<PAGE>

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

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

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

                                    FORM 10-Q

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

              FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

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

              For the Transition Period from _________ to _________

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

                         Commission File Number 1-14373

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes X  No   .
                                      ---   ---

At May 1, 2000, the Registrant had 21,053,489 shares of Common Stock
outstanding.

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



<PAGE>


                         INSIGNIA FINANCIAL GROUP, INC.

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2000

                                    ----------
                                      INDEX
                                    ----------

<TABLE>
<CAPTION>

PART I -- FINANCIAL INFORMATION                                                                                  Page
                                                                                                                 ----
<S>                                                                                                              <C>
      Item 1.  Financial Statements

           Condensed Consolidated Statements of Income for the
              Three Months Ended March 31, 2000 and 1999 ...................................................      2

           Condensed Consolidated Balance Sheets
               at March 31, 2000 and December 31, 1999......................................................      3

           Condensed Consolidated Statements of Cash Flows
               for the Three Months Ended March 31, 2000 and 1999...........................................      4

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

      Item 2.  Management's Discussion and Analysis of
                 Financial Condition and Results of Operations..............................................     14

      Item 3.  Quantitative and Qualitative Disclosure of Market Risk......................................      23

PART II -- OTHER INFORMATION

      Item 1.  Legal Proceedings............................................................................     24

      Item 6.  Exhibits and Reports on Form 8-K.............................................................     24

SIGNATURES..................................................................................................     25
</TABLE>


<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
                                                                 March 31
                                                                 --------
                                                          2000               1999
                                                          ----               ----
<S>                                                    <C>                <C>
REVENUES
   Real estate services                                $174,308           $114,264
   Property operations                                      788                387
   Internet-based businesses                                  4                 --
   Interest                                               1,356              1,127
   Foreign currency transaction gains                       601                 --
                                                       --------           --------
     Total revenues                                     177,057            115,778
                                                       --------           --------

COSTS AND EXPENSES
   Real estate services                                 161,392            110,496
   Property operations                                      249                114
   Administrative                                         2,811              1,884
   Interest                                               2,719                883
   Property interest                                        396                116
   Depreciation                                           2,502              1,107
   Property depreciation                                    120                 66
   Amortization of intangibles                            6,422              5,251
   Internet-based businesses                              6,004                 --
   Merger related expenses                                   --              5,533
                                                       --------           --------
     Total expenses                                     182,615            125,450
                                                       --------           --------
                                                         (5,558)            (9,672)

Equity earnings in real estate ventures                   1,730              1,562
                                                       --------           --------

LOSS BEFORE INCOME TAXES                                 (3,828)            (8,110)

Provision (benefit) for income taxes                        484             (3,004)
                                                       --------           --------

NET LOSS                                               $ (4,312)          $ (5,106)
                                                       =========          =========

Per share amounts - basic                              $   (.21)          $   (.24)
                                                       =========          =========
Per share amounts - assuming dilution                  $   (.21)          $   (.24)
                                                       =========          =========

Weighted average common shares and
   assumed conversions                                   20,806             21,542
                                                       =========          =========
</TABLE>

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

                                       2
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                       March 31,      December 31,
                                                                                         2000             1999
                                                                                         ----             ----
                                                                                     (Unaudited)         (Note)
<S>                                                                                   <C>              <C>
ASSETS
  Cash and cash equivalents                                                           $  70,957        $  61,600
  Receivables                                                                           197,656          198,364
  Mortgage loans held for sale                                                           12,798            8,290
  Restricted cash                                                                        11,065           13,685
  Property and equipment                                                                 67,871           60,842
  Real estate interests                                                                  74,737           74,007
  Investments                                                                            17,109           12,386
  Property management contracts                                                          28,622           30,802
  Costs in excess of net assets of acquired businesses                                  307,530          311,481
  Other assets                                                                           24,425           23,856
                                                                                    ================ ================
Total assets                                                                           $812,770         $795,313
                                                                                    ================ ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Accounts payable                                                                     $ 15,571         $ 25,306
  Commissions payable                                                                    77,418           82,547
  Accrued incentives                                                                     11,323           44,509
  Accrued and sundry liabilities                                                         87,828           85,560
  Mortgage warehouse line of credit                                                      11,203            6,235
  Notes payable                                                                         124,658          129,632
  Real estate mortgage notes payable                                                     34,327           28,455
                                                                                    ---------------- ----------------
                                                                                        362,328          402,244

Minority interests                                                                       37,215               --

Stockholders' Equity:
  Common Stock, par value $.01 per share - authorized 80,000,000 shares,
    20,853,918 (2000) and 20,719,862 (1999) issued and outstanding shares,
    net of 1,502,600 (2000 and 1999) shares held in treasury                                209              207
  Preferred Stock, par value $.01 per share - authorized 20,000,000 shares,
    250,000 (2000) issued and outstanding shares                                              3               --
  Additional paid-in capital                                                            408,586          382,784
  Notes receivable for common stock                                                      (1,749)          (1,758)
  Retained earnings                                                                       7,642           11,954
  Accumulated other comprehensive loss                                                   (1,464)            (118)
                                                                                    ---------------- ----------------
Total stockholders' equity                                                              413,227          393,069
                                                                                    ================ ================
Total liabilities and stockholders' equity                                             $812,770         $795,313
                                                                                    ================ ================
</TABLE>



NOTE: The Balance Sheet at December 31, 1999 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>
                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                                 ---------
                                                                                           2000             1999
                                                                                           ----             ----
<S>                                                                                   <C>             <C>
OPERATING ACTIVITIES
  Net loss                                                                            $   (4,312)     $   (5,106)
  Adjustments to reconcile net loss to net cash used in
      operating activities:
     Depreciation and amortization                                                         9,044           6,424
     Merger related expenses                                                                  --           5,533
     Equity earnings                                                                      (1,730)         (1,562)
     Foreign currency transaction gains                                                     (601)             --
     Changes in operating assets and liabilities:
       Receivables                                                                        (1,275)            675
       Other assets                                                                        1,376          (1,043)
       Accounts payable and accrued expenses                                             (40,592)        (29,293)
       Commissions payable                                                                (5,652)         (1,161)
                                                                                        ---------       ---------
  Net cash used in operating activities                                                  (43,742)        (25,533)
                                                                                        ---------       ---------

INVESTING ACTIVITIES
     Payments made for acquisition of businesses                                          (1,298)        (37,253)
     Investment in Internet-based businesses                                              (5,470)             --
     Investment in real estate                                                            (4,323)         (6,581)
     Additions to property and equipment, net                                             (9,603)         (3,776)
     Net (increase) decrease in mortgage loans held for sale                              (4,508)          8,865
     Distributions from real estate investments                                            6,537          15,881
     Net decrease (increase) in restricted cash                                             2,620         (6,910)
                                                                                       ----------      ----------
  Net cash used in investing activities                                                  (16,045)        (29,774)
                                                                                       ----------      ----------

FINANCING ACTIVITIES
     Proceeds from issuance of Common Stock                                                  204              --
     Proceeds from issuance of Preferred Stock                                            25,000              --
     Proceeds from Internet stock offerings                                               37,215              --
     Proceeds from exercise of stock options                                                 420             654
     Purchase of treasury stock                                                               --          (1,794)
     Net advances (payments) on mortgage warehouse line of credit                          4,968          (9,468)
     Payments on notes payable                                                            (4,499)         (4,246)
     Proceeds from notes payable                                                             240          64,025
     Proceeds from real estate mortgage note payable                                       5,872              --
                                                                                       ----------     ----------
  Net cash provided by financing activities                                               69,420          49,171
                                                                                       ----------     ----------

  Effect of exchange rate changes in cash                                                   (276)           (125)

  Net increase (decrease) in cash and cash equivalents                                     9,357          (6,261)
  Cash and cash equivalents at beginning of period                                        61,600          53,489
                                                                                       ----------     ----------
  Cash and cash equivalents at end of period                                           $  70,957       $  47,228
                                                                                       ==========     ==========
</TABLE>

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



                                       4
<PAGE>



        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
        ----------------------------------------------------------------

1.   Business

     Insignia Financial Group, Inc. ("Insignia" or the "Company"), a Delaware
corporation headquartered in New York, New York, is a fully integrated
international real estate services company with operations throughout the United
States, the United Kingdom and continental Europe. Insignia's service businesses
specialize in commercial real estate services, single-family home brokerage,
mortgage origination, title services, apartment brokerage and leasing, escrow
agency services, condominium and cooperative apartment management, real estate
oriented financial services, equity co-investment and other services. Further,
Insignia has developed substantial Internet-based business applications
associated with real estate through its majority owned subsidiary
EdificeRex.com, Inc. and other internet-based businesses. Insignia's principal
service businesses are Insignia/ESG, Inc. (U.S. commercial real estate
services), Insignia Richard Ellis (U.K. commercial real estate services), Realty
One, Inc. (single-family home brokerage and mortgage origination), Douglas
Elliman (apartment brokerage and leasing) and Insignia Residential Group, Inc.
(condominium and cooperative apartment management). Insignia also operates other
continental European businesses in Frankfurt, Germany; Milan, Italy; and
Brussels, Belgium. In addition, with the recently announced definitive agreement
to acquire Colliers BDR in Amsterdam, Insignia's reach will further expand into
the Netherlands upon closing of the transaction. This Amsterdam business is
expected to commence operations as Insignia BDR in the second quarter of 2000.
Insignia's principal service businesses are more fully described below.

     Through Insignia/ESG, Insignia provides a broad spectrum of commercial real
estate services in the U.S., including tenant representation, property leasing
and management, property disposition and acquisition, investment sales, mortgage
financing, 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. All
commercial real estate services in the U.S. are rendered under the highly
regarded Insignia/ESG brand name. Insignia/ESG is among the leading providers of
commercial real estate services in the U.S. through its 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, Miami and other
major business districts. In all, Insignia/ESG is active in 47 markets in the
U.S. In addition to real estate services, Insignia/ESG also engages in real
estate investment activities through ownership in co-investments with
institutional partners and, to a lesser extent, development property.

     Insignia Richard Ellis ("IRE") is among the three largest commercial real
estate service providers in the United Kingdom, with offices in London,
Manchester, Glasgow, Birmingham, Leeds, Liverpool, Belfast and Jersey. IRE
represents the combined operations of Richard Ellis Group Limited ("REGL") (the
226 year old London-based commercial real estate firm acquired in February 1998)
and St. Quintin Holdings Limited ("St. Quintin") (the London-based real estate
firm acquired in March 1999). IRE provides broad-ranging services, including
consulting, project management, appraisal, zoning and other general services.
The major income components, however, are agency leasing, tenant representation
and property sales and financing. In 1999, Insignia/ESG and IRE completed
commercial transactions for more than 220 million square feet and arranged the
sale of properties valued at over $12.0 billion.

     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, title services,
escrow agency services, apartment brokerage and leasing and condominium and
cooperative apartment management. Realty One, headquartered in Cleveland,
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. With more than 1,500
sales associates and 605 corporate and support staff located in 46 offices
throughout Northern Ohio, Realty One represents over 100 residential builders
and handles more than 20,000 transactions valued at over $3 billion annually.
First Ohio Mortgage Corporation, a mortgage loan subsidiary of Realty One,
originates single-family home mortgages for Realty One clients and third
parties.




                                       5
<PAGE>


     Douglas Elliman, acquired in June 1999, operates a residential cooperative,
condominium and rental apartment brokerage and leasing business 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 as published by Real Trends. In
addition, Douglas Elliman holds leadership positions in upscale suburban markets
through offices in Greenwich and Darien, Connecticut, Bernardsville/Basking
Ridge, New Jersey, and three on Long Island (Manhasset, Locust Valley and Port
Washington/Sands Point). Douglas Elliman employs more than 780 brokers and 115
corporate employees in 15 offices in the New York area and closes in excess of
4,600 transactions valued at over $2 billion annually.

     Insignia Residential Group is the largest manager of cooperatives,
condominiums and rental apartments in the New York metropolitan tri-state area,
according to a survey in the February 2000 issue of The Cooperator, and one of
the largest apartment managers in the United States. Insignia Residential Group
provides full service third-party fee management for approximately 350 total
properties comprising more than 62,000 units. In addition, Insignia Residential
Group offers mortgage brokerage services, including resale and financing
arrangements for cooperative and condominium corporations through third-party
financial institutions.

2.  Internet Initiatives

     During 1999, Insignia announced its Internet strategy, which involves an
extensive array of major e-commerce initiatives and strategic alliances,
including internally developed businesses and equity investments in existing
third-party Internet-based businesses. Insignia expects this Internet strategy
to expand the Company's market leadership in commercial and residential real
estate services through a fundamental repositioning of the Company into a
first-tier real estate-oriented Internet services company.

     Insignia has developed Internet-based e-commerce models in virtually every
segment of the real estate services businesses in which it currently operates,
including residential sales, commercial and residential property management,
commercial leasing and tenant representation, investing (or committing to
invest) approximately $20 million of its own capital in these initiatives.
During 1999, the Company launched the following upgraded internally developed
Internet websites: www.insigniafinancial.com, www.insigniaesg.com,
www.douglaselliman.com, www.insignia-re.com, www.realtyone.com,
www.insigniaresidential.com and www.knowyourscore.com (a comprehensive
credit-scoring site operated by First Ohio Mortgage).

     Insignia also has made strategic investments of approximately $15.0 million
in third-party Internet-based businesses, including: eziaz inc. (formerly
Siteline, Inc.); LoopNet, Inc; PropertyFirst.com, Inc; MyContracts.com, Inc.;
Wireless, Inc.; Cubitz.com, Inc.; Granite Square, Inc.; Concrete Media, Inc.; We
Media, Inc.; Bizbash.com; Homestore.com, Inc. and WorkSpeed, Inc. Many of these
businesses offer Internet technologies that Insignia is incorporating into its
proprietary Internet initiatives. Insignia plans to continue to pursue its
strategy of making direct equity investments in third-party Internet-based
businesses that have a real estate oriented focus, and which are believed to
have significant potential for commercial success.

     Insignia's first internally developed e-commerce initiative to go "live" on
the Internet is the EdificeRex.com (www.edificerex.com) website, which is
operated by its subsidiary EdificeRex.com, Inc. EdificeRex consists of the
following three principal business lines:

     o RESIDENTIAL INTERNET PORTAL. The residential portal operated by
EdificeRex is a building-centric, ultra-local website targeted at residents of
high-end apartment buildings in major metropolitan areas. This service was
launched in New York City in February 2000, and is currently operational for
approximately 190 buildings containing approximately 25,000 apartments.
EdificeRex has entered into contractual agreements to provide its services to an
additional 50,000 apartment units in New York City and 60,000 units in Los
Angeles and further plans to launch the residential portal service in other
major markets across the U.S., including San Francisco, Atlanta, Boston,
Chicago, Miami, Washington, D.C., as well as in London. In each market,
EdificeRex will feature building-specific functionality and ultra-local content
patterned after the New York City portal.

     o COMMERCIAL INTERNET PORTAL. The commercial portal currently under
development by EdificeRex will target small to mid-sized tenants of commercial
office space as well as employees of those tenants. This portal will also
feature ultra-local content and product and service offerings, but will offer an
aggregated corporate buying feature as well. In addition, the portal will offer
both building-centric and tenant-centric functionality (such as customized, free
Intranet services). The commercial portal service is scheduled to be rolled-out
in the Fall of 2000 in New York City, with service in additional major
metropolitan areas in the U.S. and the U.K. expected to



                                       6
<PAGE>

follow. EdificeRex has entered into contractual arrangements with owners and
managers (including Insignia/ESG) of buildings containing approximately 275
million square feet of commercial office space to provide this portal service.

     o RESIDENTIAL "SMART BUILDING" SERVICES. This service offering features the
installation of building-centric local area networks (LANs) in individual
apartment buildings, which will be used to deliver high-speed, always-on,
wireless broadband Internet access and other services to residents in the
building. Other planned "smart building" service offerings utilizing the
wireless LAN infrastructure include consumer (resident) oriented services, such
as data storage and back-up, content filtering and delivery of on-demand, rich
content such as video, as well as business (building) oriented services such as
monitoring and alarming of mechanical systems and video monitor/intercom
functionality.


3.   Internet Stock Offerings

     In March 2000, EdificeRex completed a $36 million private equity financing
in which it sold 4,595,349 shares of its Series C Preferred Stock, representing
an equity interest of approximately 14% in the company, for $7.81 per share to a
group of approximately 20 outside investors. This transaction implies an
enterprise valuation of more than $250 million for EdificeRex. Following the
financing, Insignia owns approximately 51% of the outstanding stock of
EdificeRex, with the remainder owned by management, employees and strategic real
estate and operating partners. EdificeRex's founding real estate partners
include Blackacre Capital Management, Apollo Real Estate Advisors, The Witkoff
Group, Milford Management Corporation, The Related Companies, and Casden
Properties.

     Insignia expects that its other internally developed Internet-based
businesses will raise third-party capital to fund ongoing operations in a
similar manner as the EdificeRex financing.

4.   Branding

     In February 2000, Insignia launched a new worldwide corporate branding
program that provides a new high-tech image for the Company and creates a common
identity for its principal business units. The centerpiece for this worldwide
branding change is a vibrant, bright blue "i" logo. Insignia incurred
approximately $1.6 million in expenses associated with this branding program
during the first quarter of 2000.

5.   Preferred Stock Issuance

     In February 2000, Insignia sold 250,000 shares of perpetual convertible
preferred stock, with a stated value of $100 per share, to investment funds
advised by Blackacre Capital Management for an aggregate purchase price of $25.0
million. The issuance was exempt from registration under the Securities Act of
1933, as amended, pursuant to Section 4 (2) thereof. The preferred stock pays a
4% annual dividend, payable at Insignia's option in cash or Common Stock, and is
convertible into the Company's Common Stock at the option of the holder at $14
per share, subject to adjustment. The preferred stock is callable by the
Company, at face value, at any time on or after February 15, 2004.

6.  Colliers BDR Acquisition

     In March 2000, the Company entered into a definitive agreement to acquire
Colliers BDR, a Dutch real estate services company headquartered in Amsterdam,
the Netherlands. Colliers BDR provides a variety of commercial real estate
services with a specialization in corporate services and international advisory
assignments. The base purchase price of approximately $2.0 million is held in
escrow pending closing of the transaction. Additional purchase consideration of
approximately $2.5 million, payable over three years, is contingent on the
future performance of this business. Colliers BDR is expected to commence
operations as Insignia BDR in the second quarter of 2000.



                                       7
<PAGE>




7.   Insignia Opportunity Trust

     In 1999, Insignia sponsored the formation of a private real estate
investment trust ("REIT"), Insignia Opportunity Trust ("IOT"). IOT, through its
subsidiary operating partnership, Insignia Opportunity Partners, invests in real
estate debt and, to a lesser extent, other real estate equity instruments with a
focus on below investment grade commercial mortgage backed securities. IOT
commenced operations in October 1999 and has invested more than $16 million in
such investments. At March 31, 2000, Insignia held a $2.3 million investment, or
approximately 13% ownership, in IOT.

     IOT has received capital commitments for an aggregate $72 million, of which
$10 million is to be invested by Insignia and the remainder to be made by
strategic partners that have invested in other Insignia related transactions in
prior years. Funding for these capital commitments is to be completed over the
course of 2000 and 2001.

8.  Stock Repurchases

     Insignia has repurchased 1,502,600 shares of its Common Stock at an
aggregate cost of approximately $16.2 million under the Company's $17.5 million
repurchase program established in October 1998. The shares held in treasury at
March 31, 2000 are reserved for the exercise, upon vesting, of 1,493,000
warrants granted in early 2000 to certain executive officers, non-employee
directors and other employees of the Company.

9.  Merger Related Expenses

     In 1999, Insignia incurred aggregate one-time charges of approximately $4.3
million ($3.1 million, net of tax) for merger related expenses in connection
with the acquisition of St. Quintin in March 1999 and its subsequent operational
merger with REGL. Originally, the merger costs had been estimated at $5.5
million. The charges reflected the provision for estimated costs of vacated
excess office space sublet and other consolidation expenses incurred in
connection with the operational merger. All such office space was disposed of
and all other consolidation expenses, including severance costs, were incurred
in 1999. The combined operations of REGL and St. Quintin now operate as Insignia
Richard Ellis.

10. 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 months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2000. 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, 1999.

11. Reclassifications

     Certain prior year amounts have been reclassified to conform to the 2000
presentation. These reclassifications have no effect on net income.

12. Seasonality

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




                                       8
<PAGE>



13. Earnings Per Share

     The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated. Due to the net losses experienced
in the first quarter of 2000 and 1999, the exercise of options and warrants is
not assumed as the result would be anti-dilutive.

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                                     ---------
                                                               2000             1999
                                                               ----             ----
                                                      (In thousands, except per share data)

    <S>                                                      <C>              <C>
    Weighted average common shares outstanding                20,806            21,542
    Assumed conversions                                           --                --
                                                             -------           -------
    Diluted shares                                            20,806            21,542
                                                             =======           =======

    Net loss                                                 $(4,312)          $(5,106)
                                                             =======           =======

    Per share amounts - basic                                $  (.21)          $  (.24)
                                                             =======           =======
    Per share amounts - assuming dilution                    $  (.21)          $  (.24)
                                                             =======           =======
</TABLE>


14. Comprehensive Income

     Total comprehensive loss for the three months ended March 31, 2000 totaled
$5.6 million and was comprised of a $4.3 million net loss, a $458,000 unrealized
loss, net of tax, on available-for-sale securities and foreign currency
translation losses of $888,000, net of tax. The following table sets forth the
components of accumulated other comprehensive loss:

<TABLE>
<CAPTION>

                                                                                 Accumulated
                                                               Unrealized           Other
                                           Foreign Currency       Gains         Comprehensive
                                             Translation      On Securities        Income
                                           ----------------- ---------------- ------------------
                                                              (In thousands)
    <S>                                           <C>               <C>                 <C>
    Balance at December 31, 1999                  $ (1,333)         $ 1,215             $ (118)

    Comprehensive losses                            (1,556)            (747)            (2,303)
    Income tax benefit                                 668              289
                                                                                           957
                                           ----------------- ---------------- ------------------
                                                      (888)            (458)            (1,346)

                                           ----------------- ---------------- ------------------
    Balance at March 31, 2000                     $ (2,221)            $757           $ (1,464)
                                           ================= ================ ==================

</TABLE>



                                       9
<PAGE>



15. Industry Segment Data

     Insignia is a fully integrated real estate services company with operations
in two principal reportable segments: commercial real estate services and
residential real estate services. The commercial services segment provides
tenant representation, property and asset management, agency leasing and
brokerage, investment sales, development, consulting and other services.
Additionally, the commercial services segment includes the Company's real estate
investment activities, consisting primarily of ownership in co-investment
partnerships and development property. The commercial services segment is
comprised of Insignia/ESG is the U.S., IRE in the United Kingdom and other
Insignia businesses in Germany, Italy and Belgium. The residential services
segment provides property management services, brokerage services, leasing,
mortgage origination and escrow agency services, title services and relocation
services. The residential services segment is comprised of Realty One, Insignia
Residential Group and Douglas Elliman. "Other" represents unallocated corporate
administration of the Company and Internet-based business operations. Assets
included in "Other" consist primarily of cash, property and equipment and
third-party Internet investments. The following tables summarize certain
financial information by reportable segment. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in Item 2 of this Form 10-Q.

<TABLE>
<CAPTION>


                                           Three Months Ended - March 31, 2000

                                                Commercial         Residential          Other            Total
                                           -----------------------------------------------------------------------
                                                                                (In thousands)
<S>                                                 <C>              <C>              <C>               <C>
REVENUES
   Real estate services                             $127,570         $ 46,738         $      --         $174,308
   Property operations                                   788               --                --              788
   Internet-based businesses                              --               --                 4                4
   Interest                                              367              161               828            1,356
   Foreign currency transaction gains                     --               --               601              601
                                            -----------------------------------------------------------------------
       Total revenues                                128,725           46,899             1,433          177,057

COSTS AND EXPENSES
   Real estate services                              115,093           46,299                --          161,392
   Property operations                                   249               --                --              249
   Administrative                                         --               --             2,811            2,811
   Interest                                              225              181             2,313            2,719
   Property interest                                     396               --                --              396
   Depreciation                                        1,696              660               146            2,502
   Property depreciation                                 120               --                --              120
   Amortization of intangibles                         4,912            1,510                --            6,422
   Internet-based businesses                              --               --             6,004            6,004
                                            -----------------------------------------------------------------------
      Total expenses                                 122,691           48,650            11,274          182,615
                                            -----------------------------------------------------------------------
                                                       6,034           (1,751)           (9,841)          (5,558)

Equity earnings in real estate ventures                1,730               --                --            1,730
                                            -----------------------------------------------------------------------

Income (loss) before income taxes                      7,764           (1,751)           (9,841)          (3,828)

   Provision (benefit) for income taxes                3,609             (926)           (2,199)             484
                                            -----------------------------------------------------------------------

NET INCOME (LOSS)                                   $  4,155         $   (825)         $ (7,642)        $ (4,312)
                                            =======================================================================

Total assets                                        $561,436         $158,454          $ 92,880         $812,770
Real estate interests                                 74,737               --                --           74,737

</TABLE>


                                       10
<PAGE>


<TABLE>
<CAPTION>
                                               Three Months Ended - March 31, 1999

                                                  Commercial       Residential          Other            Total
                                            -----------------------------------------------------------------------
                                                                          (In thousands)
<S>                                                 <C>               <C>          <C>                  <C>

REVENUES:
   Real estate services                             $ 90,056          $24,208          $     --         $114,264
   Property operations                                   387               --                --              387
   Interest                                              349              207               571            1,127
                                            -----------------------------------------------------------------------
                                                      90,792           24,415               571          115,778
                                            -----------------------------------------------------------------------
COSTS AND EXPENSES:
   Real estate services                               85,363           25,133                --          110,496
   Property operations                                   114               --                --              114
   Administrative                                         --               --             1,884            1,884
   Interest                                              438              222               223              883
   Property interest                                     116               --                --              116
   Depreciation                                          662              440                 5            1,107
   Property depreciation                                  66               --                --               66
   Amortization of intangibles                         4,392              859                --            5,251
   Merger related expenses                             5,533               --                --            5,533
                                            -----------------------------------------------------------------------
                                                      96,684           26,654             2,112          125,450
                                            -----------------------------------------------------------------------
                                                      (5,892)          (2,239)           (1,541)          (9,672)

Equity earnings in real estate ventures                1,562               --                --            1,562
                                            -----------------------------------------------------------------------

LOSS BEFORE INCOME TAXES                              (4,330)          (2,239)           (1,541)          (8,110)

Income tax benefit                                    (1,394)            (963)             (647)          (3,004)
                                            -----------------------------------------------------------------------

NET LOSS                                          $   (2,936)        $ (1,276)        $    (894)      $   (5,106)
                                            =======================================================================

Total assets                                        $499,581          $86,131           $45,315         $631,027
Real estate interests                                 53,091               --                --           53,091

</TABLE>

Certain geographic information for Insignia is as follows:

<TABLE>
<CAPTION>

                                                   Three Months Ended                 Three Months Ended
                                                     March 31, 2000                     March 31, 1999
                                            -----------------------------------------------------------------------
                                                                Long-Lived                            Long-Lived
                                                 Revenues         Assets           Revenues             Assets
                                            -----------------------------------------------------------------------
                                                                        (In thousands)
<S>                                               <C>               <C>              <C>               <C>
United States                                     $148,298          $301,756         $  97,644         $223,323
United Kingdom                                      28,200           101,312            17,675          102,273
Other countries                                        559               955               459               --
                                            =======================================================================
                                                  $177,057          $404,023          $115,778         $325,596
                                            =======================================================================
</TABLE>



                                       11
<PAGE>



16. Recent Accounting Pronouncement

     In December 1999, the Securities Exchange Commission ("SEC") issued Staff
Accounting Bulletin 101 ("SAB 101"), Revenue Recognition, which discusses the
SEC's views on the recognition of revenues from certain transactions. Following
this announcement, Insignia and its independent auditors, began informal
discussions with the SEC to determine whether this policy would impact the
Company. Insignia has been informed that its accounting policy for recognition
of leasing commissions should be modified to comply with SAB 101. Therefore,
Insignia will modify its accounting practices for leasing transactions beginning
in the second quarter of 2000. The required change will be recognized as a
cumulative effect of a change in accounting principle as of January 1, 2000.

     Historically, the Company has recognized revenues from leasing commissions
at the time of transaction closing, as has been common practice throughout the
industry. Under SAB 101, Insignia will recognize leasing commissions at the
later of either transaction closing or the completion of specified events to
commission collection, such as tenant occupancy unless significant contingencies
exist. The Company is examining the impact of SAB 101 compliance on all its
outstanding leasing transactions, however, that process has not been completed.
Implementation of SAB 101 will affect the timing of the recognition of leasing
transaction revenues. At this time, the Company is unable to predict the impact,
if any, on its normal seasonal revenue patterns.

     In 1999, leasing commissions totaled approximately $340 million, or 50% of
Insignia's total revenues. While the timing of revenue recognition will change,
the Company has never experienced bad debts in excess of 0.5% of revenues as a
result of conditions precedent to payment not occurring.

17. Material Contingencies

     In 1994, Re/Max International and various franchisees filed suit in the
United States District Court for the Northern District of Ohio against Realty
One, alleging claims under the federal antitrust laws and related state law
claims. The suit alleges that Realty One conspired with Smythe, Cramer Company
to institute a series of differential commission splits intended to harm Re/Max
International and its franchisees in the northeast Ohio residential real estate
brokerage market. Plaintiffs' claim actual damages of $30 million. The
applicable federal antitrust law provides, among other things, for the trebling
of actual damages.

     In 1997, the District Court granted summary judgment dismissing all of
plaintiffs' federal and state claims. In a ruling issued April 6, 1999, the
Sixth Circuit reversed the District Court's order in substantial part.
Subsequent to the Sixth Circuit ruling, plaintiffs voluntarily dismissed their
monopoly claims. The only remaining claims are the federal antitrust conspiracy
claims. Trial commenced in early April 2000 and is continuing. Realty One denies
the existence of any conspiracy, and has defended and continues to defend this
action vigorously.

     In connection with Insignia's acquisition of Realty One in October 1997,
the sellers indemnified the Company for any loss arising from such litigation up
to the purchase price of approximately $40 million.

     Insignia and certain subsidiaries are defendants in other lawsuits arising
in the ordinary course of business. Claims may result in substantial
compensatory and punitive damages. Management does not expect that the results
of any such lawsuits will have a material adverse effect on the financial
condition, results of operations or cash flows of the Company or its
subsidiaries.



                                       12
<PAGE>




18. Equity

     During the three month period ended March 31, 2000, the Company had the
following changes in stockholders' equity:

     a)   Net loss of $4,312,000 for the three months ended March 31, 2000.

     b)   Issuance of 250,000 shares of perpetual convertible preferred stock
          for an aggregate purchase price of $25 million.

     c)   Exercise of stock options representing 60,784 shares of Common Stock
          at exercise prices ranging from $.72 to $11.00 per share.

     d)   Issuance of 27,036 shares of Common Stock, at a price of $7.55, under
          the Company's Employee Stock Purchase Program.

     e)   Issuance of 46,236 shares of common stock for vested restricted stock
          awards.

     f)   Accrued compensation of $183,000 relating to restricted stock awards.



                                       13
<PAGE>



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

INTRODUCTION

     Insignia is among the leading providers of commercial and residential real
estate services in the United States and United Kingdom, with a growing presence
throughout other parts of continental Europe. In addition, Insignia has recently
launched an Internet strategy involving an array of e-commerce initiatives and
strategic alliances. This strategy consists of substantial internally developed
business applications (most notably, the recently launched EdificeRex.com) and
equity investments in existing third-party Internet-based businesses. Insignia's
traditional service business operates in two principal business segments
commercial and residential real estate services - offering a diversified array
of real estate services. Such services include the following: tenant
representation; agency leasing; property management; consulting; investment
sales; development and redevelopment; mortgage financing; single-family home
brokerage; mortgage origination; title and escrow agency services; and apartment
brokerage. Insignia's revenues from these services totaled $174.3 million in the
first quarter of 2000, reflecting a 53% increase over $114.3 million in the
first quarter of 1999.

      Insignia's commercial services operations include Insignia/ESG in the
U.S., IRE in the United Kingdom and other Insignia businesses in Germany, Italy
and Belgium. The commercial businesses produced aggregate service revenues of
$127.6 million in the first quarter of 2000, accounting for approximately 73% of
the Company's total service revenues for the period. IRE, which holds a "top
three" market position for commercial property services in the United Kingdom,
produced service revenues of $27.9 million in the first quarter of 2000. The
combined strength of IRE in London and Insignia/ESG in New York gives Insignia a
commanding position in two of the world's most important global business
centers.

     Insignia also continues to pursue opportunities to invest in real estate
assets, primarily through co-investment ventures with its institutional partners
in the purchase of existing properties and, to a lesser extent, development
property. Insignia holds ownership interests in 22 co-investment partnerships
totaling approximately 7.4 million square feet of commercial property and 4,000
multi-family apartment units. Insignia's ownership interests in these
partnerships range from 5% to 35%. Two of these partnerships own property
developed by Insignia. During the first quarter of 2000, Insignia recognized a
$1.9 million gain on the sale of 105,000 square foot co-investment property
located in northern California.

     In addition, Insignia holds investments in two office properties under
development and a parcel of land held for development. The office properties are
held by joint ventures formed in 1999 with the admission of 70% and 75%
partners. Development activities on these properties are not expected to be
complete until later in 2000 or 2001.

     Insignia also owns three properties, with an aggregate real estate carrying
amount of approximately $42.7 million, which are consolidated in the Company's
financial statements at March 31, 2000. Two of the properties, Brookhaven
Village (Norman, Oklahoma) and Dolphin Village (St. Petersburg, Florida), are
retail facilities comprising over 291,000 square feet in the aggregate. The
third, One Telecom, is a 226,000 square foot office property located in
Richardson, Texas. This property was developed by Insignia, with 90% of the cost
financed, and 100% leased in late 1999 to Southwestern Bell.

     Insignia's residential services operations include Realty One, Insignia
Residential Group and Douglas Elliman. The residential businesses produced
aggregate service revenues of $46.7 million in the first quarter of 2000.
Douglas Elliman, acquired in June 1999, contributed $23.3 million in service
revenues in the first quarter.

     In addition to net income, Insignia uses EBITDA (defined as real estate
services revenues less direct expenses and administrative costs), Net EBITDA
(defined as income before depreciation, amortization, income taxes and
non-recurring one-time charges) and After tax income from service operations
(defined as Net EBITDA less income taxes), as indicators of the Company's
financial performance. Management uses these supplemental measures in the
evaluation of operations and in making financial decisions.


                                       14
<PAGE>


FINANCIAL CONDITION

     Total assets increased by approximately $17.5 million to $812.8 million at
March 31, 2000. The primary source of the increase was the $36 million in
proceeds raised through a March 2000 private equity financing of EdificeRex, the
Company's majority owned and consolidated Internet-based subsidiary. These
proceeds are to be used to fund ongoing operations of EdificeRex. Liabilities
declined by approximately $39.9 million to $362.3 million at March 31, 2000.
This decline was due principally to the payment of 1999 incentive bonuses in
March 2000. Stockholders' equity increased by $20.2 million to $413.2 million,
primarily as a result of the $25.0 million perpetual convertible preferred stock
issuance in February 2000.

RESULTS OF OPERATIONS

     Insignia reported strong results from service operations during the first
quarter of 2000, with service revenues and Net EBITDA totaling $174.3 million
and $10.1 million, respectively. These operating results represented sharp
increases of 53% and 226%, respectively, over the first quarter of 1999. The
first quarter of 2000 performance was bolstered by strong growth in the
commercial service operations of both Insignia/ESG in the U.S. and IRE in the
United Kingdom as well as significant contributions from Douglas Elliman's
residential brokerage operation. In fact, more than $30 million, or
approximately 50%, of the revenue increase was attributable to internal growth
from the expansion of services and continuing robust market conditions in the
commercial sector. Douglas Elliman, acquired in June 1999, contributed $23.3
million in services revenues and $2.6 million of EBITDA on the strength of
robust demand for New York coops and condominiums. Net EBITDA for the first
quarter of 2000 was lowered by $1.6 million in expenses incurred in the February
2000 launching of a new worldwide corporate branding. This new branding provides
a visible high-tech image for Insignia and creates a common identity for its
commercial real estate services businesses internationally.

     Insignia reported a net loss of approximately $4.3 million for the first
quarter of 2000, representing improved results in comparison to the $5.1 million
net loss reported in the first quarter of 1999. Net earnings for the first
quarter of 2000 were adversely affected by $4.3 million of operating expenses of
EdificeRex for which no tax benefit is available currently and $1.7 million for
other internally developing Internet-based businesses for which a tax benefit
was recognized. These Internet-based expenses lowered earnings by $0.29 per
share. Results for the first quarter of 1999 were marked by a shortage of
brokerage transactions in the aftermath of the late 1998 capital markets turmoil
and the $5.5 million provision for merger related expenses incurred in
connection with the acquisition of St. Quintin and its operational merger with
REGL. A $1.9 million realized gain on the sale of a co-investment property and
foreign currency transaction gains of $601,000 on the Company's borrowings
denominated in European currencies favorably impacted results for the first
quarter of 2000.

     As a result of the foregoing, earnings per share results for the first
quarter of 2000 improved in comparison to the same period of 1999 to a $0.21
loss per share. Earnings per share results for the first quarter of 2000 are
based on lower weighted average common shares outstanding, which declined by 3%
compared to the first quarter of 1999, resulting from the Company's stock
repurchase program implemented throughout 1999.




                                       15
<PAGE>



     The following table sets forth certain data derived from the Company's
condensed consolidated statements of income for the three months ended March 31,
2000 and 1999, respectively.

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                               March 31,
                                                               ---------
                                                        2000                    1999
                                                        ----                    ----
                                                                (In thousands)
 <S>                                                   <C>                     <C>
 REVENUES
     Commercial
        Insignia/ESG                                   $ 99,120                $ 72,235
        Europe                                           28,450                  17,821
     Residential                                         46,738                  24,208
                                                       --------                --------
 Real Estate Services                                   174,308                 114,264
                                                       --------                --------

 COST AND EXPENSES
     Real estate services                               161,392                 110,496
     Administrative                                       2,811                   1,884
                                                       --------                --------

 EBITDA - REAL ESTATE SERVICES (1)                       10,105                   1,884

     Real estate FFO (2)                                    768                     970
     Interest and other income                            1,356                   1,127
     Foreign currency transaction gains                     601                      --
     Interest expense                                    (2,719)                   (883)
                                                       --------                --------

 NET EBITDA (1)                                          10,111                   3,098

     (Provision) benefit for income taxes                  (400)                  2,017
                                                       --------                --------

 AFTER TAX INCOME FROM SERVICE OPERATIONS (1)             9,711                   5,115

     Internet-based businesses                           (6,000)                     --
     Benefit for income taxes                               685                      --
                                                       --------                --------

 AFTER TAX INCOME AFTER INTERNET                          4,396                   5,115

     Merger related expenses                                 --                  (5,533)
     Gains on sale of real estate                         1,922                   1,821
     (Provision) benefit for income taxes                  (769)                    987

     Depreciation - property and equipment               (2,502)                 (1,107)
     Amortization of intangibles                         (6,422)                 (5,251)
     Depreciation - real estate                            (937)                 (1,138)
                                                       --------                --------

 NET LOSS                                              $ (4,312)               $ (5,106)
                                                       =========               =========
</TABLE>

(1)  Neither EBITDA, Net EBITDA nor After tax income from service operations, 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. The results of operations for the Company are
     more fully described below.


                                       16
<PAGE>




Commercial Real Estate Operations

     Real Estate Services

     The commercial service operations - Insignia/ESG, IRE and other continental
European businesses - produced aggregate service revenues of $127.6 million and
EBITDA of $12.5 million in the first quarter 2000. These results represented
increases of 42% for revenues and 166% for EBITDA compared to the first quarter
of 1999. These results reflect the strong demand for office space in the U.S.
and U.K. and the contribution of a full quarter of operations for the combined
operations of IRE.

     Insignia/ESG produced U.S. service revenues of $99.1 million and EBITDA of
$8.5 million, reflecting strong gains of 37% and 113% over the first quarter of
1999. These results were boosted by unusually strong first quarter showings in
the West, New England and New York operations. The year-over-year gains are also
reflective of the lingering effects of the late 1998 capital markets turmoil
that resulted in a shortage of large brokerage transactions in the first quarter
of 1999.

     In Europe, service revenues increased 60% from $17.8 million in the first
quarter of 1999 to $28.5 million in the first quarter of 2000. European
operations contributed EBITDA of $3.9 million for the first quarter of 2000,
reflecting a significant increase over $685,000 for the first quarter of 1999.
These gains are attributable to the operations of IRE, which continued to reap
the rewards of a robust commercial real estate market in the U.K. and the full
recognition of cost savings and revenue growth associated with 1999 combination
of St. Quintin and REGL. IRE produced service revenues of $27.9 million and
EBITDA of $4.8 million in the first quarter of 2000, representing increases of
61% and 437%, respectively, over 1999. The continental European businesses in
Germany, Italy and Belgium produced aggregate revenues of $535,000 and an EBITDA
loss of $841,000 in the first quarter of 2000. These businesses, which largely
remain in their infancy from a business standpoint, are expected to produce more
meaningful contributions in future periods.

     Principal Investment Activities

     The commercial operations of Insignia/ESG include the property operations
of the three wholly-owned real estate properties that are consolidated in the
Company's financial statements at March 31, 2000. These properties, in the
aggregate, produced revenue gains of 104% to $788,000 in the first quarter of
2000. The results of operations for these properties are excluded from service
EBITDA and are included in FFO from real estate operations.

     Insignia produced FFO from real estate ownership of $768,000 during the
first quarter of 2000, representing a decline of 21% from $970,000 produced in
the comparable period of 1999. This decline is due to the sale of several income
producing properties in the co-investment portfolio during the later part of
1999.

     Equity earnings from real estate ownership totaled approximately $1.7
million during the first quarter of 2000, reflecting an increase of 11% compared
to $1.6 million in the first quarter of 1999. Such earnings for the first
quarter of 2000 were essentially attributable to a realized gain of
approximately $1.9 million ($1.2 million after-tax) on the sale of an 105,000
square foot co-investment property located in northern California.

     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. Real estate depreciation declined 18% from $1.1
million in the first quarter of 1999 to $937,000 in the first quarter of 2000.

Residential Real Estate Operations

     The residential service operations - Realty One, Douglas Elliman and
Insignia Residential Group - produced an aggregate service revenue increase of
93% to $46.7 million in the first quarter of 2000 compared to $24.2 million in
the first quarter of 1999. Residential service operations contributed EBITDA of
$439,000 for the first quarter of 2000; a 147% gain over the $925,000 loss
experienced in the first quarter of 1999. Seasonal factors in the home-sales
market traditionally have made the first quarter of each year the weakest period
for residential service operations; however, in the first quarter of 2000 this
weakness was disguised by strong contributions from Douglas Elliman, which was
acquired in June 1999.

                                       17
<PAGE>

     During the first quarter of 2000, Douglas Elliman produced service revenues
of $23.3 million and EBITDA of $2.6 million, reflecting significant gains of
approximately $6.7 million and $325,000, respectively, over the comparable
pre-acquisition period in 1999. Douglas Elliman's results were enhanced by a 58%
increase in the value of closed transactions (which rose to $625 million) during
the first quarter of 2000 over the same period of 1999. Realty One produced a
modest service revenue decline of 5% to $16.7 million during the first quarter
of 2000 as a result of traditional seasonal factors in the northern Ohio
marketplace, coupled with further challenges from increasing mortgage rates.
Such adverse effects from rising mortgage interest rates on housing demand were
partially negated by a 6% increase in average sales prices over the first
quarter of 1999; nevertheless, EBITDA production declined 94% to a loss of $2.3
million. Insignia Residential Group's management operations, which produced
service revenues and EBITDA of $6.8 million and $175,000, respectively, in the
first quarter of 2000, were relatively flat compared to the same period of 1999.

Internet Operations

     As noted above, Internet-based businesses, which reported net operating
expenses of $6.0 million, adversely affected earnings for the first quarter of
2000. These expenses represent costs incurred in connection with the ongoing
development of new Internet-based business applications and consist primarily of
costs for personnel and advertising and marketing campaigns. These
Internet-based expenses are in line with the Company's expectations for the
operation and development of all of its internally developing Internet-based
business models. As of March 31, 2000, Insignia had invested approximately $20.0
million in the development of such business models, including more than $12.0
million of capitalized intellectual property.

Other Items Affecting Net Income

     Administrative expenses rose 49% from $1.9 million in the first quarter of
1999 to $2.8 million in 2000. This increase primarily reflects changes in the
administrative compensation structure resulting from the enhanced performance of
the service business (as compared to the first quarter of 1999) and the
continued growth of the Company over the past year through acquisitions and the
expansion of services.

     Interest expense increased by $1.8 million over the first quarter of 1999
to $2.7 million for the first quarter of 2000. The increase is due principally
to interest charges on 1999 credit facility borrowings of approximately $109
million to finance the acquisitions of Lynch Murphy, St. Quintin and Douglas
Elliman.

     Depreciation and amortization of intangibles increased 41% in the aggregate
to $9.0 million for the first quarter of 2000. This increase is the result of
increased capital investments over the course of the past year in property and
equipment and acquisitions substantially comprised of purchased intangibles.

     Results for the first quarter of 1999 were adversely affected by a merger
related charge of $5.5 million ($3.8 million after-tax) for estimated expenses
in connection with the acquisition of St. Quintin in March 1999 and its
subsequent combination with REGL. As previously noted, the one-time charges
substantially relate to the provision for costs associated with vacated excess
office space being subleased and other consolidation expenses.

     Income taxes of approximately $484,000 for the first quarter of 2000 are
attributable to the business earnings. Business earnings included $4.3 million
in Internet-based expenses of EdificeRex, for which no tax benefit is available
currently.


                                       18
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     Insignia's liquidity and capital resources consist of its cash on hand,
cash provided from operations and available credit under its $185 million
revolving credit facility. Unrestricted cash at March 31, 2000 totaled
approximately $71.0 million, inclusive of more than $36 million held by
EdificeRex, the Company's majority owned Internet-based subsidiary. The cash
holdings of EdificeRex are to be used solely for ongoing operations of
EdificeRex and are therefore not available for funding of working capital needs
for the Company's core service businesses. Net cash used in operating activities
was approximately $43.7 million in the first quarter of 2000 compared to $25.5
million for the same period of 1999. Cash from operations is generally negative
during the first quarter of each year as a result of annual incentive payments
with respect to the preceding year and seasonal factors affecting transactional
revenues (see also "Nature of Operations" below). The increased cash usage in
the first quarter of 2000 is due in part to the aforementioned seasonal and
market factors effecting the Realty One business and generally higher levels of
incentive payments than in the first quarter of 1999. In addition to operating
cash flows, the Company uses Net EBITDA and After tax income from service
operations as measures of liquidity and working capital provided by operations.
The Company reported Net EBITDA of $10.1 million and $3.1 million for the first
quarters of 2000 and 1999, respectively. After tax income from service
operations totaled $9.7 million and $5.1 million for the first quarters of 2000
and 1999, respectively. These results reflect sharp increases of 226% for Net
EBITDA and 90% for After tax income from service operations in the first quarter
of 2000 over 1999.

     As compared to net income, the Net EBITDA and After-tax income 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 purposes.

     Insignia's total long-term debt at March 31, 2000 totaled approximately
$170.1 million. Such long-term debt included approximately $108.4 million
outstanding on its credit facility, notes issued to sellers of acquired
businesses of $4.7 million, a $11.2 million mortgage warehouse line of credit
(financing single family mortgages held for sale), mortgage notes of $34.3
million on wholly owned real estate assets (which are non-recourse to the
Company) and other debt of subsidiaries totaling $11.5 million.

     In February 2000, Insignia raised $25.0 million through the issuance of
perpetual convertible preferred stock to investment funds advised by Blackacre
Capital Management. The preferred stock pays a 4% annual dividend, payable at
Insignia's option in cash or Common Stock, and is convertible into the Company's
Common Stock at the option of the holder at $14 per share, subject to
adjustment. Insignia will utilize this capital for general corporate purposes
and to fund ongoing Internet initiatives and real estate investing.

     In March 2000, EdificeRex completed a $36.0 million private equity
financing in which it sold 4,595,349 shares of its Series C Preferred Stock,
representing an approximately 14% equity interest in the company, for $7.81 per
share to a group of approximately 20 investors. Following the financing,
Insignia owns approximately 51% of the outstanding stock of EdificeRex, with the
remainder owned by management, employees and strategic real estate and operating
partners. Insignia expects that its other internally developed Internet-based
businesses will raise third-party capital to fund ongoing operations in a
similar manner as the EdificeRex financing.

     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, because
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.



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<PAGE>



     Cash flows for capital expenditure requirements, which are not extensive
under normal circumstances, generally consist of periodic computer, furniture
and fixture replacements incurred in connection with acquisitions or other
personnel additions. These expenditures in 2000 consisted primarily of leasehold
improvements and furniture and fixtures from office relocation and expansion,
computer equipment and management systems, information technology infrastructure
costs and internally developed Internet-based e-commerce capabilities. During
the first quarter of 2000, cash flow utilized to fulfill capital replacement
needs of the service businesses totaled approximately $9.6 million.
Approximately $6 million of such capital expenditures in the first quarter of
2000 related to internally developed Internet-based businesses. Insignia expects
capital expenditures to remain at significant levels throughout fiscal 2000 due
to the continuing development and implementation of such accounting and
financial systems at Insignia/ESG and other principal operating units. Property
and equipment costs, excluding expenditures for further Internet-based business
initiatives and acquisitions, are expected to again exceed $30.0 million in
2000.

     Insignia expects to use cash on hand and cash flow from operating
activities to fund capital expenditures needs, acquisitions (including the
payment of contingent payments earned), real estate investments, Internet-based
business initiatives 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.

THE YEAR 2000 ISSUE

     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 came to be known as "Year 2000" or the "Year 2000
Issue." The effects of the Year 2000 Issue on operations and financial reporting
could 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.

     To address the Year 2000 Issue, Insignia established an in-house program
team and initiated a comprehensive plan to assess, remediate and test the
Company's internal computer systems, hardware and processes, including key
operational and financial systems. The plan consisted of the following seven key
phases: awareness, inventory, risk assessment, remediation, quality assurance,
implementation and contingency planning. The plan also included steps to verify
that all key customers, suppliers and other third parties with whom the Company
transacts business were taking the necessary measures to ensure their own
readiness and timely implementation. All phases of the Year 2000 readiness plan
were completed as scheduled prior to the end of 1999. To date, Insignia has not
experienced any Year 2000 Issues with respect to its internal operating systems,
customers, suppliers or other third parties. In addition, Insignia has not
experienced any material loss in 2000 due to the Year 2000 Issue.



                                       20
<PAGE>



RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 133 ("SFAS"), Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 requires companies 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 does not anticipate that its adoption will have a
material effect on the financial position or results of operations of the
Company.

     In December 1999, the SEC staff issued Staff Accounting Bulletin 101 ("SAB
101"), Revenue Recognition. SAB 101 discusses the SEC staff views on certain
revenue recognition transactions. The Company will adopt SAB 101 no later than
the second quarter of 2000 and any change in accounting would be recognized as a
cumulative effect of a change in accounting principle as of January 1, 2000.
Management has not completed its review of SAB 101 and its impact to the
Company's business. The adoption of SAB 101 might have a material effect on the
financial position and results of operations of the Company; however, any change
would have no impact on the Company's cash flow from operations. At this time,
the Company is unable to predict the impact, if any, on its normal seasonal
revenue patterns.

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 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.

     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.

     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 adverse impact on the Company's profitability.



                                       21
<PAGE>



NATURE OF OPERATIONS

     Revenues from tenant representation, investment sales, debt placements,
agency leasing and residential 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 gradual slowdown in
transactional activity and corresponding operating results during the first
quarter.

     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 favorable 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

     Insignia is exposed to a variety of market risks, including foreign
currency exchange rate fluctuations and changes in 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 conducts business in the following
foreign jurisdictions: United Kingdom, Germany, Italy, and Belgium. As a result
of these foreign operations, the Company's financial results could be
significantly affected by factors such as fluctuations in foreign currency
exchange rates and weak economic conditions in these foreign markets. These
foreign factors have not had a material adverse effect on the Company and are
not expected to have a material impact in the foreseeable future.

     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 at current cash and debt levels would have an
estimated annual net impact of approximately $1.0 million on the Company's
results of operations.



                                       22
<PAGE>



FORWARD LOOKING STATEMENTS

     Certain items discussed in this Report constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and, as such, involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. You can
identify such statements by the fact that they do not relate strictly to
historical or current facts. Statements which make reference to the expectations
or beliefs of the Company or any of its management are such forward-looking
statements. These statements use words such as "believe", "expect", "should" and
"anticipate". Such information includes, without limitation, statements
regarding the results of litigation, Insignia's future financial performance,
estimated capital expenditures, statements concerning the performance of the
U.S. and international commercial and residential brokerage markets, and the
Company's plans to develop and operate commercially viable Internet and
e-commerce businesses. Actual results will be affected by a variety of risks and
factors, including, without limitation, international, national and local
economic conditions and real estate risks and financing risks.

     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.



                                       23
<PAGE>


                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.  Legal Proceedings
--------------------------

     See Note 17 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 filed during the quarter ended March 31, 2000:

        None.



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<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 of the Board and
                                                  Chief Executive Officer




                                             By:  /s/James A. Aston
                                                  ------------------------------
                                                  James A. Aston
                                                  Chief Financial Officer
                                                  (Principal Accounting Officer)




                                       25