<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 SEPTEMBER 30, 1999

              [ ] 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) 984-8000
              (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 October 31, 1999 the Registrant had 20,854,923 shares of Common Stock
outstanding.

================================================================================

<PAGE>

                         INSIGNIA FINANCIAL GROUP, INC.

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999

                                 ---------------
                                      INDEX
                                 ---------------
                                                                           Page
                                                                           ----
PART I -- FINANCIAL INFORMATION

     Item 1.  Financial Statements

         Condensed Consolidated Statements of Income for the
            Three and Nine Months Ended September 30, 1999 and 1998 ......   2

         Condensed Consolidated Balance Sheets
            at September 30,  1999 and December 31, 1998..................   3

         Condensed Consolidated Statements of Cash Flows
            for the Nine Months Ended September 30, 1999 and 1998.........   4

         Notes to Condensed Consolidated Financial Statements.............  5-10

     Item 2.  Management's Discussion and Analysis of

         Financial Condition and Results of Operations.................... 11-21

     Item 3.  Quantitative and Qualitative Disclosure of Market Risk......  21

PART II -- OTHER INFORMATION

     Item 1.  Legal Proceedings...........................................  22

     Item 6.  Exhibits and Reports on Form 8-K............................  22

SIGNATURES ...............................................................  23

<PAGE>

                                     PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

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

<TABLE>
<CAPTION>
                                                        Three Months Ended            Nine Months Ended
                                                           September 30                 September 30
                                                           ------------                 ------------
                                                        1999          1998           1999          1998
                                                        ----          ----           ----          ----
<S>                                                  <C>           <C>            <C>           <C>
REVENUES

   Real estate services                              $ 193,223     $ 131,721      $ 464,029     $ 358,360
   Property operations                                     397            --          1,184            --
   Interest                                              1,190           874          3,452         1,939
   Other                                                    --            69             --           164
                                                     ---------     ---------      ---------     ---------
      Total revenues                                   194,810       132,664        468,665       360,463

COSTS AND EXPENSES

   Real estate services                                169,719       118,091        420,630       318,401
   Property operations                                     133            --            395            --
   Administrative                                        2,620         2,033          7,247         5,561
   Interest                                              2,867           382          5,386         1,088
   Property interest                                       175            --            504            --
   Depreciation                                          1,987         1,096          4,589         2,441
   Property depreciation                                   156            --            273            --
   Amortization of intangibles                           6,410         5,244         17,331        14,822
   Merger related expenses                                  --            --          5,533            --
                                                     ---------     ---------      ---------     ---------
      Total expenses                                   184,067       126,846        461,888       342,313
                                                     ---------     ---------      ---------     ---------
                                                        10,743         5,818          6,777        18,150

Equity earnings (losses) in real estate ventures            69          (465)         1,991        (1,323)
Minority interests                                          --           113             --           259
                                                     ---------     ---------      ---------     ---------

 INCOME BEFORE INCOME TAXES                             10,812         5,466          8,768        17,086

   Provision for income taxes                            5,406         2,460          5,435         7,689
                                                     ---------     ---------      ---------     ---------

NET INCOME                                           $   5,406     $   3,006      $   3,333     $   9,397
                                                     =========     =========      =========     =========

Per share amounts - basic                            $     .25     $     .14      $     .16     $     .45
                                                     =========     =========      =========     =========
Per share amounts - assuming dilution                $     .24     $     .13      $     .15     $     .43
                                                     =========     =========      =========     =========

Weighted average common shares and
   assumed conversions                                  22,463        22,377         22,964        21,998
                                                     =========     =========      =========     =========

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

</TABLE>

                                                   2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                              September 30,   December 31,
                                                                                  1999           1998
                                                                              -------------   ------------
                                                                               (Unaudited)       (Note)
<S>                                                                             <C>            <C>
ASSETS
   Cash and cash equivalents                                                    $  52,076      $  53,489
   Receivables                                                                    188,516        153,807
   Mortgage loans held for sale                                                    13,961         18,409
   Restricted cash                                                                 13,845         10,468
   Property and equipment                                                          41,902         27,897
   Real estate interests                                                           63,566         58,196
   Property management contracts                                                   32,986         38,033
   Costs in excess of net assets of acquired businesses                           316,094        213,829
   Other assets                                                                    29,355         21,361
                                                                                ---------      ---------

Total assets                                                                    $ 752,301      $ 595,489
                                                                                =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Accounts payable                                                             $  15,143      $  14,367
   Commissions payable                                                             73,004         56,391
   Accrued incentives                                                              25,833         32,662
   Accrued and sundry liabilities                                                  80,763         64,388
   Mortgage warehouse line of credit                                               11,759         17,915
   Notes payable                                                                  136,191         17,867
   Real estate mortgage notes payable                                              22,207          8,656
                                                                                ---------      ---------
                                                                                  364,900        212,246
                                                                                ---------      ---------

Stockholders' Equity:
   Common Stock, par value $.01 per share - authorized 80,000,000 shares,
     20,862,091 (1999) and 21,423,646 (1998) issued and outstanding shares,
     net of 1,274,100 (1999) and 139,200 (1998) shares held in treasury               209            214
   Additional paid-in capital                                                     383,355        383,075
   Retained earnings                                                                4,989          1,656
   Accumulated other comprehensive income                                             354            141
   Notes receivable for common stock                                               (1,506)        (1,843)
                                                                                ---------      ---------
Total stockholders' equity                                                        387,401        383,243
                                                                                ---------      ---------

Total liabilities and stockholders' equity                                      $ 752,301      $ 595,489
                                                                                =========      =========
</TABLE>

NOTE:  The Balance Sheet at December 31, 1998 has been derived from the audited
       financial statements at that date but does not include all the
       information and footnotes required by generally accepted accounting
       principles for complete financial statements.

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


                                                   3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           Nine Months Ended
                                                                             September 30,
                                                                             -------------
                                                                          1999           1998
                                                                          ----           ----
<S>                                                                    <C>            <C>
OPERATING ACTIVITIES

   Net income                                                          $   3,333      $   9,397
   Adjustments to reconcile net income to net cash

      provided by operating activities:

      Depreciation and amortization                                       22,193         17,263
      Merger related expenses                                              5,533             --
      Equity (earnings) losses                                            (1,991)         1,323
      Minority interest                                                       --           (259)
      Changes in operating assets and liabilities:
         Receivables                                                     (26,863)       (20,122)
         Other assets                                                     (2,153)           366
         Accounts payable and accrued expenses                              (293)        (1,503)
         Commissions payable                                              16,613          1,753
                                                                       ---------      ---------
   Net cash provided by operating activities                              16,372          8,218
                                                                       ---------      ---------

INVESTING ACTIVITIES

      Additions to property and equipment, net                           (16,208)       (11,586)
      Payments made for acquisition of businesses                       (111,738)       (61,690)
      Decrease (increase) in mortgage loans held for sale                  4,448         (3,747)
      Investment in real estate                                          (20,706)       (30,926)
      Distributions from real estate investments                          17,494          3,250
      Net increase in restricted cash                                     (6,825)        (3,065)
                                                                       ---------      ---------
   Net cash used in investing activities                                (133,535)      (107,764)
                                                                       ---------      ---------

FINANCING ACTIVITIES

      Proceeds from issuance of common stock                                 798             --
      Proceeds from exercise of stock options                              1,055             --
      Purchase of treasury stock                                         (12,494)            --
      Net (payments) advances on mortgage warehouse line of credit        (6,156)         3,261
      Payments on notes payable                                           (2,727)        (6,113)
      Proceeds from notes payable                                        121,765          5,505
      Proceeds from real estate mortgage note payable                     13,551             --
      Net transactions with Former Parent                                     --        122,579
                                                                       ---------      ---------
   Net cash provided by financing activities                             115,792        125,232
                                                                       ---------      ---------
   Effect of exchange rate changes in cash                                   (42)           422

   Net (decrease) increase in cash and cash equivalents                   (1,413)        26,108
   Cash and cash equivalents at beginning of period                       53,489          5,514
                                                                       ---------      ---------
   Cash and cash equivalents at end of period                          $  52,076      $  31,622
                                                                       =========      =========

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

</TABLE>

                                                4
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  Business

    Organization

    Insignia Financial Group, Inc. ("Insignia" or the "Company"), headquartered
in New York, New York, is the parent company of an international real estate
organization. Insignia's service businesses specialize in commercial real estate
services, single-family home brokerage and mortgage origination, condominium and
cooperative apartment management, apartment brokerage and leasing, real estate
oriented financial services, equity co-investment, fund management and other
services. As more fully described below, Insignia's principal businesses are
Insignia/ESG, Inc. (international commercial property services), Realty One,
Inc. (single-family home brokerage and mortgage origination), Insignia
Residential Group, Inc. (condominium and cooperative apartment management) and
Douglas Elliman (apartment brokerage and leasing) (collectively, the "Insignia
Businesses"). The European operations of Insignia/ESG consist of Richard Ellis
St. Quintin ("REStQ") in the United Kingdom, Insignia RE GmbH in Germany,
Insignia RE SpA in Italy and Insignia RE Belgium SA.

    Through Insignia/ESG, Insignia provides a broad spectrum of commercial real
estate services, including tenant representation, property leasing and
management, property disposition and acquisition, investment sales, debt
placement, equity co-investment, development, redevelopment and consulting
services. Insignia/ESG provides these services for tenants, owners and investors
in office, industrial, retail, hospitality and mixed-use properties.
Insignia/ESG is among the leading providers of commercial real estate services
in the United States, enjoying a leadership market position in the New York
metropolitan area and significant market positions in property owner and/or
tenant services in Washington, D.C., Philadelphia, Boston, Chicago, Atlanta,
Phoenix, Los Angeles, San Francisco, Dallas and other major central business
districts. In all, Insignia/ESG has operations in 49 markets in the United
States. Insignia/ESG also has growing international capabilities, which allow it
to meet clients' expanding global needs, in the United Kingdom, Germany, Italy
and Belgium. REStQ is among the leading property services companies in the
United Kingdom, with offices in London, Manchester, Glasgow, Birmingham, Leeds,
Liverpool, Belfast and Jersey.

    Through Realty One, Insignia Residential Group and Douglas Elliman, Insignia
provides a diversified array of residential real estate services, including
single-family home brokerage, mortgage origination, escrow services, apartment
brokerage and leasing and condominium and cooperative apartment management.
Realty One operates a full-service single-family residential brokerage and
mortgage origination business in northern Ohio and is the eighth largest (based
on unit volume) residential real estate brokerage firm in the United States
according to Real Trends "Big Broker Report" published in May 1999. Realty One
handled more than 15,300 transactions valued at $2.3 billion in the first nine
months of 1999. First Ohio Mortgage Corporation, a mortgage loan affiliate of
Realty One, originates single-family home mortgages for Realty One clients and
third parties. Insignia Residential Group is the largest manager of cooperatives
and condominiums in the New York metropolitan area, according to the January
1999 issue of New York Habitat, and one of the largest apartment managers in the
United States. Insignia Residential Group, which manages over 300 residential
properties, consisting of cooperatives, condominiums and rental properties,
increased its New York management portfolio by 2,600 units to approximately
62,000 units with the August 1999 acquisition of R.A. Cohen & Associates.
Douglas Elliman, acquired in June 1999, operates the largest residential real
estate brokerage firm in New York City. Douglas Elliman commands the number one
market position for both residential sales and rentals in New York City
according to the annual ranking of residential brokerage companies nation-wide
published by Real Trends. Douglas Elliman closed more than 2,600 transactions
valued at $1.7 billion during the nine months ended September 30, 1999. On a
combined basis, Realty One and Douglas Elliman comprise one of the largest
residential brokerage businesses in the United States, with aggregate
transactions valued at approximately $4 billion for the first nine months of
1999.

    Spin-Off

    Insignia, which was incorporated under the laws of the state of Delaware on
May 6, 1998 (formerly known as Insignia/ESG Holdings, Inc.), originally was a
wholly owned subsidiary of a company known as Insignia Financial Group, Inc.
("Former Parent"). On September 21, 1998, Former Parent effected the spin-off of
Insignia through a pro rata distribution (the "Spin-Off") to the holders of
common stock of Former Parent of all the outstanding common stock, par value
$0.01 per share, of Insignia. On October 1, 1998, Former Parent (which then
consisted solely of businesses and assets relating to multi-family residential
real estate) merged into Apartment Investment and

                                       5
<PAGE>

Management Company, a Maryland corporation ("AIMCO"), with AIMCO being the
surviving corporation (the "Merger"). On November 2, 1998, Insignia assumed the
name of Former Parent, "Insignia Financial Group, Inc.," and reclaimed Former
Parent's original New York Stock Exchange symbol, "IFS." Insignia's principal
executive offices are located at 200 Park Avenue, New York, New York 10166, and
its telephone number at that address is (212) 984-8000.

2.  Interim Financial Information

    The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles 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 and nine months ended September
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. The financial results for the three and nine
months ended September 30, 1998 present the results of operations of those
Insignia Businesses spun-off from Former Parent in September 1998 as if the
Spin-Off occurred at the beginning of the year. 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, 1998.

3.  Reclassifications

    Certain prior year amounts have been reclassified to conform to the 1999
presentation. These reclassifications have no effect on net income.

4.  Stock Repurchase

    At September 30, 1999, 1,274,100 shares of Insignia's common stock had been
repurchased at an aggregate cost of approximately $14.3 million. The repurchase
program was expanded in July 1999 to permit the repurchase of up to an aggregate
$17.5 million in common stock, including the shares repurchased through
September 30, 1999.

5.  Earnings Per Share

    The following table sets forth the computation of basic and diluted earnings
per share for the periods indicated. The per share data for the three and nine
months ended September 30, 1998 is presented on a pro forma basis assuming the
Spin-Off occurred at the beginning of the year.

<TABLE>
<CAPTION>
                                                Three Months Ended       Nine Months Ended
                                                   September 30,           September 30,
                                                   -------------           -------------
                                                 1999        1998        1999        1998
                                                 ----        ----        ----        ----
                                                   (In thousands, except per share data)
<S>                                             <C>         <C>         <C>         <C>
BASIC

Weighted average common shares outstanding      21,275      21,305      21,461      20,926
Assumed conversions                                 --          --          --          --
                                               -------     -------     -------     -------
Total                                           21,275      21,305      21,461      20,926
                                               =======     =======     =======     =======
Net income                                     $ 5,406     $ 3,006     $ 3,333     $ 9,397
                                               =======     =======     =======     =======
Per share amounts - basic                      $   .25     $   .14     $   .16     $   .45
                                               =======     =======     =======     =======

DILUTED

Weighted average common shares outstanding      21,275      21,305      21,461      20,926
Assumed conversions                              1,188       1,072       1,503       1,072
                                               -------     -------     -------     -------
Total                                           22,463      22,377      22,964      21,998
                                               =======     =======     =======     =======
Net income                                     $ 5,406     $ 3,006     $ 3,333     $ 9,397
                                               =======     =======     =======     =======
Per share amounts - assuming dilution          $   .24     $   .13     $   .15     $   .43
                                               =======     =======     =======     =======
</TABLE>

                                       6
<PAGE>

6.  Segment Data

    Insignia is an international real estate services company with operations in
two principal reportable segments: commercial and residential services. The
commercial services segment is comprised of Insignia/ESG's domestic operations,
REStQ in the United Kingdom, Insignia RE GmbH in Germany, Insignia RE SpA in
Italy and Insignia RE Belgium SA. Additionally, the commercial services segment
includes the Company's real estate ownership operations, consisting of ownership
in co-investment partnerships and property held for development. The residential
services segment is comprised of Realty One, Insignia Residential Group and
Douglas Elliman. "Other" represents unallocated corporate administration of the
Company and assets included in "Other" consist primarily of cash and property
and equipment. The following financial statements 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.

                          NINE MONTHS ENDED - SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
                                            COMMERCIAL   RESIDENTIAL       OTHER          TOTAL
                                            -----------------------------------------------------
                                                                 (In thousands)
<S>                                         <C>           <C>            <C>            <C>
REVENUES
    Real estate services                    $ 334,424     $ 129,605      $      --      $ 464,029
    Property operations                         1,184            --             --          1,184
    Interest                                      758           831          1,863          3,452
                                            -----------------------------------------------------
       Total revenues                         336,366       130,436          1,863        468,665

 COSTS AND EXPENSES
    Real estate services                      302,977       117,653             --        420,630
    Property operations                           395            --             --            395
    Administrative                                 --            --          7,247          7,247
    Interest                                    1,244           872          3,270          5,386
    Property interest                             504            --             --            504
    Depreciation                                3,317         1,241             31          4,589
    Property depreciation                         273            --             --            273
    Amortization of intangibles                14,107         3,224             --         17,331
    Merger related expenses                     5,533            --             --          5,533
                                            -----------------------------------------------------
       Total expenses                         328,350       122,990         10,548        461,888
                                            -----------------------------------------------------
                                                8,016         7,446         (8,685)         6,777

Equity earnings in real estate ventures         1,991            --             --          1,991
                                            -----------------------------------------------------

INCOME (LOSS) BEFORE INCOME TAXES              10,007         7,446         (8,685)         8,768

   Provision (benefit) for income taxes         5,733         3,350         (3,648)         5,435
                                            -----------------------------------------------------

NET INCOME (LOSS)                           $   4,274     $   4,096      $  (5,037)     $   3,333
                                            =====================================================

Total assets                                $ 543,890     $ 165,572      $  42,839      $ 752,301
Real estate interests                          63,566            --             --         63,566
</TABLE>

                                       7
<PAGE>


                          NINE MONTHS ENDED - SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
                                            COMMERCIAL   RESIDENTIAL        OTHER          TOTAL
                                            ------------------------------------------------------
                                                                (In thousands)
<S>                                         <C>            <C>            <C>            <C>
REVENUES
    Real estate services                    $ 261,197      $  97,163      $      --      $ 358,360
    Interest                                      566            864            509          1,939
    Other                                         164             --             --            164
                                            ------------------------------------------------------
       Total revenues                         261,927         98,027            509        360,463

COSTS AND EXPENSES
    Real estate services                      229,664         88,737             --        318,401
    Administrative                                 --             --          5,561          5,561
    Interest                                       --          1,137            (49)         1,088
    Depreciation                                1,644            797             --          2,441
    Amortization of intangibles                12,160          2,662             --         14,822
                                            ------------------------------------------------------
       Total expenses                         243,468         93,333          5,512        342,313
                                            ------------------------------------------------------
                                               18,459          4,694         (5,003)        18,150

Equity losses in real estate ventures          (1,323)            --             --         (1,323)
Minority interests                                259             --             --            259
                                            ------------------------------------------------------

INCOME (LOSS) BEFORE INCOME TAXES              17,395          4,694         (5,003)        17,086

   Provision (benefit) for income taxes         7,772          2,018         (2,101)         7,689
                                            ------------------------------------------------------

NET INCOME (LOSS)                           $   9,623      $   2,676      $  (2,902)     $   9,397
                                            ======================================================

Total assets                                $ 425,617      $  95,642      $  30,544      $ 551,803
Real estate interests                          49,087             --             --         49,087
</TABLE>

Certain geographic information for Insignia is as follows:

<TABLE>
<CAPTION>
                           Nine Months Ended                 Nine Months Ended
                           September 30, 1999                September 30, 1998
                        -----------------------------------------------------------
                                       Long-Lived                        Long-Lived
                        Revenues         Assets           Revenues         Assets
                        -----------------------------------------------------------
                                              (In thousands)
<S>                     <C>              <C>              <C>              <C>
United States           $396,206         $287,204         $319,355         $210,685
United Kingdom            68,976          102,559           37,866           70,316
Other countries            3,483            1,219            3,242            6,536
                        -----------------------------------------------------------
                        $468,665         $390,982         $360,463         $287,537
                        ===========================================================
</TABLE>

7.  1999 Acquisitions

    Insignia has acquired the following companies in 1999. These acquisitions
were accounted for as purchases.

    Lynch Murphy Walsh & Partners

    On March 1, 1999, Insignia acquired Lynch Murphy Walsh & Partners ("Lynch
Murphy"), a provider of commercial real estate services located in Boston,
Massachusetts. Lynch Murphy specializes in brokerage services, including
representation of tenants and landlords, investment sales and debt placements,
valuation services and advisory/consulting services. The base purchase price was
$12.0 million, all of which was paid in cash from

                                       8
<PAGE>

borrowings under Insignia's revolving credit facility. Additional purchase
consideration of up to $10.0 million over the next three years is contingent on
the future performance of Lynch Murphy.

    St. Quintin Holdings Limited

    On March 5, 1999, Insignia acquired St. Quintin, a British real estate
services firm headquartered in London. The operations of St. Quintin have been
merged with Richard Ellis Group Limited ("REGL") and the combined entities now
operate under the name Richard Ellis St. Quintin throughout the United Kingdom.
The base purchase price was approximately $32.0 million. Additional purchase
consideration of up to approximately $12.0 million over the next four years is
contingent on the future performance of St. Quintin. The purchase was funded
with approximately $24.3 million in borrowings under Insignia's revolving credit
facility, the issuance of 305,981 shares of Insignia common stock and assumed
options to purchase 611,962 shares of Insignia common stock.

    Douglas Elliman

    On June 23, 1999, Insignia acquired Douglas Elliman, a residential real
estate brokerage firm located in New York City. The base purchase price was
approximately $65 million, paid in cash from borrowings under Insignia's
revolving credit facility. Additional purchase consideration of up to $10
million over the next five years is contingent on the future performance of
Douglas Elliman.

    Other Information

    Pro forma results of operations for the nine months ended September 30, 1999
and 1998, respectively, assuming consummation of the Douglas Elliman (1999), St.
Quintin (1999) and REGL (1998) acquisitions as of January 1, 1998 are as
follows:

<TABLE>
<CAPTION>
                                                    Nine Months Ended
                                                      September 30,
                                                      -------------
                                                 1999              1998
                                                 ----              ----
                                          (In thousands, except per share data)
<S>                                            <C>               <C>
Revenues                                       $514,199          $460,402
                                               ========          ========
Net income                                        8,900            13,595
                                               ========          ========
Per share amounts - assuming dilution          $    .38          $    .60
                                               ========          ========
</TABLE>

8.  Merger Related Expenses

    In connection with the acquisition of St. Quintin and its subsequent
combination with REGL, the Company incurred a one-time charge of $5.5 million in
the first quarter of 1999. This charge reflects the provision for the costs of
subleasing excess office space of REGL as a result of combining the operations
and, to a lesser extent, severance costs. The integration of REGL and St.
Quintin onto a single consolidated platform is substantially in place and
achieving cost savings ahead of expectations.

                                       9
<PAGE>

9.  Comprehensive Income

    Total comprehensive income for the nine months ended September 30, 1999
totaled $3.5 million and was comprised of net income of $3.3 million, an
unrealized gain on available-for-sale securities of $544,000 and foreign
currency translation losses of $331,000. The following table sets forth the
components of accumulated other comprehensive income (In thousands):

<TABLE>
<CAPTION>
                                                                           Accumulated Other
                                      Foreign Currency  Unrealized Gains    Comprehensive
                                         Translation      On Securities         Income
                                      ------------------------------------------------------
<S>                                        <C>               <C>                <C>
Balance at December 31, 1998               $ 141             $  --              $ 141

Current period change, before tax           (581)              389
                                                                                  970
Income tax benefit (expense)                 250              (426)              (176)
                                           -----             -----              -----
                                            (331)              544                213
                                           -----             -----              -----
Balance at September 30, 1999              $(190)            $ 544              $ 354
                                           =====             =====              =====
</TABLE>

10. Material Contingencies

    The Company and certain subsidiaries are defendants in lawsuits arising in
the ordinary course of business. Such lawsuits are primarily insured claims
arising from accidents at managed properties. Claims may result in substantial
compensatory and punitive damages. Management believes that such lawsuits will
be resolved without material loss to the Company or its subsidiaries.

    Pursuant to the merger agreement among Insignia, Former Parent and AIMCO,
Insignia and AIMCO were required to settle in cash any differences between the
actual adjusted net liabilities of Former Parent on the date of the Merger and
$458 million of adjusted net liabilities stipulated in the merger agreement.
Settlement negotiations were concluded in July 1999, resulting in a final
payment by AIMCO to Insignia in October 1999 of approximately $1.4 million
(including post-closing interest of approximately $95,000).

11. Equity

    During the nine month period ended September 30, 1999, the Company had the
following changes in stockholders' equity:

    a)   Exercise of stock options and warrants representing 151,384 shares of
         common stock at exercise prices ranging from $.01 to $11.72 per share.

    b)   Issuance of 81,005 shares of common stock under the Company's Employee
         Stock Purchase Program at prices ranging from $8.92 to $10.31.

    c)   Issuance of 34,975 shares of common stock for vested restricted stock
         awards.

    d)   Net income of $3,333,000 for the nine months ended September 30, 1999.

    e)   Accrued compensation of $553,000 relating to restricted stock awards.

    f)   Repurchase of 1,134,900 shares of common stock at an average price of
         $11.00 per share (or approximately $12.5 million in aggregate).

    g)   Issuance of 305,981 shares of common stock and the assumption of
         options to purchase up to 611,962 shares of common stock (at an
         exercise price of $6.575) pursuant to the St. Quintin acquisition.

    h)   Adjustments of $2.3 million to additional paid-in capital for certain
         amounts estimated on the Spin-Off date.

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

                                       10
<PAGE>

INTRODUCTION

    Insignia is among the leading providers of commercial and residential real
estate services in the United States and the United Kingdom with a growing
presence throughout Europe. Insignia, which operates in two principal business
segments (commercial and residential services), provides a diversified array of
real estate services including tenant representation, property leasing and
management, consulting, investment sales, development, redevelopment, debt
placement, single-family home brokerage and mortgage origination, apartment
brokerage and leasing, fund management and other services. Revenues from these
services totaled $193.2 million and $464 million for the three and nine months
ended September 30, 1999, respectively, reflecting strong gains of 47% and 29%
compared to the same periods of 1998.

    The commercial services businesses include Insignia/ESG's domestic
operations, REStQ in the United Kingdom, Insignia RE GmbH in Germany, Insignia
RE SpA in Italy and Insignia RE Belgium SA. The commercial businesses produced
aggregate service revenues of $334.4 million for the first nine months of 1999,
accounting for approximately 72% of the Company's total service revenues for the
period. Insignia continues to strengthen its position as a leader in commercial
real estate services internationally through the acquisition of St. Quintin and
its operational merger with REGL in March 1999 and the recent establishment of
offices in Milan, Italy and Brussels, Belgium. Through REStQ, which produced
service revenues of $68.4 million for the first nine months of 1999, Insignia
holds a "top three" market position in the United Kingdom. The combined strength
of REStQ in London and Insignia/ESG in New York gives Insignia a commanding
position in two of the world's most important global business centers.

    The residential services businesses include Realty One, Insignia Residential
Group and Douglas Elliman. Realty One, located in Cleveland, Ohio, is the
largest provider of residential real estate brokerage services in Ohio and the
eighth largest (based on unit volume) in the United States according to Real
Trends "Big Broker Report" published in May 1999. Insignia Residential Group is
the largest provider of management services to cooperative and condominium
owners in the New York metropolitan area, with a total portfolio of
approximately 62,000 units. Douglas Elliman is the largest provider of
residential brokerage services in New York City. On a combined basis, Realty One
and Douglas Elliman comprise the one of the largest residential brokerage
businesses in the United States, with aggregate transactions valued at
approximately $4 billion for the first nine months of 1999. The residential
businesses produced aggregate service revenues of $129.6 million for the first
nine months of 1999.

    In addition to providing real estate services, Insignia also pursues
opportunities to purchase real estate assets primarily through co-investment
ventures with its institutional partners to acquire existing properties, and to
a lesser extent, property held for development. At September 30, 1999, Insignia
held ownership interests in 20 co-investment partnerships which owned an
aggregate of 5.7 million square feet of commercial property and 3,500
multi-family apartment units and Insignia held interests as an owner and
developer of five office and industrial projects in various stages of
development. Insignia's real estate ownership in co-investment partnerships
typically ranges from 5% to 35% and from 30% to 100% in the development
projects. Insignia also owns a 155,000 square foot retail property located in
Norman, Oklahoma that is consolidated in the Company's financial statements at
September 30, 1999. Additionally, Insignia purchased a 136,000 square foot
retail property located in St. Petersburg, Florida in October 1999. All real
estate ownership operations are managed as a component of the Company's
commercial services business.

    Insignia's primary objective is to increase earnings and stockholder value
through internal growth and the acquisition of select businesses. In addition to
net income, Insignia uses EBITDA (defined as real estate service revenues less
direct expenses and administrative costs), Net EBITDA (defined as income before
depreciation, amortization, income taxes and non-recurring one-time charges) and
Net EBITDA less income taxes, as measures of the Company's financial
performance.

                                       11
<PAGE>

BASIS OF PRESENTATION

    The comparative financial results for the three and nine months ended
September 30, 1998 present the results of operations of those Insignia
Businesses spun-off from Former Parent in September 1998 as if the Spin-Off
occurred at the beginning of the year. Administrative expenses in 1998, which
included, among other things, investment banking, information technology, legal,
finance, accounting and facilities expenses of the Former Parent, were allocated
to Insignia for all periods prior to the Spin-Off. These administrative
allocations, which totaled $5.6 million for the nine months ended September 30,
1998, were based on a detailed analysis of the operations of Former Parent using
various methods, including employee headcount, acquisition activities and
estimated management time devoted to the operations of those Insignia
Businesses.

FINANCIAL CONDITION

    Total assets increased by $156.8 million in the first nine months of 1999 to
$752.3 million at September 30, 1999. The primary source of the increase relates
to the acquisitions of Lynch Murphy in Boston (March 1999), St. Quintin in the
United Kingdom (March 1999) and Douglas Elliman in New York City (June 1999).
These acquisitions, comprised substantially of intangible assets, resulted in
the $102 million increase in costs in excess of net assets of acquired
businesses. The remainder of the asset growth was attributable to continued
investment in real estate development property and increased receivables from
service activities. Liabilities increased by $152.7 million to $364.9 million at
September 30, 1999. The increase is due principally to borrowings of
approximately $110 million on Insignia's revolving credit facility for
acquisition financing and the assumption of liabilities in connection with the
1999 acquisitions mentioned above. Additionally, increases in commission's
payable, resulting from the expansion of domestic brokerage activities, and real
estate mortgage financing contributed to the overall rise in liabilities.

                                       12
<PAGE>

RESULTS OF OPERATIONS

    The following table sets forth certain data derived from the Company's
condensed consolidated statements of income for the three and nine months ended
September 30, 1999 and 1998, respectively (In thousands):

<TABLE>
<CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                                    September 30,                 September 30,
                                                    -------------                 -------------
                                                 1999           1998           1999           1998
                                                 ----           ----           ----           ----
<S>                                           <C>            <C>            <C>            <C>
REVENUES
    Commercial
       Insignia/ESG                           $ 101,031      $  77,890      $ 262,587      $ 220,794
       Europe                                    27,568         17,193         71,837         40,403
    Residential                                  64,624         36,638        129,605         97,163
                                              ---------      ---------      ---------      ---------
       Real estate services                     193,223        131,721        464,029        358,360

COST AND EXPENSES
    Real estate services                        169,719        118,091        420,630        318,401
    Administrative                                2,620          2,033          7,247          5,561
                                              ---------      ---------      ---------      ---------

EBITDA - REAL ESTATE SERVICES (1)                20,884         11,597         36,152         34,398

    Real estate FFO (2)                             813            378          2,916          1,350
    Interest and other income                     1,190            943          3,452          2,103
    Interest expense                             (2,867)          (382)        (5,386)        (1,088)
    Minority interests                               --            113             --            259
                                              ---------      ---------      ---------      ---------

NET EBITDA (1)                                   20,020         12,649         37,134         37,022

    Income tax provision                         (5,406)        (2,460)        (7,150)        (7,689)
                                              ---------      ---------      ---------      ---------

NET EBITDA LESS INCOME TAXES (1)                 14,614         10,189         29,984         29,333

    Merger related expenses                          --             --         (5,533)            --
    Income tax benefit                               --             --          1,715             --

    Depreciation - property and equipment        (1,987)        (1,096)        (4,589)        (2,441)
    Amortization of intangibles                  (6,410)        (5,244)       (17,331)       (14,822)
    Depreciation - real estate                   (1,199)          (843)        (3,122)        (2,673)
    Gains on sale of real estate                    388             --          2,209             --
                                              ---------      ---------      ---------      ---------
NET INCOME                                    $   5,406      $   3,006      $   3,333      $   9,397
                                              =========      =========      =========      =========
</TABLE>

(1) Neither EBITDA, Net EBITDA nor Net EBITDA less income taxes, as disclosed
above, should be construed to represent cash provided by operations determined
pursuant to generally accepted accounting principles ("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.

(2) Funds From Operations ("FFO") is defined as income or loss from real estate
operations before depreciation, gains or losses on sales of property and
provisions for impairment.

                                       13
<PAGE>

    Insignia reported increases in total service revenues and Net EBITDA for the
third quarter of 1999 of 47% to $193.2 million and 58% to $20 million,
respectively, compared to the same period of 1998. Over $40 million or 65% of
the revenue growth was attributable to 1999 acquisitions with the remainder
representing internal growth. The third quarter results for 1999 reflected the
material recovery from the lingering effects of the capital market turmoil that
slowed commercial real estate activity earlier in the year and robust
residential brokerage activities of the New York based Douglas Elliman business.
The third quarter was adversely affected by the continued slow recovery in the
hotel sector.

    Insignia's results for the nine months ended September 30, 1999 reflected
service revenue gains of 29% to $464 million compared to the same period of
1998. Net EBITDA for the first nine months of 1999, totaling $37.1 million,
represented relatively flat results in comparison to the $37 million for the
same period of 1998. The nine-month comparisons were favorably impacted by
Douglas Elliman, which has contributed service revenues and EBITDA of $30.5
million and $5.7 million, respectively, since its acquisition in June 1999. By
contrast, the nine-month comparisons were adversely affected by substantial
differences in first quarter results (compared to 1998) of Realty One and
Insignia/ESG attributable to seasonal factors. Realty One, which realized a
record first quarter in 1998 as a result of an uncharacteristically mild winter
in Cleveland, experienced a more normal 1999 winter in Cleveland resulting in a
return to normal seasonal sales patterns. Insignia/ESG, while not directly
impacted by weather conditions, has traditionally produced a majority of its
revenues and EBITDA in the second half of the year. In 1998, Insignia/ESG
experienced a reversal of this normal pattern with the first quarter producing
the highest quarterly EBITDA for the year due to an unusual abundance of large
transactions.

    Earnings for the first nine months of 1999 were further adversely affected
by the first quarter one-time charge of $5.5 million ($3.8 million, net of tax)
for merger related expenses of REStQ. These expenses represent the costs of
excess office space to be sublet and other consolidation expenses in connection
with the operational merger of St. Quintin and REGL.

    As a result of the foregoing and as more fully described below, net earnings
and diluted per share for the third quarter of 1999 increased 80% to $5.4
million and 85% to $.24, respectively, and for the first nine months of 1999
declined to $3.3 million and $.15, respectively, compared to the same periods in
1998.

Commercial Real Estate Operations

    Real Estate Services

    Commercial services operations reported revenue increases of 35% to $128.6
million for the third quarter and 28% to $334.4 million for the first nine
months of 1999 compared to the same periods of 1998. European operations, most
notably REStQ, accounted for approximately 31% of the third quarter growth and
43% of the growth for the nine months. The remainder of the revenue growth was
attributable to the Lynch Murphy acquisition ($8.1 million) and internal growth
from the expansion of services in key US markets.

    In Europe, service revenues increased 60% to $27.6 million for the third
quarter and 78% to $71.8 million for the first nine months of 1999 compared to
the same periods of 1998. These increases are attributable primarily to the full
nine month impact of results for REGL in 1999 (compared to seven months in
1998), the acquisition and operational merger of St. Quintin with REGL in March
1999 and the full nine month impact of the German operation established in June
1998.

    The domestic operations of Insignia/ESG reported revenue increases of 30% to
$101 million for the third quarter of 1999 and 19% to $262.6 million for the
first nine months of 1999, compared to the same periods of 1998. As noted above,
$8.1 million of the domestic revenue growth for the first nine months of 1999
was attributable to the March 1999 acquisition of Lynch Murphy in Boston.
Additionally, $22.9 million of the service revenue increase for the nine months
of 1999 was a result of the full nine-month impact of the mid-1998 acquisitions
of Hotel Partners and Jackson Cross. Revenue gains were reported for the third
quarter and nine months of 1999 in virtually all regions of Insignia/ESG
reflecting the strength in the domestic commercial services organization.

    Commercial services operations produced EBITDA of $15.3 million for the
third quarter of 1999 and $31.4 million for the first nine months of 1999,
reflecting a 55% increase for the quarter and flat results for the year,
compared to 1998. European operations contributed EBITDA of $3.5 million to
commercial services for the third quarter and $7.4 million for the first nine
months of 1999, reflecting increases of $2.7 million and $4.5 million,

                                       14
<PAGE>

respectively, over the same periods of 1998. These significant EBITDA gains are
primarily the product of a robust real estate market in the United Kingdom, in
combination with the full recognition of cost savings and revenue growth
associated with the acquisition and merger of St. Quintin with REGL. In
addition, the German operation contributed EBITDA of $408,000 and $756,000 for
the third quarter and first nine months of 1999, reflecting a 62% increase for
the first nine months of 1999, compared to 1998.

    Domestic operations of Insignia/ESG reported an EBITDA increase of 30% to
$11.7 million for the third quarter of 1999. These results were fueled by the
New York region, which closed Insignia/ESG's two largest 1999 brokerage
transactions and produced an EBITDA increase of 38% to $10 million on $49.8
million in total service revenues. For the first nine months of 1999, domestic
EBITDA declined 16%, or $4.6 million, to $24 million compared to 1998. The major
contributing factors to this decline were the previously noted year to year
difference in the New York market experienced during the first quarter, in
combination with a $5 million increase in back office support costs resulting
primarily from higher information technology costs.

    Real Estate Ownership

    FFO from real estate ownership produced increases of 115% to $813,000 and
116% to $2.9 million for the three and nine months of 1999 over the same periods
of 1998. These increases reflect the continued enhancement of operating
performance at the properties resulting from improved occupancy and further cost
efficiencies.

    The difference between real estate FFO and equity earnings is represented by
depreciation of real estate, gains or losses from sales of property and
provisions for impairment. Insignia reported equity earnings from real estate
ownership of $69,000 and $2 million for the third quarter and first nine months
of 1999, compared to losses of $465,000 and $1,323,000 for the same periods of
1998. Equity earnings for the first nine months of 1999 were favorably impacted
by realized gains of $2.2 million attributable to the disposition of four
co-investment properties.

    Residential Services

    Residential services operations produced revenue increases of 76% to $64.6
million for the third quarter of 1999 and 33% to $129.6 million for the first
nine months of 1999 compared to the same periods in 1998. The majority of the
revenue growth was attributable to Douglas Elliman, which produced service
revenues totaling $27.4 million for the third quarter and $30.5 million for the
period since its acquisition in June 1999. Douglas Elliman has capitalized on
the robust market for cooperative and condominium sales in New York City with
significant growth in its sales volume over 1998. Through the first nine months
of 1999, Douglas Elliman closed 2,615 transactions valued at over $1.7 billion,
reflecting increases of 10% in sales volume and 25% in transaction value
compared to the same period of 1998. Realty One revenues increased by 2% to
$30.7 million for the third quarter and 2% to $78.9 million for the first nine
months of 1999 compared to the same periods of 1998. Insignia Residential Group
revenues increased 1% to $6.5 million and 3% to $20.1 million for the third
quarter and first nine months of 1999, respectively, compared to the same
periods of 1998.

    Residential services operations produced EBITDA gains of 118% to $8.3
million for the third quarter and 42% to $12 million for the first nine months
of 1999 over the same periods of 1998. Consistent with revenues, the EBITDA
increases are substantially the result of the June 1999 acquisition of Douglas
Elliman, which produced EBITDA of $5 million for the third quarter of 1999 and
$5.7 million for the period since acquisition in June 1999. Realty One reported
an EBITDA decline of 14% to $5.9 million for the first nine months of 1999 over
the same period of 1998. This decline was primarily the result of the previously
noted year to year difference attributable to the reversion to a more normal
seasonal sales pattern in the first quarter of 1999 compared to the record level
experienced in the first quarter of 1998. Insignia Residential Group reported an
EBITDA decline of 78% to $340,000 for the first nine months of 1999 due
substantially to higher lease expense and support costs, compared to 1998.

                                       15
<PAGE>

    Other Expenses Affecting Net Income

    Administrative costs increased 29% to $2.6 million and 30% to $7.2 million
for the third quarter and first nine months of 1999, respectively, over 1998
levels for the same periods. Approximately $750,000 of the increase for the
first nine months of 1999 was attributable to professional fees incurred in
connection with aborted acquisition transactions. The remainder of the increase
can be traced principally to changes in the overhead cost structure of the
Company resulting from the Spin-Off in September 1998. Administrative costs
totaling $5.6 million for the first nine months of 1998 consisted entirely of
allocations of Former Parent overhead costs (see Basis of Presentation above).

    Interest expense increased by $2.5 million to $2.9 million for the third
quarter of 1999 and $4.3 million to $5.4 million for the first nine months of
1999, respectively, compared to the same periods of 1998. These increases are
due to interest charges resulting from borrowings of $110 million on the
Company's revolving credit facility to finance the acquisitions of Lynch Murphy,
St. Quintin and Douglas Elliman. Interest expense for the third quarter and
first nine months of 1998 was comprised of interest on Realty One borrowings,
principally under its warehouse line used in the origination of mortgage loans
for sale, and REGL borrowings substantially secured by restricted cash deposits.
The results for 1998 do not include any interest expense allocation from the
indebtedness of Former Parent.

    Depreciation and amortization of intangibles increased 32% to $8.4 million
for the third quarter and 27% to $21.9 million for the first nine months of
1999, respectively, compared to the same periods of 1998. These increases are
the result of increased capital investments in property and equipment and
acquisitions substantially comprised of purchased intangibles.

    Results for the first nine months of 1999 are adversely affected by the
one-time charge of $5.5 million for merger related expenses in connection with
the acquisition of St. Quintin and its combination with REGL in March 1999. As
previously noted, this one-time charge substantially relates to the provision
for costs associated with excess office space to be subleased.

    Income taxes for the first nine months of 1999 are impacted by lower income
combined with an increase in the effective tax rate compared to the same period
of 1998. Income taxes for 1999 were impacted by a $1.7 million benefit, at UK
statutory tax rates (31%), attributable to the previously mentioned one-time
merger related expenses.

LIQUIDITY AND CAPITAL RESOURCES

    Insignia's liquidity and capital resources consist of its cash, cash
provided from operations and available credit under its $185 million revolving
credit facility. Insignia's total indebtedness at September 30, 1999 included
approximately $110 million outstanding on this facility, notes issued to sellers
of acquired businesses of $9.3 million, a $11.8 million mortgage warehouse line
of credit (financing single family mortgages held for sale), mortgage notes of
$22.2 million (which are non-recourse to the Company) on controlled real estate
assets and other debt of subsidiaries totaling $17.1 million.

    Unrestricted cash at September 30, 1999 was $52.1 million, representing a
slight decline from $53.5 million at December 31, 1998. The Company uses Net
EBITDA and Net EBITDA less income taxes as measures of liquidity and working
capital provided by operations. Fluctuations in elements of working capital are
partly attributable to the generation of revenues that are transactional in
nature and therefore affected by seasonality and capital market conditions. Such
fluctuations are generally temporary and minor, with the exception of incentive
compensation, since residential operations generally carry minimal receivables
and domestic leasing commissions in the commercial sector carry a corresponding
commission liability payable to brokers. Incentive compensation is accrued over
the course of each year based upon financial performance and generally paid in
the first quarter of the succeeding year.

    The Company reported Net EBITDA of $37.1 million and $37 million and Net
EBITDA less income taxes of $30 million and $29.3 million for the nine months
ended September 30, 1999 and 1998, respectively. As compared to net income, the
Net EBITDA measures effectively eliminate the impact of non-cash charges for
depreciation, amortization of intangible assets and other non-recurring charges.
Management believes that the presentation of such supplemental measures enhance
a reader's understanding of the Company's operating performance, as they provide
a measure of generated cash available for use to service debt and for other
required or discretionary

                                       16
<PAGE>

purposes. Insignia generated $16.4 million in net cash from operating activities
for the nine months ended September 30, 1999, reflecting an increase of 99% over
comparable levels of $8.2 million for the same period of 1998.

    Capital expenditure requirements are not normally extensive, consisting
primarily of periodic computer, furniture and fixture replacements incurred in
connection with acquisitions or other personnel additions. Capital expenditures
totaling approximately $16.2 million for the first nine months of 1999 have
materially exceeded the Company's normal expenditures. These expenditures
consisted primarily of leasehold improvements and furniture and fixtures from
office relocation and expansion and computer and management system costs (See
also Year 2000 Issue). Over $10 million of total 1999 capital expenditures
pertain to the domestic commercial operations of Insignia/ESG. Insignia expects
capital expenditures to remain at significant levels for the remainder of 1999
and in to 2000 due to the continued development and implementation of accounting
and management systems at each of the Company's principal operating units.

    Insignia expects to use cash on hand and net cash provided by operating
activities to fund capital expenditures primarily for computer related
purchases, acquisitions (including the payment of contingent payments earned)
and to make principal payments on the Company's outstanding indebtedness. The
Company anticipates that its existing sources of liquidity, including cash on
hand, operating cash flows and available credit under its revolving credit
facility, will be sufficient to meet the Company's working capital and capital
replacement needs for the foreseeable future and, in any event, for at least the
next twelve months. The Company's working capital needs are reassessed on a
routine basis and as acquisitions are identified and pursued.

    Insignia expects to use all or a portion of its Net EBITDA remaining after
capital expenditures and taxes, together with its unused credit facilities, to
finance selective acquisitions in its existing business lines and complementary
businesses, and to expand its real estate ownership.

THE YEAR 2000 ISSUE

Introduction

    The Year 2000 Issue relates to the inability of many computer systems to
recognize dates for the year 2000 and afterward. Systems that use only two
digits to designate a year (e.g., 2000 is entered as "00"), can malfunction when
dates are used in processing data and recalling data from storage. The problems
arising from such programming have come to be known as "The Year 2000 Issue."
The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000. If not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failures or
miscalculations causing disruptions of operations, including such things as a
temporary inability to process transactions, pay invoices or conduct similar
routine business operations without interruption.

State of Readiness

    Former Parent began addressing the Year 2000 Issue prior to the September
1998 Spin-Off. Insignia, under the guidance of its Year 2000 Program team, has
developed a phased Year 2000 readiness plan to address its internal systems that
are comprised of both information technology ("IT") and non-IT systems. The plan
consists of the following seven key phases: awareness, inventory, risk
assessment, remediation, quality assurance, implementation and contingency
planning. The Company has substantially completed its awareness phase and will
continue this phase through December 31, 1999 to maintain a heightened sense of
awareness to the Year 2000 Issue. The Company, with the assistance of outside
consultants, has completed its comprehensive inventory and assessment of its
internal IT systems.

    Insignia believes that its planned upgrade of existing IT systems and/or
conversions to new systems will enable it to address the Year 2000 Issue without
material operational difficulties. The Company is continuing its purchase and
implementation of a new generation of computer systems for the
condominium/cooperative management business, new financial systems for its
international commercial services businesses and the upgrade of its broker
productivity and target marketing systems for the single-family home brokerage
business. The implementation of these new and upgraded systems is anticipated to
be complete and tested for quality assurance by the end of November 1999. Based
upon the results of the assessment phase, the Company will determine the
appropriate levels of remediation and the areas in which detailed contingency
planning will be required. The remediation phase of the Company's IT systems is
anticipated to be completed during the fourth quarter of 1999. The Company
expects to complete the

                                       17
<PAGE>

remediation of its technical infrastructure first, with remediation of its
mission-critical applications to be completed shortly thereafter. Insignia is
also assessing its exposure to the Year 2000 issues other than those associated
with its internal IT systems in order to develop a plan and contingencies to
address these risks. This assessment plan includes consideration of the
Company's leased facilities (including embedded systems such as devices used to
control, monitor or assist the operation of equipment and machinery at such
facilities), third party vendors and service suppliers.

    The Company believes that many of its customers, suppliers and other third
parties with whom the Company transacts business are also likely to be affected
by the Year 2000 Issue, which could in turn affect the Company. The ability of
such third parties to adequately address their own Year 2000 issues is outside
the Company's control. At this time, Insignia is in the process of reviewing the
Year 2000 readiness of its major suppliers and customers. There can be no
assurance that all aspects of the Year 2000 Issue, particularly those related to
the efforts of customers, suppliers or other third parties, will be fully
resolved. Because of the diversity of Insignia's base of customers and
suppliers, in the event that one or more customers or suppliers fail to achieve
Year 2000 readiness, the Company believes that results of operations, financial
position or cash flows should not be materially adversely affected.

Costs to Address the Company's Year 2000 Issues

    Insignia expects its Year 2000 costs, including the costs of external
consultants, technical resources and approximately $1.5 million in capital
expenditures, to approximate $3.5 million in total. Approximately $2.8 million
of that amount has been incurred through September 30, 1999. The Company is
funding all Year 2000 efforts with operating cash flows and cash on hand.
Several factors that could impact the Company's ability to make the necessary
modifications or replacements include, but are not limited to, the availability
and cost of trained personnel and the ability of such personnel to locate and
correct all relevant computer codes or to replace embedded computer chips in
affected systems. If such modifications are not completed on a timely basis or
are substantially more costly to implement than anticipated, the Company's
business, financial condition or the results of operations could be materially
adversely affected.

    Properties for which the Company provides management services for third
party owners rely on a variety of third party suppliers to provide critical
operating services. These suppliers may utilize systems and embedded
technologies to control the operation of building systems such as utilities,
lighting, security, elevators, heating, ventilation and air conditioning
systems. The Company is in the process of obtaining assurances from suppliers as
to their Year 2000 readiness and preparing contingency plans, including the
identification of alternative suppliers. The Company does not control these
third party suppliers, and for some suppliers, such as utility companies, there
may be no feasible alternative suppliers available. The failure of these
suppliers' systems could have a material adverse effect on the operations of the
affected property, and widespread failures could have a material adverse effect
on the Company. THIS INFORMATION IS INTENDED SOLELY TO ADVISE THE INVESTMENT
COMMUNITY OF THE STEPS THAT THE COMPANY IS TAKING TO ASSIST OWNERS OF
COMPANY-MANAGED PROPERTIES WITH YEAR 2000 ISSUES RELATING TO NON-IT SYSTEMS. NO
OWNER OR TENANT IN A COMPANY-MANAGED PROPERTY SHOULD RELY ON THIS STATEMENT AS
AN INDICATION THAT THE COMPANY HAS OR WILL INVENTORY OR ASSESS THE MANAGED
PROPERTY ON ITS BEHALF OR THAT; IN FACT, SUCH PROPERTY IS OR WILL BE IN A STATE
OF YEAR 2000 READINESS. INQUIRIES IN THIS REGARD SHOULD BE ADDRESSED TO
APPROPRIATE PROPERTY MANAGEMENT PERSONNEL. Costs of remediating Year 2000 issues
associated with non-IT systems at managed properties should be borne exclusively
by the owners of such properties.

Risks and Contingency Plans

    The contingency planning process involves identifying reasonably likely
business disruption scenarios that, if they were to occur, could create
significant problems in the critical functions or operations of each business
unit. Each of the Company's business units is developing plans to respond to
such scenarios so that critical business functions and operations may continue
to operate with minimal disruption. Insignia anticipates that the contingency
plans will be completed during the fourth quarter 1999, and that they will be
continue to be reviewed and updated, as necessary, up to and into 2000. The
Company has projected that the most likely worst case Year 2000 scenario would
be the result of unidentified Year 2000 issues, which result in unplanned
downtime at a rate that is higher than normally experienced. Potential
disruptions of this nature should not have a material adverse impact on the
Company's results of operations, financial position or cash flow. Although
Insignia is not aware of any threatened claims related to the Year 2000 Issue,
it may become subject to litigation arising from such claims and depending on
the outcome, such litigation could have a material adverse effect on the
Company. The Company has obtained

                                       18
<PAGE>

certain insurance coverage to offset these and other business risks related to
the Year 2000 Issue, however, the extent of any ultimate exposure, if any, is
not yet known at this time.

ACQUISITIONS

    Insignia has completed four strategic acquisitions in 1999 and continues to
evaluate acquisition opportunities in pursuit of its global growth strategy.
This strategy focuses on the development of each of its international and
domestic businesses, while simultaneously seeking principal opportunities to
invest capital in real estate assets in partnership with its clients. Such
undertakings are expected in both commercial and residential real estate assets
and services. Insignia also expects that it may pursue opportunities to
diversify its lines of business and investment objectives as circumstances and
opportunities change. Due to the substantial non-cash amortization incurred by
the Company as a result of purchased goodwill and other intangibles,
depreciation of real estate, and interest expense charges associated with
acquisition financing, past and future acquisitions may adversely affect net
income.

RECENT ACCOUNTING PRONOUNCEMENTS

    In 1998, the Accounting Standards Executive Committee issued Statement of
Position 98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"), which
is effective for financial statements for fiscal years beginning after December
15, 1998. SOP 98-5 requires costs of start-up activities and organization costs
to be expensed as incurred. Initial application should be reported as the
cumulative effect of a change in accounting principles and expensed in the first
quarter in the year of adoption. Insignia has no amounts capitalized that are
affected by the requirements of SOP 98-5.

    In 1998, the Accounting Standards Executive Committee issued Statement of
Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use ("SOP 98-1"). Under SOP 98-1, qualifying computer
software costs are required to be capitalized and amortized to income over the
software's estimated useful life. SOP 98-1 is effective for fiscal years
beginning after December 15, 1998. The adoption of SOP 98-1 has not had a
material effect on the Company.

    In June 1998, the Financial Accounting Standards Board issued SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 133 requires
the Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives are either offset against the change in fair value
of assets, liabilities, or firm commitments through earnings or recognized in
other comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. SFAS 133 is effective for financial statements for
fiscal years beginning after June 15, 2000. Management has not completed its
review of SFAS 133, but does not anticipate that its adoption will have a
material effect on the Company.

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 negative
impact in the foreseeable future. Insignia's exposure to market risk from
changing prices consists primarily of fluctuations in rental rates of properties
managed, market interest rates on residential mortgages and debt obligations,
real estate property values, and foreign currency fluctuations of its European
operations.

    The revenues of the property management operations with respect to rental
properties are highly dependent upon the aggregate 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.

    The revenues associated with the commercial services business 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.

                                       19
<PAGE>

    Changes in market interest rates on residential mortgage loans and changes
in real property values in northern Ohio and New York City impact the revenues
of the Company's residential brokerage and mortgage origination businesses.
Recent price and cost trends have not significantly affected profit margins;
however, changes in these trends in the future could have a potentially
significant impact on the Company's profitability.

NATURE OF OPERATIONS

    Revenues from tenant representation, investment sales, debt placements,
agency leasing and single family home brokerage, which collectively comprise a
substantial portion of Insignia's service revenues, are transactional in nature
and therefore subject to seasonality and business and capital market conditions.
Such seasonal and other factors materially impact the Company's quarterly
results, particularly revenues, earnings and cash flows.

    Consistent with the industry in general, the commercial services segment has
historically experienced its lowest quarterly operating results in the first
quarter of each year as a result of the desire of clients to complete
transactions by calendar year-end. This phenomenon generally results in higher
revenues and income in the last half of the year and a lull in transactional
activity and corresponding operating results during the first quarter.

    As previously noted, operating results in the first nine months of 1998
significantly exceeded historical norms due to an unusual volume of large
leasing transactions in the commercial segment (principally in the New York
marketplace), while the fourth quarter of 1998 experienced lower than normal
activity because of adverse conditions in capital markets. The operating results
for the first nine months of 1999 reflect the reversion of results to historical
seasonal patterns, as well as some lingering effects from the unfavorable
capital market conditions in late 1998.

    The residential services segment is materially impacted by the seasonal
factors of Realty One's home brokerage and mortgage origination business. Due to
the geographic location of Realty One's operations in Ohio, weather conditions
have historically had an adverse effect on single family home sales resulting in
operating losses during the first quarter of each year. The volume of Realty
One's home brokerage and mortgage transactions typically peak during the spring
and summer months, coinciding with both weather conditions and the increased
tendency for moving between school years, resulting in higher revenues and
earnings during the second and third quarters of each year.

    A significant portion of the expenses associated with transactional
activities in the commercial and residential segments is directly correlated to
revenue. As a consequence of the seasonality of revenues, the Company's income
is normally expected to be lowest in the first quarter and highest in the fourth
quarter of each year. Insignia continues to believes that its large, diversified
client base, geographical reach, overall size and number of annual transactions
help to minimize the impact of seasonality and other changes in business and
capital market conditions on annual revenues and earnings.

MARKET RISK AND RISK MANAGEMENT POLICIES

    Market risk is the exposure to loss resulting from changes in interest
rates, foreign currency exchange rates, commodity prices and equity prices.
Insignia's primary market risk exposure consists of changes in foreign currency
exchange rates and interest rates.

    The Company's earnings and cash flows are subject to fluctuations due to
changes in foreign currency exchange rates from the Company's operations in
foreign jurisdictions. In addition to the United States, the Company currently
conducts business in the United Kingdom, Germany, Italy and Belgium. As a
result, the Company's financial results could be significantly affected by
factors such as changes in foreign currency exchange rates and weak economic
conditions in these foreign markets. Fluctuations in foreign currency exchange
rates are not expected to have a material impact on the Company.

    The Company's interest income and expense are most sensitive to the changes
in the general level of interest rates. In this regard, changes in interest
rates affect the interest earned on the Company's cash equivalents and
short-term investments 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. An increase or decrease of 1% in
prevailing interest rates would have a net impact of approximately $1.4 million
on the Company's results of operations on an annualized basis at current debt
levels.

                                       20
<PAGE>

FORWARD LOOKING STATEMENTS

    Certain items discussed in this report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and as such may 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. These statements use words such as "believe",
"expect", "should" and "anticipate". Such information includes, without
limitation, statements regarding the results of litigation, the effects of the
Spin-Off and the Merger, the effects of Year 2000 Issues, Insignia's future
financial performance and estimated capital expenditures. Actual results will be
affected by a variety of risks and factors, including, without limitation,
national and local economic conditions and real estate risks and financing
risks.

    With respect to the Year 2000 Issues, actual results may be affected by the
availability of qualified personnel and other information technology resources,
the ability to identify and remediate all date-sensitive lines of computer code
or to replace embedded computer chips in affected systems or equipment and the
actions and ability of third party customers and suppliers to successfully
address their Year 2000 Issues.

    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.

Item 3.  Quantitative and Qualitative Disclosure of Market Risk

    The information called for by this item is provided under the caption
"Market Risk and Risk Management Policies" under Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations.

                                       21
<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

    See Note 10 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

         27.1 Financial Data Schedule

    a)   Reports on Form 8-K

         The following reports on Form 8-K were filed during the quarter
         ended September 30, 1999:

         1.   Form 8-K dated June 23, 1999 and filed July 8, 1999 disclosing
              the Registrant's acquisition of Douglas Elliman Brokerage.

         2.   Form 8-K/A dated June 23, 1999 and filed August 31, 1999
              disclosing the financial statements of Douglas Elliman Brokerage
              (amending Form 8-K filed July 8, 1999).

                                       22
<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