $4.5 million of losses on Internet investments, goodwill
amortization of $4.1 million and a Realty One operating loss of approximately
$2.75 million (net of $1.2 million in applicable taxes) included in discontinued
operations.

     Despite the expected decline in performance from the record levels of 2001,
the 2002 first quarter results generated cautious optimism for an improved
business environment over the remainder of 2002. The Company's 2002 performance
confirmed that two strategic actions taken in the prior year - the acquisition
of Insignia Bourdais in France and the re-engineering of Insignia Douglas
Elliman - are contributing positively to the Company's profitability and
shareholder value. Both of these operations performed better than expected in
the 2002 quarter and market conditions and transactional activity are gaining
momentum for a strong year 2002 for each business.

     Insignia management monitors and evaluates its financial performance using
three measures. Net EBITDA is defined as income from continuing operations
before depreciation, amortization, income taxes and other non-core items
(Internet, etc.). Net EBITDA deducts all interest expense and includes Funds
From Operations ("FFO") from real estate co-investments. Real estate FFO is
defined as income or loss from real estate operations before depreciation, gains
or losses on sales of property and provisions for impairment. The second measure
used by management is Income from Real Estate Operations (before income taxes).
This measure deducts depreciation and amortization from the Net EBITDA measure
and also includes gains or losses on real estate co-investments. The final
measure is Income from Continuing Operations, which includes the now concluded
Internet business and investment strategy. Net EBITDA, real estate FFO and
Income from Real Estate Operations are supplemental measures that are not
defined by GAAP and Insignia's usage of these terms may differ from other
companies' usage of the same or similar terms.

     The table on the following page depicts the Company's operating results, in
a format that highlights the above three measures, for the three months ended
March 31, 2002 and 2001, respectively. Operating results for each period present
all results related to the sold Realty One business in discontinued operations.
This information has been derived from the Company's condensed consolidated
statements of operations for the periods then ended.



                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                        MARCH 31,
                                                                        ---------
                                                               2002                  2001
                                                               ----                  ----
                                                                       (In thousands)
<S>                                                        <C>                    <C>
   REAL ESTATE SERVICES REVENUES
       Commercial - United States                           $      86,463          $  120,539
       Commercial - International                                  34,278              25,128
       Residential                                                 27,253              29,430
                                                          ------------------    -----------------
         Total real estate services revenues                      147,994             175,097

   COST AND EXPENSES
       Real estate services                                       139,613             156,629
       Administrative                                               2,782               3,400
                                                          ------------------    -----------------
   EBITDA - REAL ESTATE SERVICES (1)                                5,599              15,068
       Real estate FFO (2)                                          1,521               1,320
       Interest income                                              1,063               1,851
       Foreign currency transaction gains                              16                  57
       Interest expense                                            (2,202)             (2,880)
                                                          ------------------    -----------------
   NET EBITDA (1)                                                   5,997              15,416
       Gains on sale of real estate                                   972                  --
       Depreciation                                                (4,293)             (3,479)
       Amortization of intangibles                                 (1,721)             (6,259)
       Property depreciation                                       (1,624)             (1,028)
                                                          ------------------    -----------------
   INCOME FROM REAL ESTATE OPERATIONS BEFORE INCOME
        TAXES                                                        (669)              4,650

       Losses from Internet investments                                --              (4,452)
                                                          ------------------    -----------------
   (Loss) income from continuing operations before
         income taxes                                                (669)                198

       Income tax benefit                                             261                  18
                                                          ------------------    -----------------

   (LOSS) INCOME FROM CONTINUING OPERATIONS                          (408)                216

    Discontinued operations:
       Operating loss, net of applicable taxes                         --              (2,750)
       Adjustment to loss on disposal, net of
       applicable taxes                                               265                  --
                                                          ------------------    -----------------

  NET LOSS                                                           (143)             (2,534)

  Preferred stock dividends                                          (250)               (250)
                                                          ------------------    -----------------

  NET LOSS AVAILABLE TO COMMON SHAREHOLDERS                 $        (393)         $   (2,784)
                                                          ==================    =================
</TABLE>

(1) Neither EBITDA nor Net EBITDA, as disclosed above, should be construed to
represent cash provided by operations determined pursuant to GAAP. These
measures are not defined by GAAP and Insignia's usage of these terms may differ
from other companies' usage of the same or similar terms. As compared to net
income, the EBITDA and Net EBITDA measures effectively eliminate the impact of
non-cash charges for depreciation, amortization of intangible assets and other
charges. Management believes that the presentation of these supplemental
measures enhance a reader's understanding of the Company's operating performance
as they provide a measure of generated cash.

(2) Real estate FFO is defined as income or loss from real estate operations
before depreciation, gains or losses on sales of property and provisions for
impairment. This measure is not defined by GAAP and Insignia's usage of this
term may differ from other companies' usage of the same or similar terms.
Management uses this supplemental measure in the evaluation of principal real
estate investment activities and believes that it provides a measure of
generated cash flows for the Company's real estate operations.



                                       23
<PAGE>

Commercial Real Estate Services

     Insignia's commercial real estate service operations include Insignia/ESG
in the United States, Insignia Richard Ellis in the United Kingdom, Insignia
Bourdais in France and other businesses in Germany, Italy, Belgium, the
Netherlands, Asia and Latin America. Revenues from commercial services declined
17%, or $24.9 million, in the 2002 first quarter compared to 2001. U.S.
commercial services were solely responsible for the overall change as services
revenues fell 28%, or $34 million, to $86.5 million in 2002. European revenues
rose 34% to $33.1 million, enhanced by stronger than expected contributions in
France, and revenues for Asia and Latin America more than doubled in the first
quarter of 2002. Total EBITDA from commercial services declined by 62%, or $10.4
million, with EBITDA from U.S. services declining $12.1 million from the 2001
first quarter. European EBITDA increased by 132% to $3.2 million, augmented by a
$2 million contribution in France. Asian and Latin American operations
collectively produced EBITDA losses of $852,000, relatively unchanged from 2001.

     In the U.S., where EBITDA declined 75% to $4.1 million, the 2002 first
quarter was marked by decreased leasing activity following a period of corporate
indecision in the second half of 2001. This 2002 period compares to a first
quarter of 2001 that benefited from robust activity prior to the economic
slowdown which began to affect the Company in the second quarter of 2001. The
2001 first quarter represented the Company's strongest first quarter ever for
the U.S. commercial services unit and benefited materially from the investment
programs under the financial services portion of the business, which contributed
$4.6 million of EBITDA from the completion and sale of two properties developed
by the Company. Despite lower earnings in 2002, which was anticipated, the U.S.
commercial service performance exceeded management's expectations for the
period, providing optimism for the remainder of 2002. Nonetheless, in the
current environment the Company continues to be guarded in its optimism and, as
a result, continues to manage indirect operating expenses closely. As evidence,
U.S. operating expenses in the first quarter of 2002 declined more than $7
million, or 15%, from 2001 levels.

     Insignia's European operations performed better than expected during the
first quarter of 2002, bolstered by year-over-year improvement in the U.K. and
contributions from Insignia Bourdais in France it its initial period of
ownership by Insignia. European service revenues were $33.1 million for the
first quarter of 2002, representing a 34% improvement over 2001. Further,
European EBITDA was $3.2 million for the first quarter of 2002, a 132%
improvement over the $1.4 million of EBITDA generated in 2001. Insignia Bourdais
generated services revenues of $9.9 million and EBITDA of $2.0 million, fueled
by strength in the investment market and improvement in leasing activity in
Paris compared to the fourth quarter of 2001. Further, French EBITDA for the
2002 first quarter was relatively consistent with the $2.1 million generated
during the comparative first quarter of 2001 (which was prior to acquisition by
Insignia). Insignia Richard Ellis contributed revenues and EBITDA of $20.9
million and $1.4 million, respectively, during the 2002 quarter, reflecting a
35% improvement in EBITDA over $1.0 million in 2001. While U.K. revenues
declined 7% from 2001, Insignia Richard Ellis benefited from a steady pace of
investment sales and prudent cost containment. While the Central London leasing
market, in which Insignia Richard Ellis is the dominant service provider,
continues to be affected by the market slowdown, rental levels have remained
steady.

     The other European businesses performed below the levels experienced in
2001, yet exceeded expectations in the current soft economic environment. These
businesses collectively produced services revenue of $2.3 million and an EBITDA
loss of $293,000 during the 2002 first quarter. In comparison, these operations
generated revenues and EBITDA of $2.3 million and $319,000, respectively, for
the 2001 quarter, buoyed by strength in occupancy and investment markets in
Germany and the Netherlands. The Company's office in Madrid, Spain, opened in
mid-2001, contributed positively to earnings with EBITDA of $166,000 during the
2002 quarter. Conversely, the U.K. operations of Hotel Partners
(hotel/hospitality brokerage services) suffered an EBITDA loss of $371,000 in
the first quarter of 2002 due to a shortage of concluded investment
transactions.

     The Company's operations in Asia and Latin America launched in 2001
incurred aggregate losses of $854,000 for the first quarter of 2002. Despite
improved revenue production in 2002, earnings were consistent with the $815,000
of losses incurred in the 2001 the first quarter. The performance of these
recent start-up operations has been poorer than initially anticipated due
primarily to weak economic conditions. The Company expects the operations to
continue to incur losses during the second quarter of 2002, but generate small
profits during the second half of the year.



                                       24
<PAGE>

Residential Real Estate Services

     The Company's residential real estate services, provided through New
York-based Insignia Douglas Elliman and Insignia Residential Group, produced
revenues and EBITDA of $27.3 million and $2 million, respectively, during the
first quarter of 2002. This performance represented a 17% improvement in EBITDA,
despite a 7% decline in revenues from 2001. Residential services benefited from
a stronger than expected recovery in the New York apartment market, which had
been severely affected by the events of September 11th, and operating
efficiencies and expense reductions resulting from the implementation in 2001 of
reengineering/reorganization at both businesses.

     Insignia Douglas Elliman produced service revenues and EBITDA of $20.6
million and $1.6 million, respectively, for the 2002 first quarter. These
operating results represented a decline of 10%, or $2.3 million, for revenues
and an increase of 22%, or $300,000, for EBITDA, compared to 2001. Insignia
Douglas Elliman experienced a 3% increase in volume of units sold to $583
million for the first quarter of 2002, up from $564 million in 2001. The number
of units sold increased 7% in 2002 over the first quarter of 2001. Conversely,
the average sales price declined a modest 3.6% to $822,000 from the
exceptionally strong first quarter of 2001. The inverse relationship between
sales volume and revenues results from decreases in commission rates in response
to a more competitive market for residential sales after the terrorist events or
September 11th. This decrease in commissions accounted for approximately $1.75
million of the $2.3 million revenue decline in the first quarter of 2002. The
remainder of the revenue decline is attributable to a $617,000 decrease in
rental commission revenues in 2002, compared to the 2001 first quarter. Rental
transactions are excluded from the sales volume statistics.

     The number of contract signings in the first quarter of 2002 was up
significantly compared to both the fourth quarter and the first quarter of 2001.
This rise is the product of an improving New York market and bodes well for the
remainder of 2002.

     Insignia Residential Group produced results for the first quarter of 2002
were substantially in line with 2001, with revenues up 2% to $6.6 million and
EBITDA unchanged at $344,000. This performance was achieved despite the absence
of bank earnings credits, which have been eroded by declines in interest rates
on cash deposits over the past year.

Administrative

     Lower corporate administrative expenses contributed positively to the
Company's performance in the first quarter of 2002 as expenses declined 18% to
$2.8 million in the 2002 period. The change is primarily related to lower
incentive compensation and discretionary expenses in response to the Company's
lower operating results.

Other Items Included in the Determination of Net EBITDA

     Interest income declined 43% from approximately $1.9 million for the first
quarter of 2001 to $1.1 million for the same period of 2001. Lower interest
rates on short-term investment of cash on hand contributed significantly to the
interest decline in 2002. The average rate of interest earned on invested cash
in 2002 declined approximately 300 basis points from the first quarter of 2001.
Also, a $32 million revolver pay-down in January 2002 caused average cash
available for investment to decline in 2002, compared to the first quarter of
2001.

     Corporate interest expense decreased 24% to $2.2 million for the first
quarter of 2002. The Company benefited from the aforementioned $32 million
pay-down of outstanding credit facility debt and lower interest rates on the
variable rate (LIBOR) borrowings. The average interest rate on remaining
facility borrowings of $117 million was approximately 4.5% for the 2002 quarter,
a decline from approximately 8% for the same period of 2001.

     Real Estate FFO from the Company's property investment portfolio increased
15% to $1.5 million for the first quarter of 2002. The Company's property
operations contributing to Real Estate FFO consist of minority owned
co-investment entities, three wholly-owned and/or controlled properties
(consolidated in the Company's financial statements at March 31, 2002) and three
properties developed by Insignia which have commenced operations. This
year-over-year growth in Real Estate FFO is attributable primarily to enhanced
property performance, property additions and contributions in 2002 from
developed properties. Real Estate FFO is a financial measure that is not defined
by GAAP and the Company's usage of this term may differ from other companies'
usage of the same or similar terms.



                                       25
<PAGE>

Other Items Included in the Determination of Net Income

     Gains realized from sales of real estate by minority owned ventures totaled
$972,000 during the first quarter of 2002 (net of payments to certain employees
totaling $1.5 million). There were no sales of co-invested property during the
first quarter of 2001. The 2002 gains were derived primarily from the sale of
the Serramonte office/retail property located in California, in which Insignia
held a 10% minority ownership interest. Property sales are difficult to predict
and will likely vary considerably from period to period. In addition, as a
minority owner, Insignia does not control the sale decision. Insignia expects to
sell between four and seven properties during 2002 out of the thirty-six
minority owned properties in the co-investment portfolio at March 31, 2002;
although, there can be no assurances of the timing or amount of any gains.

     Depreciation expense (excluding consolidated property depreciation)
increased 23% to $4.3 million for the first quarter of 2002, from $3.5 million
for the comparable period of 2001. The increase is the result of capital
spending of more than $12 million over the past year primarily for leasehold
improvements (in connection with the upgrade and relocation of offices in key
U.S. markets) and software upgrades.

     Property depreciation increased 58%, or $596,000, to $1.6 million. The
change from first quarter of 2001 results from the commencement of operations of
three development properties, expenses attributed to properties acquired in 2001
and depreciation of a 1% owned but controlled and consolidated apartment
partnership.

     Amortization of intangibles declined 73%, or $4.5 million, to $1.7 million
in the first quarter of 2002. The adoption of new accounting standards requiring
elimination of amortization of goodwill, effective January 1, 2002, was
responsible for $4.1 million of the decline from first quarter of 2001. The
remainder of the decrease was attributable to a combination of factors including
the following: (i) a $850,000 decline in amortization of property management
contracts fully amortized in 2001 and (ii) amortization of $462,000 in the 2002
first quarter attributed to specifically identified intangibles acquired in the
Groupe Bourdais purchase.

     In the first quarter of 2001, the Company incurred Internet losses of
approximately $4.5 million, reflecting impairment write-offs of certain
third-party Internet-based investments. Insignia had no operating activity
during the first quarter of 2002 related to Internet-based business investments.
The Company wrote-off all remaining Internet-related investments in 2001, except
for approximately $1 million invested in a multiple venture e-commerce fund. The
Company maintains its investment in this fund equivalent to fair value as
reported by the fund's manager.

     Net income for the 2002 first quarter was favorably impacted by income from
discontinued operations of $265,000 pertaining to contractual post closing
adjustments in conjunction with the Realty One sale. The first quarter of 2001
included a Realty One operating loss of $2.75 million (net of $1.2 million tax
benefit) in discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

     Insignia's liquidity and capital resources are available from its cash and
cash equivalents, unused capacity under its revolving credit facility and cash
generated by operations. Historically, capital expenditures and investments in
minority ownership interests in real estate related investments have been funded
through cash from operations, and the revolving credit facility has been used to
fund the cash portion of acquisitions of businesses and, in 2000, e-commerce
investments. Insignia believes that existing cash and cash equivalents,
revolving credit facility availability and cash generated by operations
represents sufficient capacity for all anticipated investment opportunities and
working capital needs.

     Insignia's unrestricted cash at March 31, 2002 totaled $66.6 million,
representing a $65.2 million decline from $131.9 million at December 31, 2001.
Almost $50 million of the decline was due to the payment of 2001 incentive
compensation in March 2002. Other significant cash flow items during the first
quarter of 2002 included the $32 million pay-down on the revolving credit
facility and $23 million of proceeds received from the sale of Realty One.



                                       26
<PAGE>

     The Company uses Net EBITDA reduced by income taxes as a proxy for its cash
flow from operations. The table below summarizes Net EBITDA less income taxes
and deductions for capital expenditures for the three months ended March 31,
2002 and 2001, respectively. This computation derives a measure of working
capital produced by operations. Such capital resources represent amounts
generally available for real estate investment or other purposes.

                                                   THREE MONTHS ENDED
                                                        MARCH 31,
                                                        ---------
                                                  2002             2001
                                                  ----             ----
                                                     (In thousands)

        NET EBITDA                             $    5,997       $   15,416

        Income tax benefit (provision)                261           (1,540)
                                             --------------------------------

        AFTER TAX NET EBITDA                        6,258           13,876

        Capital expenditures                         (951)          (2,287)
                                             --------------------------------

         TOTAL                                 $    5,307       $   11,589
                                             ================================

     While this working capital measure differs from cash flow from operations
under GAAP, the GAAP measure differences tend to be temporary in Insignia's
businesses and by its construction matches incentives earned in the prior year
with current year operations. For example, cash used in operations during the
first quarter of 2002 totaling $64 million includes the $50 million of incentive
payments for the preceding fiscal year. For the first quarter of 2001, cash used
in operating activities totaled $57 million, including over $62 million of
incentive compensation paid for the record 2000 year. The Company's operating
cash flows also include certain real estate interests and Internet activity,
which Insignia views as non-operating activities. Cash flow from operations is
generally negative during the first quarter of each year due to the payment of
prior year incentives and seasonal factors affecting transactional revenues.
That said, cash flow from the operations was abnormally low during the first
quarter of 2002 because of slower market conditions. The same period of 2001 was
however unusually robust.

Existing Debt

     Insignia's total debt at March 31, 2002 and December 31, 2001 consisted of
the following:

                                                       MARCH 31,    DECEMBER 31,
                                                         2002          2001
                                                         ----          ----
                                                           (In thousands)

Outstanding amount under revolving credit facility    $ 117,000     $ 149,000
Loan notes payable to sellers of acquired U.K.
   businesses, secured by restricted cash holdings       20,573        20,972
                                                     --------------------------
Notes payable                                           137,573       169,972

Real estate mortgage notes payable                       53,732        37,269

                                                     --------------------------
   TOTAL DEBT                                         $ 191,305     $ 207,241
                                                     ==========================

     All U.K. acquisition loan notes are guaranteed by a bank as required by the
terms of the respective purchase agreements and the bank holds restricted cash
deposits sufficient to repay the notes in full when due. The acquisition loan
notes have a final maturity of April 2010 and are callable semi-annually at the
discretion of the note holder. Real estate mortgages consist of notes payable
secured solely by property assets owned either by Insignia subsidiaries or
entities over which Insignia exercises controls. The real estate mortgages are
recourse only to the applicable real estate asset and have maturities ranging
from December 2002 to October 2023. As a result of these two circumstances,
Insignia only considers the revolving credit facility in its analysis of
liquidity and capital resources.



                                       27
<PAGE>

     Insignia's revolving credit facility matures in May 2004 and has a maximum
commitment of $230 million. At March 31, 2002 the amount outstanding on the
revolving credit facility was $117 million and the interest rate on amounts
drawn was approximately 4.5%. In addition to the amount outstanding, Insignia
had outstanding letters of credit of $11.0 million ($10.4 million pertaining to
real estate investment obligations) at March 31, 2002 that are considered
outstanding amounts under the terms of the revolving credit facility. The unused
commitment at March 31, 2002 was approximately $102 million.

         Borrowings under the revolving credit facility bear interest at LIBOR
plus a margin that varies according to the ratio of debt to consolidated EBITDA,
adjusted for specified other costs. Insignia is vulnerable to increases in
interest rates as a result of either increases in the base rate or the variable
LIBOR margin. A 100 basis points increase in the effective interest rate would
increase interest expenses by more than $1 million on an annual basis. The
margin above LIBOR for subsequent draws or rollovers is 2.50%.

     The Company's revolving credit agreement contains covenants concerning the
maintenance of a minimum consolidated net worth, a maximum leverage ratio (based
on total debt to consolidated EBITDA) and certain other financial ratios. The
most restrictive of these covenants is the leverage ratio. Under this covenant,
the maximum amount outstanding cannot exceed 3 times EBITDA for the trailing
four quarters, after giving pro forma effect to acquisitions and dispositions.
Because the third quarter of 2001 was so negatively affected by September 11th,
Insignia requested and obtained a temporary increase of the leverage ratio to
3.25 until the third quarter of 2001 is no longer included in the trailing four
quarters calculation. Insignia's request was not in respect of any default or
potential default. Rather, Insignia recognized that the inclusion of such a poor
quarter, caused by very unusual and uncontrollable events, in the four quarters
calculation would render availability for unforeseen investment opportunities
abnormally low. At March 31, 2002, the actual availability under the revolving
credit facility was approximately $41 million. The Company is in compliance with
all financial covenants.

Real Estate Investments and Related Obligations

     Insignia invests in real estate assets and real estate related assets,
usually as a minority owner and asset manager or property manager, with third
party investors. These investments include operating real estate properties,
real estate under development and investment entities investing in below
investment grade or lower rated securitized real estate debt. Each of these
entities is debt financed. The real estate entities in which Insignia owns a
minority interest owned aggregate assets of $1.0 billion and were obligated on
aggregate debt of $677 million at March 31, 2002. Each entity is liable only for
its own debt, and such debt is substantially non-recourse other than to the
asset financed. At March 31, 2002 and December 31, 2001, respectively, the
Company's real estate investments consisted of the following:

<TABLE>
<CAPTION>
                                                                                MARCH 31,        DECEMBER 31,
                                                                                  2002               2001
                                                                                  ----               ----
                                                                                      (In thousands)
<S>                                                                          <C>                 <C>
          Minority interests in operating properties                         $       26,334      $     29,282
          Consolidated owned properties                                              17,457            41,788
          Consolidated property of 1% owned and controlled partnership               36,907                --
          Minority interests in development properties                               10,743            10,761
          Land held for future development                                            2,362             2,308
          Minority interests in real estate debt investment funds                    11,320            11,571
                                                                            -----------------------------------

             TOTAL INVESTMENTS                                                $     105,123      $     95,710
                                                                            ===================================
</TABLE>

     The real estate carrying amounts of consolidated owned properties were
financed by real estate mortgage notes totaling $15.9 million and $37.3 million
at March 31, 2002 and December 31, 2001, respectively. In March 2002, Insignia
sold Shinsen Place, an office building in Tokyo, Japan purchased in late 2001,
which was consolidated at December 31, 2001. Shinsen Place was purchased solely
for resale to a client for a fee of approximately $600,000. The sale of the
property reduced the Company's real estate investments and corresponding real
estate mortgage notes by $24.3 million and $21.4 million, respectively. The 1%
owned property partnership, consolidated due to control, was financed by
mortgage debt of $37.8 million at March 31, 2002. Insignia's equity at book
value in all



                                       28
<PAGE>

consolidated properties totaled $3.7 million at March 31, 2002 and $5.5 million
at December 31, 2001. The Company has no further obligations to these properties
or their creditors.

     Apart from the potential loss of its equity investment, totaling $54.4
million at book value in all real estate entities at March 31, 2002, Insignia's
other assets are only at risk with respect to specific obligations it has
undertaken or to standard carve-outs in the mortgage lending industry from the
non-recourse provisions of mortgage loans. Each entity in which Insignia holds
an investment is a single purpose entity, the assets of which are subject to the
obligations only of that entity. Each entity's debt, except to the extent of the
letters of credit and other guarantees/commitments shown below, is either (i)
non-recourse except to the real estate assets of the subject entity (subject to
carve-outs standard in such non-recourse financing, including the misapplication
of rents or environmental liabilities) or (ii) an obligation solely of such
limited liability entity and thus is non-recourse to other assets of the
Company.

     Insignia, as a matter of policy, would consider advancing funds to such an
entity beyond its obligation as a new investment requiring normal returns.
Insignia's aggregate obligations to all such real estate entities at March 31,
2002 consisted of the following:

<TABLE>
<CAPTION>
                                                                 AMOUNT
                                                           -----------------
                                                             (In thousands)
<S>                                                           <C>
   Letters of credit partially backing construction loans      $   8,900
   Other partial guarantees of property debt                       2,825
   Future capital contributions for capital improvements             700
   Future capital contributions for asset purchases                4,000
                                                           -----------------
      TOTAL OBLIGATIONS                                        $  16,425
                                                           =================
</TABLE>

     Outstanding letters of credit generally have one-year terms to maturity and
bear standard renewal provisions. Other real estate obligations do not bear
formal maturity dates and remain outstanding until certain conditions (such as
final sale of property and funding of capital commitments) have been satisfied.

Contingent Purchase Consideration

     Insignia also has obligations for earnouts, or contingent purchase
consideration, with respect to past acquisitions. One earnout of a maximum
amount of $6.4 million is believed extremely unlikely to ever become payable.
Other acquisition earnouts, excluding Insignia Bourdais, are believed more
likely than not of being met, and the amounts payable in that case would be as
follows:

                        YEAR                    AMOUNT
                   -----------------------------------------
                                            (In thousands)

                        2002                   $   7,500
                        2003                       3,500
                        2004                       2,500
                        2005                       1,000
                                           -----------------
                   TOTAL EARNOUTS               $ 14,500
                                           =================

     Insignia expects to pay these amounts from cash provided by operations.

     With respect to Insignia Bourdais, base purchase consideration of $21.4
million was paid at closing in a combination of cash and Insignia common stock,
determined based on an annual minimum EBITDA expectation of $4 million. Based on
actual EBITDA of Insignia Bourdais for the four quarters ending March 31, 2002,
additional purchase consideration of approximately $5.3 million became payable
and is included in accrued and sundry liabilities at March 31, 2002. This earned
purchase consideration will be paid in May 2002, 23% in Insignia common stock
with the remainder in cash. Further, an earnout provision over calendar years
2002, 2003 and 2004 provides for additional contingent purchase price of $22
million. Payment of the full remaining earnout would require average annual
EBITDA over the three years of more than $10 million, while EBITDA equal to or
less than



                                       29
<PAGE>

the results of the last twelve months ended March 31, 2002 of approximately $6.2
million would not result in any further consideration. All earnout calculations
are based upon a multiple of total purchase consideration to EBITDA of
approximately 4.2. The Company is not able to predict the amount of any future
consideration payable under the remaining earnout provision.

Material Commitments

     Operating Leases

     The Company leases office space and equipment under non-cancelable
operating leases. Minimum annual rentals under operating leases for fiscal years
2002 - 2006 and thereafter are as follows:

                                                      AMOUNT
                                                -------------------
                                                  (In thousands)

      2002                                            $   35,929
      2003                                                32,646
      2004                                                28,846
      2005                                                24,542
      2006                                                21,707
      Thereafter                                          74,629
                                                -------------------
      TOTAL MINIMUM PAYMENTS                           $ 218,299
                                                ===================

     Certain of the leases are subject to renewal options and annual escalation
based on the Consumer Price Index or annual increases in operating expenses.

     Preferred Stock

     In 2000, the Company sold 250,000 shares of perpetual convertible preferred
stock, with a stated value of $100 per share, to investment funds advised by
Blackacre Capital Management for an aggregate purchase price of $25.0 million.
The preferred stock pays a 4% cumulative annual dividend, payable quarterly at
Insignia's option in cash or common stock, and is convertible into the Company's
common stock at the option of the holder at $14 per share, subject to
adjustment. The preferred stock is callable by the Company, at stated value, at
any time on or after February 15, 2004. The Company paid cash dividends of
$250,000 in the first quarter of 2002.

Capital Expenditures

     Insignia's capital expenditure estimate for 2002 is approximately $15
million; however, such expenditures have been substantially deferred until
market conditions and overall real estate activity improves. As evidence,
capital expenditures totaled $951,000 in the first quarter of 2002, compared
with $2.3 million in the first quarter of 2001. The Company expects to fund
capital expenditures from cash on hand and cash provided by operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     In April 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 145, which rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt and SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements (which amended SFAS No. 4), amends SFAS No. 13,
Accounting for Leases and makes certain technical corrections to other
accounting standards. The rescission of SFAS No. 4 and SFAS Statement No. 64
affects income statement classification of gains and losses from extinguishment
of debt.

     SFAS No. 145 will be effective for fiscal years beginning after May 15,
2002, with early adoption of the provisions related to the rescission of SFAS
No. 4 encouraged. Upon adoption, prior period items that do not meet the
extraordinary item classification criteria in APB 30 must be reclassified.
Adoption of SFAS No. 145 is not expected to have any effect on the Company's
financial position or results of operations.

     In October 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 provides accounting
guidance for financial accounting and reporting for the impairment or



                                       30
<PAGE>

disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, it retains the fundamental provisions of that Statement. It also
supersedes the accounting and reporting of APB Opinion No. 30, Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions related to the disposal of a segment of a business. However, it
retains the requirement in Opinion 30 to report separately discontinued
operations and extends that reporting to a component of an entity either
disposed of or classified as held for sale. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. Insignia early adopted SFAS No. 144 as
of January 1, 2001.

     SFAS 144 requires, in most cases, that gains/losses from dispositions of
investment properties and all earnings from such properties be reported as
"discontinued operations". SFAS No. 144 is silent with respect to treatment of
gains/losses from sales of investment property held in a joint venture. The
Company has concluded that, as a matter of policy, all gains/losses from the
sale of minority owned property in its real estate co-investment program
constitute earnings from a continuing line of business. Therefore, operating
activity related to that investment program will continue to be classified in
income from continuing operations.

CRITICAL ACCOUNTING POLICIES

     Management's discussion and analysis of financial condition and results of
operations is based upon the Company's condensed consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of
these financial statements requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses.
The Company bases its estimates on historical experience and assumptions that
are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. Insignia believes the
following critical accounting policies affect its significant judgments and
estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

     The Company's real estate services revenues are generally recorded when the
related services are performed or at closing in the case of real estate sales.
Leasing commissions that are payable upon tenant occupancy, payment of rent or
other events beyond the Company's control are recognized upon the occurrence of
such events. As certain conditions to revenue recognition for leasing
commissions are outside of the Company's control, judgment must be exercised in
determining when such required events to recognition have occurred.

     Insignia's revenue from property management services is generally based
upon percentages of the revenue generated by the properties that it manages. In
conjunction with the providing of management services, the Company customarily
employs personnel (either directly or on behalf of the property owner) to
provide services solely to the properties managed. Insignia is reimbursed, by
the owners of managed properties, for all direct payroll related costs incurred
in the employment of property personnel. The aggregate amount of payroll costs
reimbursed approximates $40 million to $50 million annually. All such payroll
reimbursements are characterized in the Company's statements of operations as a
reduction of actual expenses incurred. This characterization is based on the
following factors: (i) the property owner generally has authority over hiring
practices and the approval of payroll prior to payment by the Company; (ii)
Insignia is the primary obligor with respect to the property personnel, but
bears little or no credit risk under the terms of the management contract; (iii)
reimbursement to the Company is completed prior to or simultaneous with payment
of payroll; and (iv) the Company generally earns no margin in the arrangement,
obtaining reimbursement only for actual cost incurred.

Principles of Consolidation

     Insignia's financial statements include the accounts of all majority owned
subsidiaries and all entities over which the Company exercises voting control
over operating decisions. All significant intercompany balances and transactions
have been eliminated. Entities in which the Company owns less than the majority
interest and has substantial influence are recorded on the equity method of
accounting (net of payments to certain employees in respect of equity grants or
rights to proceeds).

     In one instance, a 1% owned partnership (with additional promotional
interests in profits depending on performance) is consolidated by virtue of near
absolute control of the partnership. Since the limited partners'



                                       31
<PAGE>

investment has been fully depreciated, the assets, liabilities and operations of
the partnership are consolidated as if Insignia completely owned the asset, even
though economically Insignia only holds a small minority interest.

Valuation of Investments

     The Company reviews each of its investments in unconsolidated real estate
and Internet entities on a quarterly basis for evidence of impairment.
Impairment losses are recognized whenever events or changes in circumstances
indicate declines in value of such investments below carrying value and the
related undiscounted cash flows are not sufficient to recover the assets
carrying amount.

Valuation of Intangibles

     The Company's intangible assets substantially consist of goodwill, property
management contracts, favorable premises leases and other intangibles including
non-compete agreements, franchise agreements, customer backlog and trade names.
Through December 31, 2001, the Company used an undiscounted cash flow
methodology to determine whether underlying operating cash flows were sufficient
to recover the carrying amount of intangible assets. As of January 1, 2002,
goodwill is no longer amortized, but will be evaluated annually for impairment
based on a reporting unit fair value approach as required by SFAS No. 142. In
determining fair value of a reporting unit, the Company relies on the
application of generally accepted valuation approaches including a market
approach, which includes both comparisons to other comparable publicly traded
businesses and recent transactions involving similar businesses, and an income
approach based on discounted cash flows.

Valuation of Deferred Taxes

     The Company records deferred income tax assets and liabilities to reflect
the tax consequences on future years of temporary differences of revenue and
expense items for financial statement and income tax purposes. The Company
periodically evaluates the realization of a deferred income tax asset by
considering the existence of sufficient taxable income of the appropriate
character and provides for any amounts that are unlikely to be realized.

Business Combinations

     The Company accounts for its business combinations under the purchase
method of accounting. As such, the Company allocates the acquisition cost to the
identifiable assets acquired and liabilities assumed based on their respective
fair values at date of acquisition. The excess of the cost of the acquired
company over the sum of the amounts assigned to identifiable assets acquired
less liabilities assumed is then allocated among identifiable intangible assets
and goodwill. The Company utilizes various methods customarily used in determine
the fair value of identifiable intangible assets. These methods include, but are
not limited to obtaining independent appraisals, preparing discounted cash flow
analysis and comparable sale analysis.

     All contingent consideration determinable at the date of acquisition is
included in determining the cost of an acquired company. Consideration which is
due at the expiration of the contingency period or which is held in escrow
pending the outcome of the contingency is disclosed but not recorded as a
liability or as additional cost of the acquired company unless the outcome of
the contingency is determinable beyond a reasonable doubt.

IMPACT OF INFLATION AND CHANGING PRICES

     Inflation has not had a significant impact on the results of operations of
Insignia in recent years and is not anticipated to have a significant impact in
the foreseeable future. Insignia's exposure to market risk from changing prices
consists primarily of fluctuations in rental rates of commercial and residential
properties, market interest rates on residential mortgages and debt obligations,
real estate property values and foreign currency fluctuations affecting
operating results in Europe, Asia and Latin America.

     The revenues associated with the commercial services businesses are
impacted by fluctuations in interest rates, lease rates, real property values
and the availability of space and competition in the market place. Commercial
service revenues are derived from a broad range of services that are primarily
transaction driven and are therefore volatile in nature and highly competitive.



                                       32
<PAGE>

     The revenues of property management operations with respect to rental
properties are highly dependent upon market rents of the properties managed,
which are affected by rental rates and building occupancy rates. Rental rate
increases are dependent upon market conditions and the competitive environments
in the respective locations of the properties. Employee compensation is the
principal cost element of property management. Changes in market interest rates
and real property values impact the revenues of the Company's New York-based
co-op and condo brokerage and apartment leasing business.

NATURE OF OPERATIONS

     Revenues from tenant representation, agency leasing, investment sales and
residential brokerage, which collectively comprise a substantial portion of
Insignia's service revenues, are transactional in nature and therefore subject
to seasonality and changes in business and capital market conditions. A
significant portion of the expenses associated with these transactional
activities is directly correlated to revenue.

     Consistent with the industry in general, Insignia's operating income and
earnings have historically been lower during the first three calendar quarters
than in the fourth quarter. The reasons for the concentration of earnings in the
fourth quarter include a general, industry-wide focus on completing transactions
by calendar year end, as well as the constant nature of the Company's
non-variable expenses throughout the year versus the seasonality of its
revenues. This phenomenon has generally produced a historical pattern of higher
revenues and income in the last half of the year and a gradual slowdown in
transactional activity and corresponding operating results during the first
quarter.

     Over the last two years, the Company's quarterly results have not followed
the traditional seasonal pattern. As evidence, in 2001 the Company realized its
best ever first quarter, yet produced much lower second and third quarters than
the preceding year due to the effects of the global economic slowdown and the
tragic events of September 11th. Market disruptions like that of the third
quarter of 2001 can alter the effect of "normal" seasonality. Also, certain
conditions to revenue recognition for leasing commissions are outside of the
Company's control and as a result the impact of leasing revenues on income
seasonality is unpredictable. Consequently, quarter-to-quarter comparisons may
be difficult to interpret.

     The Company plans its capital and operating expenditures based on its
expectations of future revenues. If revenues are below expectations in any given
quarter, the Company may be unable to adjust expenditures to compensate for any
unexpected revenue shortfall. The Company's business could suffer as a
consequence.

FORWARD LOOKING STATEMENTS

     Certain items discussed in this Report constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and, as such, involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. You can
identify such statements by the fact that they do not relate strictly to
historical or current facts. Statements that make reference to the expectations
or beliefs of the Company or any of its management are such forward-looking
statements. These statements use words such as "believe", "expect", "should" and
"anticipate". Such information includes, without limitation, statements
regarding the results of litigation, Insignia's future financial performance,
cash flows, expansion plans, estimated capital expenditures and statements
concerning the performance of the U.S. and international commercial and
residential brokerage markets. Actual results will be affected by a variety of
risks and factors, including, without limitation, international, national and
local economic conditions and real estate and financing risks, as well as those
set forth under the caption "Risk Factors" in Item 1 of Form 10-K for the year
ended December 31, 2001.

     All such forward-looking statements speak only as of the date of this
Report. The Company expressly disclaims any obligation or undertaking to release
publicly any updates of revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.



                                       33
<PAGE>

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

     The real estate market tends to be cyclical and related to the condition of
the economy as a whole and to public perception of the economic outlook. In
addition, capital availability tends to also be cyclical, leading to periods of
excess supply or shortages. When supply is constrained or the economic outlook
is poor, leasing and sales volumes may decline. When capital is constrained or
there is excess supply, property investment volume may decline.

     Periods of economic slowdown or recession, rising interest rates, inflation
or declining demand for real estate will adversely affect Insignia's business
and may cause, among other things: (i) declines in leasing activity; (ii)
declines in the availability of capital for investment in and mortgage financing
for commercial real estate; (iii) declines in consumer demand for New York
co-ops and condominiums; and (iv) declines in rental rates and property values,
with a commensurate decline in real estate service revenues.

    Insignia is exposed to a variety of market risks, including foreign currency
fluctuations and changes in interest rates. In addition to the United States,
the Company conducts business in foreign jurisdictions throughout Europe, Asia
and Latin America. However, currencies other than the British pound, euro and
dollar have comprised less than 1% of annual revenues. The Company's European
operations, which are conducted using the pound and euro currencies, generally
have produced 15% to 20% of the Company's total service revenues. With the
addition of Insignia Bourdais in France, revenue contributions in pounds and
euros are expected to increase. During the first quarter of 2002, $33.1 million,
or 22%, of total services revenues were conducted using these currencies.

     Because the pound and euro have declined over the last three years, the
Company's reported revenues and earnings have been adversely affected when
translated to dollars. Continued changes in the value of such currencies against
the US Dollar will affect the Company's reported results. As evidence, a 10%
change in the pound and euro could have an annual impact of more than $10
million on revenues and $1 million on net income.

     The Company's residential brokerage and leasing business is affected by
changes in the general level of market interest rates. Consumer buying habits
related to co-op and condo properties in New York are influenced to some degree
by mortgage interest rates, particularly at the lower end of the spectrum of
sales prices. Changes in interest rates also affect the interest earned on the
Company's cash and equivalents as well as interest paid on its debt. Interest
rates are sensitive to many factors, including governmental monetary and tax
policies, domestic and international economic and political considerations and
other factors that are beyond the Company's control. A 100 basis point change in
interest rates at debt levels at March 31, 2002 would affect interest expense by
more than $1 million on an annual basis.



                                       34
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     See Note 14 - "Material Contingencies" in Notes to Condensed Consolidated
Financial Statements, Part I, Item 1, of this Form 10-Q.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     a)   Exhibits

          None

     b)   Reports on Form 8-K filed during the quarter ended March 31, 2002:

          1.   Form 8-K dated and filed January 9, 2002, disclosing amendment of
               the Company's Credit Agreement, arranged by First Union
               Securities, Lehman Brothers and Bank of America, on November 26,
               2001.

          2.   Form 8-K dated January 31, 2002 and filed on February 20, 2002
               disclosing Insignia's December 2001 definitive agreement to sell
               its Realty One single-family home brokerage business and
               affiliated companies to Real Living, Inc. The sale formally
               closed on January 31, 2002.

          3.   Form 8-K/A dated December 19, 2001 and filed on March 4, 2002,
               disclosing the financial statements of Insignia Bourdais Holding
               (Group Bourdais), amending Form 8-K filed on December 29, 2001.











                                       35
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      INSIGNIA FINANCIAL GROUP, INC.



                                      By: /s/Andrew L. Farkas
                                          -------------------------------------
                                          Andrew L. Farkas
                                          Chairman and Chief Executive Officer




                                      By: /s/James A. Aston
                                          -------------------------------------
                                          James A. Aston
                                          Chief Financial Officer


DATE: May 14, 2002





                                       36