<PAGE>


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

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 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)

           Securities registered pursuant to Section 12(b) of the Act:

          Title of each class              Name of exchange on which registered

Common Stock, Par Value $0.01 Per Share            New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act:

                                      None

                                (Title of Class)

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 .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. {X}

At March 1, 2001, there were 21,691,064 shares of Common Stock outstanding.
Based on the reported closing price of $13.00 per share on the New York Stock
Exchange on such date, the aggregate market value of Registrant's Common Stock
held by non-affiliates was approximately $250 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for the Annual Meeting of Stockholders is incorporated by
reference in Part III of this Form 10-K.



<PAGE>


                                     Part I

Item 1.  Business

ORGANIZATION

     Insignia Financial Group, Inc. ("Insignia" or the "Company"), a Delaware
corporation headquartered in New York, New York, is an international real estate
services company with operations throughout the United States and United Kingdom
as well as in continental Europe, Asia and Latin America. Insignia, incorporated
on May 6, 1998 under the name Insignia/ESG Holdings, Inc., originally was a
wholly-owned subsidiary of a company also named Insignia Financial Group, Inc.
("Former Parent"). On September 21, 1998, Former Parent effected the spin-off of
Insignia through a pro rata distribution (the "Spin-Off") to the holders of
common stock of Former Parent of all the outstanding common stock of Insignia
(the "Common Stock"). On November 2, 1998, Insignia assumed the name of Former
Parent, "Insignia Financial Group, Inc.," and reclaimed Former Parent's original
New York Stock Exchange symbol, "IFS." Insignia's principal executive offices
are located at 200 Park Avenue, New York, New York 10166, and its telephone
number is (212) 984-8033.


     Insignia's real estate service businesses specialize in commercial real
estate services, apartment brokerage and leasing, single-family home brokerage,
mortgage origination, title services, escrow agency services, condominium and
cooperative apartment management, real estate oriented financial services,
equity co-investment and other services. The Company's principal real estate
service businesses are Insignia/ESG, Inc. (U.S. commercial real estate
services), Insignia Richard Ellis (U.K. commercial real estate services),
Douglas Elliman LLC (residential sales and rentals), Realty One, Inc.
(single-family home brokerage and mortgage origination) and Insignia Residential
Group, Inc. (condominium and cooperative apartment management). Insignia
operates other European businesses in Frankfurt, Germany; Milan, Italy;
Brussels, Belgium; Dublin, Ireland; Belfast, Northern Ireland; and Amsterdam,
the Netherlands. Insignia enjoys overall market dominance for commercial and
residential real estate services in New York through the leading market
positions of Insignia/ESG, Douglas Elliman and Insignia Residential Group.


     The Company commenced operations in Asia in July 2000 by establishing an
office in Tokyo, Japan and subsequently acquiring Brooke International, a
commercial real estate services company with existing offices in Hong Kong,
China and Thailand, in December 2000. The Company also recently extended its
service capability into Latin America with the March 2001 acquisition of Grupo
Inmobiliario Inova S.A de C.V. ("Inova"), located in Mexico City, and plans to
further extend its Asian platform with the acquisition of Brooke International's
operations in India in early April 2001.

     In addition to real estate services, Insignia invests in real estate
assets, through co-investment initiatives with institutional clients, principal
development activities and real estate funds. The Company's real estate service
businesses and real estate investment activities are more fully described below.

REAL ESTATE SERVICES

COMMERCIAL REAL ESTATE SERVICES


     The Company's commercial real estate services are performed through
Insignia/ESG in the United States, Insignia Richard Ellis ("IRE") in the United
Kingdom and other Insignia subsidiaries in continental Europe, Asia and Latin
America. The Company's commercial services operations generated aggregate
service revenues of $641.9 million in 2000, or approximately 73% of the
Company's total service revenues and representing substantial gains over $497.8
million in 1999 and $378.4 million in 1998.


United States Operations


     The Company's U.S. commercial real estate services operations commenced in
1991 as a division of Former Parent. The move into full-service brokerage
commenced in 1996 with the acquisition of Edward S. Gordon Company Incorporated
and subsequent expansion of brokerage operations nationwide. In the U.S., the
Company is among the leading providers of commercial real estate services, with
leadership positions in the New York metropolitan marketplace and significant
positions in other major markets including Washington, D.C., Philadelphia,
Boston, Chicago, Atlanta, Phoenix, Los Angeles, San Francisco, Dallas and Miami.
The Company's growth in the



                                       1
<PAGE>

late 1990's was fueled largely by acquisitions of regional commercial real
estate service companies. However, its growth in 2000 was almost fully achieved
through the organic expansion of its client base. U.S. commercial real estate
services operations comprise the Company's largest business unit, accounting for
approximately 57% of total service revenues for the 2000 year. U.S. commercial
service operations generated service revenues of approximately $500.2 million in
2000, reflecting material growth over $389.2 million in 1999 and $312.9 million
in 1998.


     The Company provides a broad spectrum of commercial real estate services
throughout the U.S. to corporations and other major space users, property owners
and investors. These services include tenant representation, property leasing
and management, property acquisition and disposition services, investment sales,
mortgage financing, equity co-investment, development, redevelopment and
consulting services. The Company serves tenants, owners and investors in office,
industrial, retail, hospitality and mixed-use properties, representing 224
million square feet of commercial real estate including 148 million square feet
of office space, 56 million square feet of industrial space, 15 million square
feet of retail space and 5 million square feet of mixed use space. These
services are provided on a third-party basis for companies such as The Irvine
Company, Teachers Insurance and Annuity Association, Chase Manhattan, TA Realty,
Lend Lease and others. During 2000, the Company completed U.S. sales and leasing
transactions totaling in excess of 180 million square feet of commercial real
estate, including more than $5.0 billion of commercial property sales.
Insignia/ESG's major corporate clients include Chase Manhattan, Lehman Brothers,
The New York Times Company, Barclays and Metropolitan Life.


     All commercial real estate services in the U.S. are rendered under the
Insignia/ESG brand. The Company prides itself on the consistent, high-quality
delivery of its services across geographic markets, property types and
disciplines and is active to varying degrees in 47 U.S. markets. Specialized
divisions within the U.S. commercial services business are Capital Advisors
(investment sales and financing activities), Hotel Partners (hotel/hospitality
brokerage services) and Commercial Investments Group (fee-development and
redevelopment services).


     The Company represents many leading corporations and property owners,
helping them to fulfill their real estate needs in this marketplace. During the
2000 year, Insignia/ESG extended its market-leading position in New York with
participation in 24 of Manhattan's 50 largest office-leasing transactions,
including the top three, according to a list published in the February 2001
issue of Crain's New York Business. This represents the fourth consecutive year
that Insignia/ESG held the number one position in this survey and reflects an
increase from 17 of the top 50 transactions for the 1999 year. In addition,
Insignia/ESG was also responsible for the largest leasing transaction in New
Jersey for the second year in a row and 8 of the top 20, according to the
January 2001 issue of Real Estate New Jersey.

     The Company's reputation and success throughout the U.S. serves as the
primary catalyst for growth and expansion of commercial real estate services
both domestically and internationally. The Company's growth strategy combines
targeted acquisitions of companies that offer complementary skill sets as well
as the expansion of servicing capabilities in select markets through broker
recruitment initiatives. Expansion is primarily focused on first tier markets
(those comprising 75 million square feet or more) and secondarily on
opportunities in second tier U.S. and international markets (those comprising 25
million to 74 million square feet). Since May 1998, the Company has completed
acquisitions of commercial real estate service companies in Chicago,
Philadelphia and Boston, and expanded its service capabilities in Los Angeles,
San Francisco, Atlanta and Miami.

United Kingdom and European Operations


     The Company's European businesses consist of commercial real estate
operations in the United Kingdom, Germany, Italy, Belgium and the Netherlands.
European operations, which accounted for 16% of Insignia's total service
revenues, produced approximately $141.8 million in service revenues, concluded
more than 66 million square feet of sales and lease transactions and arranged
the sale of more than $9.0 billion in commercial property in 2000. For the 1999
and 1998 years, Insignia's European operations generated service revenues of
$108.6 million and $65.4 million, respectively. The growth in European
operations for 2000 was primarily achieved through the organic expansion of the
Company's client base in the U.K. This expansion was substantially due to the
successful integration in 1999 of Richard Ellis Group Limited ("REGL"), acquired
in 1998, and St. Quintin Holdings Limited ("St. Quintin"), acquired in 1999,
into a single U.K. operation with a leading market position in London. The
British Pound (Sterling) represents the only foreign currency of a material
business operation, as more than 90% of Insignia's foreign operations were
derived in the U.K. for both 2000 and 1999, with services revenues of $132.2
million and $104.6 million, respectively. The continental European businesses
contributed positive results for 2000 with more than $9.5 million of service
revenues. The continental European businesses are expected to provide


                                       2
<PAGE>

increasingly meaningful contributions over time through the maturation of
operations and expansion of service capabilities throughout their markets.

     The Company's U.K. subsidiary is among the three largest commercial real
estate service providers in the United Kingdom and the largest, based on 25%
market share for leasing activity, in central London. The Company provides
extensive coverage of the entire United Kingdom market through full-service
offices in London, Glasgow, Birmingham, Leeds, Manchester, Liverpool and Jersey,
and holds a minority equity interest in an Irish real estate services company
with offices in Ireland and Northern Ireland through offices in Dublin and
Belfast. The Company's U.K. operation provides broad-ranging real estate
services, including agency leasing, tenant representation, property sales and
financing, consulting, project management, appraisal, zoning and other general
services. The major income components are agency leasing, tenant representation
and property sales and financing. The 2000 year was exceptionally successful for
the U.K. operation, reflecting the full benefit of the 1999 operational merger
of REGL and St. Quintin and a robust real estate market in the U.K.

     The combined strength of the Company's subsidiaries in New York and London
gives Insignia a commanding position in two of the world's most important global
business centers. The U.S. and U.K. operations have benefited from transatlantic
cross-selling opportunities, which are expected to grow in impact over time, in
light of the global business environment and the prominence of New York and
London as world financial capitals.


     The U.K. operations are viewed as the springboard for the Company's
continued global expansion of the commercial real estate services platform.
Since the initial acquisition of REGL in February 1998, the U.K. operations have
assisted in the establishment of service operations in Frankfurt, Germany,
Milan, Italy, Brussels, Belgium and Amsterdam, the Netherlands.

Asian Operations

     The Company launched operations in Asia during 2000 with the establishment
of an office in Tokyo, Japan in July 2000 and the acquisition of Brooke
International, a Hong Kong based commercial real estate services company, in
December 2000. The Tokyo operation serves the Company's clients throughout
Japan.


     Brooke International, founded in 1988, employs approximately 80 real estate
professionals and support personnel in four offices in Hong Kong, China, and
Thailand. The acquisition provides the Company with an ideal platform from which
to serve existing clients in Asia, particularly in corporate real estate
services and investment business, and should also create cross-selling
opportunities with the U.S., U.K. and continental European businesses. Insignia
expects to expand its Asian operations with the acquisition of Brooke
International's operations in India in early April 2001 and anticipates further
expansion in Asia as additional attractive opportunities are identified.


Commercial Services

     The full range of commercial services provided by the Company world-wide
include the following:

     Tenant Representation-- acquisition or disposition of leased or owned space
on behalf of space users

     Consulting -- specialization in large, multi-faceted transactions (usually
50,000 square feet or more) requiring in-depth planning, analysis and execution

     Investment Sales-- sale or acquisition of all types of commercial property
on behalf of owners

     Mortgage Financing -- arrangement of financing (either debt or equity) on
behalf of owners of all types of commercial properties

     Agency Leasing -- marketing of available space within commercial properties
on behalf of owners/landlords and the consummation of leases with tenants

     Property Management -- responsibility for the financial and operational
aspects of a commercial property, which sometimes involve specialized services
such as construction management, engineering or energy management



                                       3
<PAGE>

     Facilities Management -- responsibility for the delivery of services for
properties owned and occupied by corporations, institutions, government
agencies, hospitals, colleges and universities

     Industrial Services -- specialized services performed for the owners and/or
users of manufacturing, warehouse, distribution or flex-space (combining office
and industrial uses) facilities

     Property Development and Redevelopment -- development and construction
services for owners of office, industrial and retail properties, and the
re-development/re-positioning of properties for owners looking to create
enhanced value

     Real Estate Investment -- primarily through ownership in equity
co-investment partnerships and development property with select clients

Market Trends

     United States

  o  Clients Demand More Services; Desire to Consolidate Service Providers -- As
     real estate requirements become more sophisticated, clients' needs follow.
     Increasingly, companies want to be able to turn to a single source for all
     of their real estate use, investment and management requirements. As a
     result, clients with multiple real estate requirements ranging from
     occupancy needs to investment objectives are consolidating service
     providers. Whereas several years ago it might have been common for real
     estate owners, users and investors to hire several different companies in
     different locations to manage their needs, the industry is seeing a trend
     towards the hiring of fewer providers to address all of a client's
     requirements.

 o   Increasing Sophistication of Transactions -- As companies grow the
     significance of their real estate issues follow suit. It is common today
     for a company's real estate occupancy and investment issues to be second
     only to labor as a component of overall operating costs. Additionally, with
     the increasing sophistication of capital markets, the trend toward real
     estate securitization, the tendency of companies today to merge with others
     to achieve economies of scale and capture market share, and the
     consolidation of worldwide locations that accompany such mergers, the
     manner in which corporations manage such issues can have profound impacts
     on their financial performance. As a result, the level of sophistication
     required to manage such complex requirements and interrelationships
     transcends the traditional role of the real estate broker. Successful
     commercial real estate services companies today must be able to manage
     these requirements in order to effectively compete.

     The Company's response to the foregoing is to seek to become an advisor for
corporations and financial institutions with respect to their real estate use,
investment and management requirements in the same manner that major investment
banks are advisors to a corporation's corporate finance requirements. By
focusing on providing the highest quality services with the best talent in the
major business centers of the world, the Company seeks to become the "one-stop"
resource for all real estate requirements, specializing in the more complex and
creative transactions that characterize today's worldwide marketplace.

     Europe

     The consensus forecast for the U.K. economy projects the slowdown of
overall growth in the commercial real estate sector in 2001 (compared with
2000), while overall growth in the Euro based economies is expected to remain at
levels relatively consistent with the 2000 year. After very strong activity in
2000, occupational demand in Southeast England will moderate, especially in the
information technology and telecommunications sectors; however, the market will
remain tightly supplied due to limited new development for office space. The
global slowdown and reduced dynamism in technology sectors are likely to lower
the pressure of demand over the course of 2001 in some European markets, causing
leasing activity to decline.


                                       4
<PAGE>

Competitive Position/Competition

     The Company believes that it is well positioned to meet the competitive
challenges present in the commercial real estate marketplace. Among its
competitive strengths are:

         o        strong reputation and recognition of the Company's brand names
                  within the industry

         o        quality and depth of both its management and brokerage staff

         o        entrepreneurial corporate culture, which allows it to respond
                  quickly to opportunities

         o        unique methodologies for implementing large, complex
                  transactions

         o        complete array of services, which allows it to both meet
                  existing client needs and take advantage of cross-selling
                  opportunities

         o        extensive property services portfolio, which provides
                  significant economies of scale

         o        proven mergers and acquisitions capability

         o        market leadership in two of the world's most important
                  financial centers-- New York and London

         o        focus on attracting, retaining, supporting and promoting the
                  highest quality, most skilled personnel in the industry

     U.S. Commercial Real Estate Services

     Competition is intense in the U.S. commercial property services industry,
particularly in the areas of tenant representation, property leasing and
management and other services in which the Company is engaged. Historically,
most competitors have been regional or local companies specializing in one or
more aspects of the business (e.g., property management, tenant representation,
etc.). However, the consolidation trend has spawned fewer, larger international
competitors that are integrated across property types and disciplines. The
Company competes increasingly with these full-service national competitors,
including CB Richard Ellis, Cushman & Wakefield, Grubb & Ellis, Jones Lang
LaSalle and Trammel Crow.

     Different factors weigh heavily in the competition for tenant
representation and property services assignments. For major tenant
representation assignments, competition is based on quality of services,
demonstrated track record, breadth of resources, analytical skills and market
knowledge. The Company has a distinct methodology for executing major tenant
representation assignments, which combines brokerage and consulting disciplines.
This methodology, honed in New York over the past decade, is being exported to
top tier markets throughout the United States. Further, the Company has an
outstanding track record in completing major tenant representation assignments.
Over the last two years, the Company, as tenant representative, has arranged
major transactions for such well-known entities as the following: Chase
Manhattan, Lehman Brothers, Credit Suisse First Boston, John Wiley & Sons,
Barclays, Global Crossing, Marsh & McLennan, Winstar Communications, Martha
Stewart Enterprises, Waterhouse Securities and Citigroup.

     As previously noted, the Company participated in the top three
office-leasing transactions and 24 of Manhattan's 50 largest office-leasing
transactions for the 2000 year according to a list published in the February
2001 issue of Crain's New York Business. Insignia's creativity and
transaction-structuring expertise have been recognized by a leading trade group,
which annually recognizes two New York City transactions as its "Deals of the
Year." The Company has been the recipient of such awards in four of the past
five years. The Company believes that its outstanding track record provides a
distinct competitive advantage.

     Competition for third-party commercial property services is based
principally on cost and the quality of service, including the ability to enhance
asset values. The Company's personnel are experienced in managing a wide variety
of property types in locations throughout the country. This enables Insignia to
offer an owner of a large diversified portfolio the ability to obtain
experienced management for most or all of its properties through one
organization. The Company believes that it has demonstrated an ability to
effectively manage, lease and improve the value of


                                       5
<PAGE>

properties. In addition, the Company believes that it has developed a reputation
for quality service and attention to detail for clients, investors and tenants
alike. The Company also believes that its economies of scale and
state-of-the-art management information systems allow it to offer services
efficiently and at an overall cost that is competitive with or less expensive
than those offered by other property service companies. Because of its size and
diversity, the Company is able to control operating costs by spreading fixed
overhead expenses across its large service base, which enhances profitability
and enables Insignia to pass cost savings on to the property owners for which it
provides services. Major property owner clients include The Irvine Company, Lend
Lease, Chase Manhattan and Teachers Insurance and Annuity Association.

     U.K Commercial Real Estate Services


     Competition is also intense among commercial service providers in the U.K.
With 2000 revenues of $132.2 million, the Company's U.K. subsidiary has
established itself as a market leader with a "top three" position in the U.K. in
commercial property markets, along with DTZ and Jones Lang Lasalle. The Company
has also achieved the number one position in the highly competitive central
London market for leasing services for 2000 (according to a survey published in
the March 3, 2001 issue of Estates Gazette), surpassing several long entrenched
competitors. The Company believes that its U.K. subsidiary's operations and
reputation place Insignia at a strategic advantage over other primary
competitors including CB Hiller Parker, Knight Frank, Cushman & Wakefield and
FPD Savills.


RESIDENTIAL REAL ESTATE SERVICES

     The Company's residential real estate services are performed in the U.S.
through the collective operations of Douglas Elliman, Realty One and Insignia
Residential Group.. Through these businesses, the Company provides a diversified
array of residential real estate services throughout northern Ohio and the New
York metropolitan area including apartment brokerage and leasing, single-family
home brokerage, mortgage origination, title services, escrow agency services and
condominium and cooperative apartment management. The Company's residential
services operations generated aggregate service revenues of $233.2 million in
2000, or approximately 27% of the Company's total service revenues and
representing material gains over $180.7 million in 1999 and $129 million in
1998.

Residential Sales and Rentals


     Through Douglas Elliman, founded in 1911 and acquired by Insignia in June
1999, the Company operates a residential cooperative, condominium and rental
apartment brokerage and leasing firm in New York City. Douglas Elliman commands
the number one market position for both residential sales and rentals in New
York City according to the annual ranking in the March 2001 issue of Crain's New
York Business. In addition, Douglas Elliman operates in upscale suburban markets
through offices in Greenwich and Darien, Connecticut, Bernardsville/Basking
Ridge, New Jersey, and Long Island (Manhasset, Locust Valley and Port
Washington/Sands Point). Douglas Elliman has more than 900 brokers, supported by
130 corporate employees in 15 offices in the New York City area. In 2000,
Douglas Elliman's apartment brokerage and leasing business closed transactions
valued at over $2.8 billion and generated service revenues of approximately
$107.5 million, or 12% of the Company's total service revenues for 2000.





                                       6
<PAGE>

Single Family Home Brokerage and Mortgage Origination


     Through Realty One, established in 1953 and acquired by Former Parent in
October 1997, the Company operates a full-service single-family residential
brokerage, mortgage origination and title insurance business headquartered in
Cleveland and having offices throughout northern Ohio. Realty One's current
business operation is the result of nearly 60 separate mergers and acquisitions.
Realty One's operations constitute the largest residential real estate brokerage
firm in Ohio and the fourteenth largest (based on unit volume) in the United
States according to Real Trends "Big Brokers Report" published in May 2000.
Realty One employs approximately 1,500 sales associates and 600 corporate and
support staff located in 46 offices throughout northern Ohio and represents more
than 100 residential builders. For 2000, Realty One participated in residential
sales transactions valued at nearly $3 billion. Realty One's residential
services operation produced $99.2 million in service revenues for 2000,
accounting for approximately 11% of the Company's total service revenues.

     The Company, through the combined businesses of Douglas Elliman and Realty
One, operates the tenth largest residential brokerage operation in the United
States, with more than 25,000 transactions valued at approximately $5.8 billion
for the 2000 year.


Cooperative and Condominium Management

     Through Insignia Residential Group, acquired by Former Parent in September
1995, the Company operates the largest manager of cooperatives, condominiums and
rental apartments in the New York metropolitan area, according to a survey in
the February 2001 issue of The Cooperator. Insignia Residential Group provides
full service third-party fee management for more than 300 properties, comprising
in excess of 60,000 residential units, and employ's over 300 people located in
offices throughout the greater New York metropolitan area. Among the notable
properties currently managed by Insignia Residential Group in New York City are
the San Remo, Worldwide Plaza, Fresh Meadows, Horizon House and West Village
Houses. Manhattan is the largest market for Insignia Residential Group, although
it does maintain a presence in each of the other four boroughs of New York City
as well as Long Island, Westchester County and Northern New Jersey. In addition
to property management, Insignia Residential Group also offers mortgage
brokerage services, including resale and financing arrangements for cooperative
and condominium corporations through third-party financial institutions.
Insignia Residential Group's residential management and mortgage brokerage
business generated total service revenues of $26.5 million in 2000, representing
approximately 3% of the Company's service revenues for the year.

Residential Services

     The residential services provided by the Company include the following:

     Residential Brokerage -- agency representation of both buyers and sellers
in the purchase and sale of residential housing, including assisting the seller
in pricing the property, marketing and advertising the property, showing the
property to prospective buyers, assisting the parties in negotiating the terms
of the sale and closing the transaction

     Leasing -- marketing of available space on behalf of owners/landlords of
properties and the consummation of leases with tenants

     Rental Brokerage -- agency representation of rental clients in the
procurement of suitable apartment housing

     Relocation Services -- assisting both corporations and individuals in the
sale, procurement and temporary management of residential properties for
corporations and transferees (including large group moves as well as individual
relocations)

     Builder Marketing Services -- representing and consulting with large
national and local developers providing marketing, research studies, product
development and brokerage services

     Mortgage Origination -- convenient and competitive mortgage services to
single family residential customers and many other brokerages throughout
northern Ohio. The Company represents more than 15 mortgage lenders in northern
Ohio, each offering multiple financial products



                                       7
<PAGE>

     Title Services -- complete title services to single family residential
brokerage customers which streamlines the home-buying and selling process by
enabling customers to conduct their entire sale or purchase transaction from one
central site, with coordinated business services creating a true "one-stop
shopping" experience

     Escrow Agency-- residential escrow agency services facilitating the closing
of property sales

    Property Management -- involves providing accounting services on a cash or
accrual basis, lease administration, central purchasing, cash management,
insurance oversight, collections and compliance monitoring, and construction
management

    Transfer Agent -- On behalf of cooperative and condominium clients, the
Company processes applications of prospective purchasers, arranges and attends
closings, facilitates the assignment of proprietary leases and provides
safekeeping of leases and other documents


    Mortgage Brokerage Services -- mortgage brokerage services including resale
and financing arrangements for customers through third-party financial
institutions


Market Trends


     The residential brokerage industry is currently defined by several key
trends, including the following: market compression; market fragmentation; and
consolidation. Profit margins are being compressed primarily as a result of
increasing splits paid to real estate agents and rising marketing costs in
response to increased market competition. There are more than 50,000 residential
brokerage companies in the U.S., one quarter of which are currently estimated to
be unprofitable, according to various industry research studies. No single
independent broker commands more than 1% of the national market, and no national
franchise company maintains more than an 11% market share, with only three
franchise companies holding more than 3%.


     The residential brokerage industry has been consolidating for some time.
Through the exceptional brand names of Realty One and Douglas Elliman, the
Company believes it is in a position of strength to enhance Insignia's market
leading positions in northern Ohio and New York and to expand into other markets
through attractive acquisitions and the extension of service capabilities.

     Opportunities exist to increase profit margins through the expansion of
services into related areas, such as mortgage, escrow, title, valuation and
renovation services that will offer the consumer a true "one-stop shopping"
experience. The approach of both Realty One and Douglas Elliman is to use
advanced technology to bundle services more inexpensively and increase the value
to the consumer.

Competitive Position/Competition

     The Company believes its competitive strengths in the residential real
estate marketplace include the following:

         o        exceptional reputation and recognition of the Company's
                  residential brand names

         o        market leadership in the Company's principal residential
                  markets-- New York and northern Ohio

         o        superior service capability due to geographic reach in the New
                  York and northern Ohio markets

         o        leading edge use of information technology platforms tailored
                  to the specific needs of residential clients

         o        full range of residential services and innovative marketing
                  practices



                                       8
<PAGE>

     Residential Sales and Rentals

     Through Douglas Elliman, the Company enjoys a long-established presence in
the New York City marketplace with a well-recognized brand name and leading
market share. Douglas Elliman offers a comprehensive range of services and
enjoys clear market advantages over its competitors, most notably The Corcoran
Group and Brown Harris Stevens, based on its size, geographic reach in the New
York marketplace and its alignment alongside the Company's other New York
operations of Insignia/ESG and Insignia Residential Group.

     Single Family Home Brokerage and Mortgage Origination

     Through Realty One, the Company accounts for approximately 28% of
single-family home sales or listings within the northern Ohio residential
market. The number two firm, Smythe, Cramer Company, is responsible for
approximately 19% of total sales and listings. Other firms trail significantly
further behind. The Company believes that Realty One's success is due to a
number of competitive advantages, including its leading-edge use of technology
and innovative marketing practices.

     Realty One's marketing practices are spearheaded by its marketing plans,
which include "Welcome Home For First Time Buyer" and Relocation value package
programs. These programs include discounts and other promotional items from
various national vendor participants including various appliance companies,
Glidden Paints, Carter Lumber and Royal Dirt Devil Vacuums. To benefit from
these marketing programs, consumers are required to use the brokerage and
mortgage origination or title services offered by Realty One and its
subsidiaries. In addition, first time buyers receive a free home warranty and a
free home inspection with a combined value in excess of $700 when they elect to
use the services of Realty One's mortgage origination subsidiary, First Ohio
Mortgage. The Company believes that the value of the free home warranty and free
home inspection combined with the discounts and other promotional items give
Realty One a significant competitive advantage over its peers.

     Cooperative and Condominium Management

     Through Insignia Residential Group, the Company operates the market leading
cooperative and condominium management business in the New York metropolitan
area. The cooperative, condominium and apartment management business is
extremely competitive. In addition to several large companies, including Charles
Greenthal, Inc. and Brown, Harris and Stevens, Inc., there are many small
entities that aggressively compete for business. Further, some owner
associations have opted for self-management, which eliminates the need for
third-party service provider's altogether. Despite the competitive landscape,
the Company believes Insignia Residential Group has a proven record and that it
has the capability to continue to compete successfully. Insignia Residential
Group has grown to be a market leader by offering superior service while
providing its clients cost benefits not available from smaller competitors.
Examples are the lower cost of supplies, insurance and other items that Insignia
Residential Group purchases on behalf of its clients using the buying power
available because of size.

REAL ESTATE PRINCIPAL INVESTMENT ACTIVITIES

Co-investment and Development


     Insignia pursues opportunities to invest in operating real estate assets.
The Company identifies investment opportunities for select clients and invests
alongside of those clients in the purchase of qualifying properties.
Co-investment partners include Walton Street Real Estate Fund III, Citibank, ING
Barings, Blackacre Capital Management, The Witkoff Group, Lennar, Lone Star
Opportunity Fund, Prudential, GE Investments and Whitehall Street Real Estate.
As of December 31, 2000, Insignia held ownership in 33 co-investment
partnerships totaling over 9.2 million square feet of commercial property and
over 4,700 multi-family apartment and hotel units. The Company's ownership
interests in these partnerships range from 1% to 30%.


     At December 31, 2000, the Company also was the sole owner of four
properties with an aggregate real estate carrying value of approximately $57.6
million at December 31, 2000. These properties, which are consolidated in the
Company's financial statements, include the following:

          o       Brookhaven Village - 155,000 square foot retail facility
                  located in Norman, Oklahoma

          o       Dolphin Village - 136,000 square foot retail facility located
                  in St. Petersburg, Florida



                                       9
<PAGE>

          o       One Telecom - 226,000 square foot office property located in
                  Richardson, Texas and originally developed by Insignia

          o       Sun Microsystems - 91,000 square foot office property located
                  in Hillsboro, Oregon and currently under development


     In addition, the Company holds a 25% interest in an office property under
development; owns 30% interests in two parcels of land held for development; and
solely owns one parcel of land also held for development. Development activities
on these properties are being directed by Insignia and are not expected to be
complete until later in 2001 or thereafter.


Insignia Opportunity Trust

     In 1999, Insignia sponsored the formation of a private real estate
investment trust ("REIT"), Insignia Opportunity Trust ("IOT"). Through its
subsidiary operating partnership, Insignia Opportunity Partners ("IOP"), IOT
invests primarily in secured real estate debt instruments and, to a lesser
extent, in other real estate debt and equity instruments, with a focus on below
investment grade commercial mortgage-backed securities.

     At formation, IOT received aggregate capital commitments of $71 million (of
which $9 million was committed by Insignia and the remainder committed by
third-party investors), which IOT in turn committed to invest in IOP in exchange
for an 88.75% general partner interest in IOP. Insignia also committed to invest
an additional $1 million directly in IOP in exchange for (i) a 1.25% managing
general partner equity interest and (ii) a 10% non-subordinated promoted equity
interest in IOP. Through December 31, 2000, the IOT investors had funded
approximately $52.3 million of their aggregate commitments (including $6.6
million funded by Insignia) and Insignia had funded approximately $737,000 of
its capital commitment to IOP, resulting in an Insignia ownership interest of
approximately 12% in IOT and 11% in IOP. Funding of the remaining capital
commitments is to be completed during 2001.

INTERNET INITIATIVES


     In late 1999, Insignia's launched an Internet strategy involving an
extensive array of e-commerce initiatives and strategic alliances, including
internally developed Internet-oriented businesses and equity investments in
third-party businesses, seeking to capitalize on Internet-related opportunities
primarily in the real estate industry. In the aggregate, the Company invested
approximately $45 million in Internet and technology-related businesses in 1999
and 2000, including approximately $18.7 million of operating costs expensed
during the periods. These Internet initiatives have been a disappointment,
primarily due to the evaporation of equity financing for Internet technology
initiatives in the second half of 2000. As a result, the Company has reevaluated
its approach to e-commerce and Internet-based initiatives, ultimately deciding
to sell, merge or terminate the majority of its internally developed
internet-based businesses and to substantially cease equity financing activities
with third-party Internet-based businesses. A driving force behind these
decisions was the Company's desire to eliminate all on-going exposure to the
financial requirements associated with such Internet-based initiatives.
Consequently, the Company incurred aggregate net pre-tax losses of $34.7 million
in 2000 related to Internet initiatives, including impairment write-downs of
$18.4 million (including both internal initiatives and third-party investments)
and aggregate net operating losses of $16.3 million.


     At December 31, 2000, Insignia held remaining equity investments of
approximately $10.5 million (after approximately $8 million of impairment
write-offs) in third-party Internet-related businesses. Insignia's equity
ownership in these businesses ranges from 1% to 10%. While these businesses
continue to operate, their future performance is highly dependent upon the
ability to raise incremental capital to fund the on-going development of their
business plans. If they are unsuccessful in raising the necessary capital,
Insignia could incur further losses from impairment write-offs.

     During the first half of 2000, Insignia consolidated EdificeRex.com, Inc.
("EdificeRex") and recorded losses of approximately $9.3 million, or $3.2
million in excess of the Company's investment. EdificeRex, launched in February
2000, represented Insignia's first internally developed Internet-based business
and was de-consolidated, beginning with the third quarter of 2000, due to a
restructuring which reduced the Company's voting interest to 47%. The
restructuring did not affect Insignia's ownership in EdificeRex, as the Company
continues to hold an economic interest of approximately 50%. The $3.2 million
excess loss is carried as a deferred credit on the Company's balance sheet until
such time as EdificeRex achieves profitability or Insignia disposes of its
interest in EdificeRex.


                                       10
<PAGE>

     The Company has no obligation or intention to provide additional funding to
EdificeRex. All other internal Internet-based operations were terminated at
December 31, 2000, resulting in a $10.4 million impairment write-off of
capitalized development costs.


     The Company has no intention of making any material investments in Internet
technology initiatives other than certain Internet-related platforms developed
or invested in by Project Octane, the industry consortium comprised of Insignia,
CB Richard Ellis, Jones Lang LaSalle and Trammel Crow.


2001 OUTLOOK


     The Company's core real estate service businesses continue to perform well.
In fact, while predictions of material softening emanate from the economic
community, the Company has not yet experienced any meaningful negative impact on
the service businesses. That said, the Company believes that the extraordinary
operating levels experienced in 2000 are unlikely to continue at the same pace
in 2001. However, in light of the eradication of $34.7 million of
Internet-related losses and an expected material reduction in capital
expenditures, Insignia expects overall capital invested in our businesses in
2001 to decline significantly from year 2000 levels. Thus, while it may be
unlikely for the Company to surpass the robust operating performance in 2000 for
the service businesses, expectations for 2001 call for financial results
surpassing any year in Insignia's or its Former Parent's history other than
2000. If 2001 expectations are met, the reduction in technology related
investments, both e-commerce initiatives and business capital expenditures,
should result in increased operating cash flow. In any event, the Company
expects 2001 to be another solid year, on the back of tremendous growth and
performance in 2000.


     In addition to developments in the Company's core service businesses,
Insignia expects 2001 to be strategically significant. The Company has spent the
last four years developing a global real estate services platform with
meaningful market positions in many major financial centers around the world. At
the same time, Insignia has a proven track record of real estate investing as a
principal, both on and off balance sheet, typically in partnership with our
clients. These activities include the Former Parent's earlier programs involving
limited partnerships as well as the Company's current co-investment,
development, and real estate-oriented debt securities programs. Recently, these
activities have been undertaken either on a one-off basis, utilizing the
Company's own resources in tandem with institutional clients, or occasionally
through the creation of off-balance sheet investment funds, such as IOT.

     During 2001, Insignia expects to continue its principal investment
activities and pursue other off balance sheet investment opportunities, similar
in scope to IOT, which would expand the Company's real estate investment
initiatives while at the same time enabling these investment activities to
produce more predictable operating contributions.

ACQUISITIONS

     Over the past ten years, Insignia has demonstrated the ability to recognize
accretive acquisition opportunities and to successfully integrate them within
its existing infrastructure. Insignia continues to seek opportunities to align
its business with other market leading real estate service firms that fit the
Company's objectives for expansion. Insignia maintains an internal mergers and
acquisitions staff that includes all senior members of Former Parent's
investment banking group as well as the acquisition analysis staff currently
maintained by Insignia Richard Ellis in the United Kingdom.


     Insignia continues to pursue an acquisition strategy that focuses on the
expansion both domestically and internationally, while simultaneously seeking
principal opportunities to invest capital in real estate assets in partnership
with its clients. Such undertakings may be in the areas of commercial and
residential real estate assets and services. Insignia has acquired the following
real estate services businesses since January 1, 2000:


                                       11
<PAGE>

Inova

     In March 2001, Insignia acquired Inova, a commercial real estate service
company headquartered in Mexico City. Inova provides acquisition advisory
services and due diligence, project coordination and supervision, real estate
valuations, tenant representation, asset management and strategic advisory
services. Inova offers Insignia an operating platform, with quality real estate
professionals, for the expansion of services in Mexico. The base purchase price
was approximately $500,000 and was paid in cash.

Brooke International

     In December 2000, Insignia acquired Brooke International, a commercial real
estate service company based in Hong Kong with additional offices in China and
Thailand. The base purchase price was approximately $1.6 million, comprised of
approximately $1.1 million paid in cash and $500,000 in equity. Additional
purchase consideration of up to $1 million, payable over three years, is
contingent on the future performance of Brooke International, which now operates
as Insignia Brooke. Insignia intends to acquire Brooke International's operation
in India in early April 2001.

BDR


     In March 2000, the Company entered into a definitive agreement to acquire
BDR, a Dutch real estate services company headquartered in Amsterdam, the
Netherlands. The base purchase price was approximately $2.4 million, all of
which was paid in cash upon final closing in September 2000. BDR provides a
variety of commercial real estate services with a specialization in
international advisory assignments and other corporate services. Additional
purchase consideration of approximately $2.5 million, payable over three years,
is contingent on the future performance of this business, which now operates as
Insignia BDR.

LIFE INSURANCE PROCEEDS

     In October 2000, Insignia received $20 million of life insurance proceeds
from a "key man" insurance policy on the life of Edward S. Gordon, a member of
the Company's Office of the Chairman who passed away on September 21, 2000. The
policy was purchased as a part of Insignia's acquisition of Edward S. Gordon
Incorporated in June 1996. Insignia incurred approximately $900,000 in
obligations payable to Mr. Gordon's estate at the time of his passing. The
Company recognized the resulting income of $19.1 million in the third quarter of
2000.


CORPORATE BRANDING


     In February 2000, Insignia introduced a worldwide corporate branding
program that established a new logo for each of the Company's principal
businesses. The centerpiece for this worldwide branding change is a vibrant,
bright blue "i" logo. This logo unites the entire company internationally behind
a highly visible and recognizable face in the marketplace and differentiates the
Company's identity as the "new" Insignia - separate and distinct from that of
the Former Parent.


INDUSTRY SEGMENT DATA


     Insignia's operating activities encompass three reportable segments. The
Company's segments include (i) commercial real estate services and principal
investment activities; (ii) residential real estate services; and (iii)
Internet-based e-commerce initiatives. The commercial segment provides services
including tenant representation, property and asset management, agency leasing
and brokerage, investment sales, development, consulting and other services. The
commercial segment also includes the Company's principal real estate investment
activities. Insignia's commercial segment comprises the operations of
Insignia/ESG in the U.S., IRE in the U.K. and other businesses in continental
Europe, Asia and Latin America. The residential segment provides services
including apartment brokerage and leasing, single-family home brokerage
services, property management services, mortgage origination and other services
and is comprised of the operations of Douglas Elliman, Realty One and Insignia
Residential Group. Insignia's Internet initiatives, which were launched in late
1999, involve equity investments in third-party Internet-based businesses and
internally developed business activities. The Company terminated its internally
developed Internet initiatives and substantially ceased equity financing
activities with third-party Internet-based

                                       12
<PAGE>

businesses at December 31, 2000. The Company's unallocated administrative
expenses and corporate assets, consisting primarily of cash and property and
equipment, are included in "Other" in the segment reporting.


     Segment operations are disclosed in the notes to the accompanying financial
statements of Insignia included in Item 14 of this Form 10-K. These financial
statements should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in Item 7 of
this Form 10-K.


CHANGE IN ACCOUNTING PRINCIPLE

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"), Revenue Recognition in Financial
Statements, which discusses the SEC's views on the recognition of revenues from
certain transactions. At December 31, 2000, the Company changed its method of
accounting for revenue recognition for leasing commissions, in compliance with
SAB 101, as a cumulative effect of a change in accounting principle, effective
as of January 1, 2000. As such, operating results for the year ended December
31, 2000 are presented in compliance with the requirements of this accounting
change. Historically, the Company generally recognized leasing commissions upon
execution of the underlying lease, unless significant contingencies existed.
Under the new accounting method, adopted retroactive to January 1, 2000, the
Company's leasing commissions that are payable upon certain events such as
tenant occupancy or payment of rent will be recognized upon the occurrence of
such events. While this accounting change affects the timing of recognition of
leasing revenues (and corresponding commission expense), it does not impact the
Company's cash flow from operations.

     The cumulative effect of the accounting change for prior years resulted in
a reduction to income for the 2000 year of $30.4 million, net of applicable
taxes of $23.3 million. The effect of the change on the 2000 year was to
decrease revenues by $59.8 million and income exclusive of the cumulative effect
of the accounting change by $10.5 million, or $0.43 per share. The effect of the
change on income for each quarter of the 2000 year is provided in the following
table:


<TABLE>
<CAPTION>
                                                            CURRENT PERIOD
                                      NET INCOME (LOSS)        EFFECT OF
                                       ON THE BASIS OF      ACCOUNTING CHANGE
                                        THE PREVIOUS           (NET OF INCOME     ADJUSTED INCOME
    (In thousands)                    ACCOUNTING POLICY          TAXES)                (1)
    -------------------------------- -------------------- --------------------- ------------------

    2000 NET (LOSS) INCOME:
<S>                 <C>                    <C>                   <C>               <C>
      First quarter 2000                   $ (4,312)             $  (401)          $ (4,713)
      Second quarter 2000                      2,767              (3,578)              (811)
      Third quarter 2000                      27,028              (3,238)             23,790
      Fourth quarter 2000                      6,786              (3,265)              3,521
                                     -------------------- --------------------- ------------------
        2000 YEAR                           $ 32,269           $ (10,482)            $21,787
                                     -------------------- --------------------- ------------------
</TABLE>

(1) Represents adjusted income before cumulative effect on prior years.

SEASONALITY

     Seasonal factors affecting the Company are disclosed in Item 7 of this Form
10-K, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" under the caption "Nature of Operations."

ENVIRONMENTAL REGULATION

     Under various federal and state environmental laws and regulations, a
current or previous owner or operator of real estate may be required to
investigate and remediate certain hazardous or toxic substances or
petroleum-product releases at the property, and may be held liable to a
governmental entity or to third parties for property damage and for
investigation and cleanup costs incurred by such parties in connection with
contamination. In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and costs it incurs in
connection with the contamination. The owner or operator of a site may be liable
under common law to third parties for damages and injuries resulting from
environmental contamination emanating from the site.


                                       13
<PAGE>

     The presence of contamination or the failure to remediate contamination may
adversely affect the owner's ability to sell or lease real estate or to borrow
using the real estate as collateral. There can be no assurance that Insignia, or
any assets owned or controlled by Insignia, currently are in compliance with all
of such laws and regulations, or that Insignia will not become subject to
liabilities that arise in whole or in part out of any such laws, rules or
regulations. Management is not currently aware of any environmental liabilities
that are expected to have a material adverse effect upon the operations or
financial condition of the Company.

EMPLOYEES

     Insignia has more than 8,000 employees worldwide, including employee
brokers and other qualified real estate agents and sales associates. Insignia
believes that its employee relations are excellent.

EXECUTIVE OFFICERS

     The following persons serve as executive officers of Insignia. All
executive officers of Insignia serve at the discretion of the Board of
Directors.

<TABLE>
<CAPTION>
             NAME                 AGE                   PRINCIPAL POSITIONS

<S>                                <C>   <C>
       Andrew L. Farkas            40    Chairman of the Board; Chief Executive Officer
       Stephen B. Siegel           56    Director; President; Chairman and Chief Executive Officer of Insignia/ESG, Inc.
       James A. Aston              48    Chief Financial Officer
       Jeffrey P. Cohen            33    Executive Vice President
       Frank M. Garrison           46    Office of the Chairman; President of Insignia Financial Services, Inc.
       Adam B. Gilbert             48    Executive Vice President; General Counsel; Secretary
       Ronald Uretta               45    Chief Operating Officer; Treasurer; President of Insignia/ESG, Inc;
                                         President of Insignia Residential Group, Inc.
</TABLE>


     Andrew L. Farkas has been a director and Chairman of Insignia since its
inception in May 1998 and Chief Executive Officer of Insignia since August 1998.
Mr. Farkas served as a director of Former Parent from its inception in August
1990 until the AIMCO merger in September 1998 and as Chairman and Chief
Executive Officer of Former Parent from January 1991 until September 1998. Mr.
Farkas also served as Chairman of the Board of Trustees of Insignia Properties
Trust, a publicly traded REIT subsidiary of Former Parent, from December 1996
until February 1999 (when it was merged into AIMCO) and as Chief Executive
Officer of Insignia Properties Trust from December 1996 until September 1998.

     James A. Aston has been Chief Financial Officer of Insignia since August
1998. Mr. Aston served as Chief Financial Officer of Former Parent from August
1996 until September 1998. Additionally, Mr. Aston served as a Trustee of
Insignia Properties Trust from December 1996 until February 1999 and President
of Insignia Properties Trust from December 1996 until September 1998. Mr. Aston
commenced employment with Former Parent in January 1991.

     Jeffrey P. Cohen has been an Executive Vice President of Insignia since
March 2000, and was Senior Vice President of Insignia from May 1998 until that
time. Mr. Cohen also serves as an Executive Managing Director of Insignia
Financial Services, Inc. He was a Senior Vice President of Former Parent from
April 1997 until September 1998, and Executive Vice President and Secretary of
Insignia Properties Trust from May 1997 until February 1999. From September 1993
until March 1997, Mr. Cohen was an attorney with the law firm of Rogers & Wells
in New York, New York.

     Frank M. Garrison has been a member of the Office of the Chairman since
August 1998, and also serves as President of Insignia Financial Services, Inc.
Mr. Garrison served as an Executive Managing Director of Former Parent and
President of its Financial Services division from July 1994 until September
1998. Additionally, Mr. Garrison served as a Trustee of Insignia Properties
Trust from December 1996 until February 1999 and Executive Managing Director of
Insignia Properties Trust from December 1996 until September 1998. Mr. Garrison
commenced employment with Former Parent in January 1992.



                                       14
<PAGE>

     Adam B. Gilbert has been General Counsel and Secretary of Insignia since
its inception in May 1998 and Executive Vice President of Insignia since August
1998. Mr. Gilbert also serves as a Senior Vice President of Insignia/ESG. He was
General Counsel and Secretary of Former Parent from March 1998 until September
1998. From January 1994 until February 1998, Mr. Gilbert served as a partner in
the law firm of Nixon, Hargrave, Devans & Doyle, LLP in New York, New York.

     Stephen B. Siegel has been a director of Insignia since its inception in
May 1998 and President of Insignia since August 1998 and is Chairman and Chief
Executive Officer of Insignia/ESG. Mr. Siegel served as President of the Edward
S. Gordon Company Incorporated (now Insignia/ESG) from June 1992 to May 1998.

     Ronald Uretta has served as Chief Operating Officer and Treasurer of
Insignia since August 1998. Mr. Uretta also serves as President of Insignia/ESG
and President of Insignia Residential Group. He was Treasurer of Former Parent
from January 1992 until September 1998 and Chief Operating Officer of Former
Parent from August 1996 until September 1998. Mr. Uretta served as a Trustee of
Insignia Properties Trust from December 1996 until October 1998.

     There are no family relationships among any of the executive officers of
Insignia.


Item 2.  Properties

     Insignia's principal executive office is located at 200 Park Avenue, in New
York, New York. The following table sets forth information on the operating
leases for the principal headquarters for each of Insignia's principal operating
units:


<TABLE>
<CAPTION>
      OPERATING UNIT                          LOCATION                      ANNUAL RENT    SQUARE FT.      EXPIRATION

<S>                         <C>                                             <C>            <C>             <C>
Insignia/ESG                200 Park Avenue, New York, NY                     $6,940,000        120,000     June 2011
Insignia Richard Ellis      Berkeley Square House, London                      3,000,000         42,000     June 2003
Realty One                  6000 Rockside Woods Blvd., Cleveland, OH             660,000         46,000     June 2005
Douglas Elliman             575 Madison Avenue, New York, NY                     635,000         32,000    April 2004
Insignia Residential Group  675 Third Avenue, New York, NY                     1,700,000         72,500  January 2009
</TABLE>


     The Company occupies additional office space in locations throughout the
United States, United Kingdom, continental Europe, Asia and Latin America under
leases expiring at various dates through 2011. Insignia believes its facilities
are adequate for current and future planned uses.



Item 3. Legal Proceedings

ANTITRUST LITIGATION

     In 1994, Re/Max International and various franchisees filed suit in federal
court in Ohio against Realty One, alleging claims under the federal antitrust
laws and related state law claims. Re/Max International alleged in its complaint
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.
Re/Max International claimed actual damages of $30 million. The federal
antitrust laws provide for trebling of actual damages.

     Insignia acquired Realty One in October 1997. In connection with the
acquisition, the sellers agreed to indemnify the Company for any loss arising
from the Re/Max International litigation up to the amount of the acquisition
price of approximately $40 million. The Re/Max International case was recently
tried before a jury, which resulted in a mistrial. The parties subsequently
settled Re/Max International's claims in July 2000, whereby Realty One agreed to
cease to impose reduced commission splits on the Re/Max plaintiffs, subject to
reinstatement in accordance with the terms of the settlement. In September 2000,
the court entered a judgment against Realty One in


                                       15
<PAGE>

the amount of approximately $6.7 million, as agreed to by the parties; however,
also included in its judgment were several terms governing Realty One's conduct
to which the parties had not agreed. Realty One has appealed the court's
judgment. The sellers have funded the initial cash portion of the settlement,
totaling approximately $3.6 million, on behalf of Realty One pursuant to their
indemnification obligations to Insignia and are obligated to fund the remainder
in semi-annual installments over five years. The payment of the first portion of
the judgment was made without prejudice to Realty One's rights of appeal.

LITIGATION CLAIMS

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

INDEMNIFICATION


     In 1998, Former Parent entered into a Merger Agreement with Apartment
Investment and Management Company ("AIMCO"), and one of AIMCO's subsidiaries,
pursuant to which Former Parent was merged into AIMCO. Shortly before the
merger, Former Parent distributed the stock of Insignia to its shareholders in a
Spin-Off transaction. As a requirement of the Merger Agreement, Insignia entered
into an Indemnification Agreement with AIMCO. In the Indemnification Agreement,
Insignia agreed generally to indemnify AIMCO against all losses exceeding $9.1
million that result from: (i) breaches by the Company or Former Parent of
representations, warranties or covenants in the Merger Agreement; (ii) actions
taken by or on behalf of Former Parent prior to the merger, and (iii) the
spin-off. The Company also agreed generally to indemnify AIMCO against all
losses, without regard to any dollar value limitation, that result from: (i)
amounts AIMCO paid to employees of Former Parent that were not retained as
employees of AIMCO; (ii) pre-merger obligations for goods, services, taxes or
indebtedness except for those that AIMCO agreed to assume; and (iii) the
businesses of Former Parent that Insignia now owns and operates as a result of
the Spin-Off.

     Since the merger transaction in October 1998, there have been no related
claims except for an examination of the federal income tax returns of Former
Parent being conducted by the Internal Revenue Service for the years ended
December 31, 1996, December 31, 1997 and the period ended October 1, 1998. AIMCO
has notified the Company that it is seeking indemnity from Insignia for any
liability as a result of this examination. Insignia agreed to indemnify AIMCO
for taxes, penalties, interest and professional fees for which it is liable as a
result of this audit and has reimbursed approximately $500,000 to AIMCO for
professional fees incurred in connection with the audit. No determinations have
been made or can be made at this time as to any potential tax liability that may
arise as a result of this examination.



Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

     No matter was submitted to a vote of the Company's stockholders, through
the solicitation of proxies or otherwise, during the fourth quarter of 2000.


                                       16
<PAGE>

                                     Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

COMMON STOCK


     Insignia's Common Stock trades on the New York Stock Exchange under the
trading symbol "IFS". The following table sets forth the high and low daily
closing sale prices for the Company's Common Stock as reported on the New York
Stock Exchange for each quarter of 1999 and 2000:


<TABLE>
<CAPTION>
CALENDAR PERIOD                                                                         HIGH              LOW
<S>                                                                                     <C>               <C>
1999
   First Quarter ...............................................................        15 7/16           12 1/2
   Second Quarter ..............................................................        14 11/16          10 1/4
   Third Quarter ...............................................................        12 1/8            8 1/8
   Fourth Quarter...............................................................        8 11/16           7 7/16

2000
   First Quarter................................................................        16 5/8            7 9/16
   Second Quarter...............................................................        13 3/4            9 3/4
   Third Quarter................................................................        11 1/4            9 3/16
   Fourth Quarter...............................................................        11 15/16          9 1/2
</TABLE>


     The closing sales price for Insignia's Common Stock on March 1, 2001, as
reported on the New York Stock Exchange, was $13.00.

     The Company's transfer agent is First Union National Bank of North
Carolina, 1525 West W. T. Harris Boulevard. Suite 3C3, Charlotte, North Carolina
28262. As of March 1, 2001, there were approximately 1,600 shareholders of
record of the Company's Common Stock.

     The Company has never paid dividends on its Common Stock and does not
currently intend to pay any dividends in the foreseeable future. Any payment of
future dividends and the amounts thereof will be dependent upon the Company's
earnings, financial requirements and other factors, including contractual
obligations. The payment of dividends is subject to certain restrictions under
the Company's credit facility.




                                       17
<PAGE>

Employee Stock Purchase Program

     The Company's 1998 Employee Stock Purchase Plan was adopted to provide
employees with an opportunity to purchase Common Stock through payroll
deductions at a price not less than 85% of the fair market value of the
Company's Common Stock. This plan is designed to qualify under Section 423 of
the Internal Revenue Code of 1986. During 2000, approximately 307,000 shares of
Common Stock were sold under this plan at an average price of approximately
$7.75 per share.

Stock Repurchases

     At December 31, 2000, Insignia held in treasury 1,502,600 repurchased
shares of its Common Stock. Such shares were repurchased at an aggregate cost of
approximately $16.2 million and are reserved for issuance upon the exercise of
warrants granted in 2000 to certain executive officers, non-employee directors
and other employees of the Company.

Preferred Stock Issuance

     On February 9, 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% cumulative 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 stated value, at any time on or after February 15, 2004.
Stock dividends of $475,000 were paid in 2000 through the issuance of 43,417
shares of the Company's Common Stock.




                                       18
<PAGE>

Item 6.  Selected Financial Data

     The following table sets forth selected historical financial data of
Insignia and those Insignia businesses included in the Spin-Off for the years
ended December 31, 2000, 1999, 1998, 1997 and 1996. This information has been
derived from and is qualified by reference to the consolidated financial
statements of the Company and the notes thereto and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included as Item 7 in this Report.


     The selected financial data presents the historical financial position,
results of continuing operations and cash flows of those Insignia businesses
owned by Former Parent for the periods prior to the Spin-Off in September 1998
as if Insignia were a separate entity for those entire periods presented. Such
financial information is not necessarily indicative of results that would have
occurred had Insignia operated as a stand-alone entity separate from Former
Parent during the periods presented prior to the Spin-Off.


<TABLE>
<CAPTION>
                                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                  -----------------------------------------------------------------------
                                                        2000          1999          1998          1997            1996
                                                        ----          ----          ----          ----            ----
                                                                  (In thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
<S>                                                 <C>           <C>           <C>             <C>           <C>
  Revenues                                          $880,363      $680,348      $507,351        $295,258      $122,005
  Income  before  cumulative  effect of a change
   in accounting principle                            21,787        10,298        11,053          13,055         3,484
  Cumulative  effect of a change  in  accounting
   principle                                         (30,420)           --            --              --            --
  Net (loss) income                                   (8,633)       10,298        11,053          13,055         3,484

PER SHARE AMOUNTS - ASSUMING DILUTION (1):
  Income before cumulative effect of a
   change in accounting principle                   $   0.89      $   0.46      $   0.50             N/A        N/A
  Cumulative effect of a change
   in accounting principle                             (1.24)           --            --             N/A        N/A
  Net (loss) income                                    (0.35)         0.46          0.50             N/A        N/A

OTHER DATA:
  Cash provided by operating activities            $  82,141     $  64,810     $  35,857       $  31,370     $  11,203
  Cash used in investing activities                  (81,436)     (165,844)     (128,140)        (87,667)      (81,090)
  Cash provided by financing activities               62,891       109,429       140,194          61,767        69,895

  EBITDA (2)                                          82,291        58,923        48,345          36,633        14,561
  Net EBITDA (2)                                      82,462        60,493        52,502          37,655        14,905

                                                                             AT DECEMBER 31,
                                                  -----------------------------------------------------------------------
                                                        2000          1999          1998          1997            1996
                                                        ----          ----          ----          ----            ----
                                                                              (In thousands)
BALANCE SHEET DATA:

  Cash and cash equivalents                         $124,527     $  61,600     $  53,489     $    5,514     $       44
  Real estate interests                              102,170        76,298        58,196         19,454          4,465
  Total assets                                       910,342       795,313       595,489        337,945        171,787
  Total debt                                         193,653       164,322        44,438         19,969             --
  Investment and net advances from Former
   Parent                                                 --            --            --        208,444        137,777
  Stockholders' equity                               408,881       393,069     383,243               --             --
</TABLE>


(1) Per share amounts for 1997 and 1996 are not presented because Insignia was
not a separate entity during those periods.


                                       19
<PAGE>

(2) EBITDA is defined as real estate services revenues less direct expenses and
administrative costs. Net EBITDA is defined as income before depreciation,
amortization, income taxes and non-recurring one-time charges. Neither EBITDA
nor Net EBITDA, as disclosed above, should be construed to represent cash
provided by operations pursuant to generally accepted accounting principles
("GAAP"), as neither is defined by GAAP. Insignia's usage of these terms may
differ from other companies' usage of the same or similar terms. As compared to
net income, these measures effectively eliminate the impact of non-cash charges
for depreciation, amortization of intangible assets and other non-recurring
charges. Management believes presentation of these supplemental measures enhance
a reader's understanding of the Company's operating performance.

BASIS OF PRESENTATION


     The comparative financial results for the periods prior to the Spin-Off are
based on the historical financial statements of those Insignia businesses
spun-off from Former Parent as if effected at the beginning of the applicable
year. Administrative expenses, which included, among other things, investment
banking, information technology, legal, finance, accounting and facilities
expenses of Former Parent, were allocated to Insignia for all periods prior to
the Spin-Off. The administrative allocations were determined based on an
analysis of the operations of Former Parent using various methods, including
employee headcount, acquisition activities and estimated management time devoted
to the operations of those Insignia businesses. The selected financial data, as
presented, may not be comparable between periods due to the allocation of
administrative expenses to Insignia for all periods prior to Spin-Off.


Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

FINANCIAL CONDITION


     At December 31, 2000, the Company was affected by a change in its method of
accounting for revenue recognition for leasing transactions in compliance with
SAB101. This change was adopted as a cumulative effect of a change in accounting
principle, effective as of January 1, 2000. Approximately $152 million in
previously recognized leasing commissions were removed as a result of this
accounting change. Such leasing commissions will be realized in the future upon
the fulfillment of conditions to commission payment.

     The Company's total assets increased by approximately $115 million to
$910.3 million at December 31, 2000. This increase was primarily attributable to
the following items: (i) a $62.9 million increase in cash attributable to the
record transaction levels in the commercial services businesses in combination
with $19.1 million of life insurance proceeds; (ii) investment in property and
equipment and real estate interests; and (iii) a $19.2 million increase in
deferred tax assets. Conversely, assets were lowered by a $14.5 million decline
in receivables, which is the net effect of a $137 million increase in
uncollected commissions on executed lease transactions and the reduction of
approximately $152 million in commissions receivables eliminated by SAB101. In
addition, the Company's total assets included costs in excess of net assets of
acquired businesses of $324.6 million and $311.5 million at December 31, 2000
and 1999, respectively, resulting from business acquisitions substantially
comprised of goodwill.

     Liabilities increased by approximately $99.2 million to $501.5 million at
December 31, 2000. This reflects a $45.5 million increase in accrued incentives
resulting from exceptional operating performance, a $22.5 million increase in
acquisition payables related to the full achievement of all remaining U.K.
purchase consideration (payable in March 2001), borrowings of $15 million on
available credit facilities and approximately $20 million of borrowings on real
estate mortgage notes (principally to fund Internet initiatives and real estate
development activities). Stockholders' equity increased by $15.8 million to
$408.9 million at December 31, 2000, principally as a result of the $25 million
convertible preferred stock issuance in February 2000, in combination with a net
loss of $8.6 million for 2000. The net loss for 2000 includes income of $21.8
million before the impact of the cumulative effect of SAB101 on prior years
totaling $30.4 million (net of applicable taxes).


                                       20
<PAGE>

RESULTS OF OPERATIONS

ACCOUNTING CHANGE


     The Company's financial results for 2000 were affected by the change in its
method of accounting for revenue recognition for leasing commissions in
compliance with SAB 101, Revenue Recognition in Financial Statements. The
adoption of SAB 101 is reflected as a cumulative effect of a change in
accounting principle as of January 1, 2000. Under SAB101, the Company's leasing
commissions that are payable upon certain events such as tenant occupancy or
payment of rent will be recognized upon the occurrence of such events.

     Historically, Insignia generally recognized leasing commissions upon
execution of the underlying lease, unless significant contingencies existed.
While this accounting change affects the timing of recognition of leasing
revenues (and corresponding commission expense), it does not impact the
Company's cash flow from operations. Financial results for the year ended
December 31, 2000 are adjusted retroactive to the beginning of the year in
compliance with the requirements of this accounting change. The impact of this
accounting change on the 2000 year is provided in the following table:


<TABLE>
<CAPTION>
                                                             SERVICE             NET            INCOME
(In thousands)                                               REVENUES          EBITDA            (LOSS)
-------------------------------------------------------- ----------------- ---------------- ----------------

<S>                                                             <C>              <C>              <C>
OPERATING RESULTS - PREVIOUS BASIS OF ACCOUNTING                $ 934,931        $ 100,581        $  32,269

SAB101 EFFECT:
First Quarter 2000                                                (4,936)            (693)            (401)
Second Quarter 2000                                              (16,659)          (6,184)          (3,578)
Third Quarter 2000                                               (17,550)          (5,597)          (3,238)
Fourth Quarter 2000                                              (20,635)          (5,645)          (3,265)
                                                         ----------------- ---------------- ----------------
     Year 2000 Effect                                            (59,780)         (18,119)         (10,482)
                                                         ----------------- ---------------- ----------------

OPERATING RESULTS - BEFORE CUMULATIVE EFFECT                      875,151           82,462           21,787
                                                         ----------------- ---------------- ----------------

Cumulative Effect  - January 1, 2000                                                               (30,420)
                                                                       --               --
                                                         ----------------- ---------------- ----------------

OPERATING RESULTS - AFTER ACCOUNTING CHANGE                     $ 875,151         $ 82,462        $ (8,633)
                                                         ================= ================ ================
</TABLE>

     The cumulative effect of the accounting change on prior years resulted in a
reduction to income for 2000 of $30.4 million (net of applicable taxes of $23.3
million), or $1.24 per share. The effect of retroactive application of the
accounting change to January 1, 2000 lowered service revenues by $59.8 million,
Net EBITDA by $18.1 million and income before the cumulative effect of the
accounting change by $10.5 million, or $0.43 per share, for the 2000 year.


     On a pro forma basis, giving effect to the change retroactive to January 1,
1999, the Company would have reported service revenues of $656.7 million, Net
EBITDA of $47.9 million, and net income of $3.2 million for the 1999 year.
Actual results reported for 1999 included service revenues of $678.5 million,
Net EBITDA of $60.5 million and net income of $10.3 million.

2000 YEAR


     For 2000, Insignia reported substantial growth in all financial measures as
service revenues grew 29% to $875.2 and Net EBITDA grew 36% to $82.5 million,
compared to 1999. Income from real estate operations grew sharply to $23.1
million for 2000, reflecting a gain of 61% over $14.4 million for 1999. These
operating results were fueled by vigorous organic growth in the Company's U. S.
and European commercial real estate services operations and full year
contributions from Douglas Elliman (acquired in June 1999) and St. Quintin
(acquired in March 1999). It is significant that more than 80% of the growth in
revenues and Net EBITDA was from internal means, driven by greater market share
and extremely robust real estate economies. These results were achieved despite
the lowering effects of the SAB101 accounting change on certain leasing
transactions.

                                       21
<PAGE>



     The Company's net earnings for 2000 were favorably impacted by income of
$19.1 million from life insurance proceeds and $1.4 million in foreign currency
transaction gains, principally from facility borrowings in declining European
currencies. Conversely, income for 2000 was adversely affected by pre-tax
Internet losses totaling $34.7 million and including $18.4 million in impairment
write-downs of the Company's internally developed businesses and certain third
party investments. Further, as noted above, the effects of the SAB101 accounting
change materially lowered 2000 earnings.

     As a result of the foregoing, the Company reported income before cumulative
effect of a change in accounting principle of $21.8 million for 2000,
representing a significant increase of 112% over $10.3 million for 1999. On a
per share basis, such earnings represented $0.89 for 2000 compared to $0.46 for
1999. The Company reported a net loss of $8.6 million for 2000, after the $30.4
million cumulative effect of a change in accounting principle. The cumulative
effect lowered earnings per share by $1.24 to ($0.35) for the 2000 year.


     The comparative results for the 1999 year were marked by the first quarter
shortage of brokerage transactions in the aftermath of the late 1998 capital
markets turmoil and the $4.3 million ($3.1 million net of tax benefit) provision
for merger related expenses incurred in connection with the acquisition of St.
Quintin and its merger with REGL.

     Weighted average fully diluted common shares increased 8% for 2000 due to
the assumed conversion of 4% convertible preferred stock issued in February
2000, along with the additional dilutive effect of assumed stock option and
warrant exercises resulting from a 37% rise in the Company's stock price during
the 2000 year.


     In addition to net income, Insignia uses EBITDA (defined as real estate
services revenues less direct expenses and administrative costs) and Net EBITDA
(defined as income before depreciation, amortization, income taxes and
non-recurring one-time charges) as indicators of the Company's financial
performance. Neither EBITDA nor Net EBITDA, as disclosed above, should be
construed to represent cash provided by operations pursuant to generally
accepted accounting principles ("GAAP"), as neither is defined by GAAP.
Insignia's usage of these terms may differ from other companies' usage of the
same or similar terms. As compared to net income, these measures effectively
eliminate the impact of non-cash charges for depreciation, amortization of
intangible assets and other non-recurring charges. Management uses these
supplemental measures to evaluate operating performance and in making financial
decisions and believes the presentation of such measures enhance a reader's
understanding of the Company's operating performance as they provide a measure
of generated cash.

The results of operations for the Company are more fully described below.


                                       22
<PAGE>

     The following table sets forth certain items derived from the Company's
consolidated statements of operations for the years ended December 31, 2000,
1999 and 1998, respectively.

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                              2000             1999              1998
                                                              ----             ----              ----
                                                                          (In thousands)
        REAL ESTATE SERVICES REVENUE:
<S>                                                        <C>              <C>               <C>
            Insignia/ESG                                   $ 500,152        $ 389,208         $ 312,940
            Europe                                           141,752          108,562            65,422
            Residential                                      233,247          180,701           128,989
                                                         ---------------    ------------    ---------------
              Total real estate revenues                     875,151          678,471           507,351
                                                         ---------------    ------------    ---------------

        COST AND EXPENSES
            Real estate services                             776,505          607,722           451,774
            Administrative                                    16,355             11,826           7,232
                                                         ---------------    ------------    ---------------

        EBITDA - REAL ESTATE SERVICES (1)                     82,291           58,923            48,345

            Real estate FFO (2)                                3,877            3,758             1,735
            Interest and other income (3)                      7,990            5,191             3,429
            Foreign currency transaction gains                 1,365              827                --
            Interest expense                                 (13,061)          (8,206)           (1,378)
            Minority interests                                    --               --               371
                                                         ---------------    ------------    ---------------

        NET EBITDA (1)                                        82,462           60,493            52,502

            Applicable income tax                            (17,223)         (12,858)          (12,975)
                                                         ---------------    ------------    ---------------


        NET EBITDA AFTER TAX                                  65,239           47,635            39,527


            Gains on sale of real estate                       3,884            2,767                --
            Real estate impairment                            (1,806)              --                --
            Tax on real estate                                  (831)          (1,107)               --

            Depreciation - FF&E                              (12,391)          (6,644)           (3,090)
            Amortization of intangibles                      (25,894)         (23,823)          (19,453)
            Depreciation - real estate                        (5,125)          (4,465)           (3,631)
                                                         ---------------    ------------    ---------------
                                                             (43,410)         (34,932)          (26,174)
                                                         ---------------    ------------    ---------------

        INCOME FROM REAL ESTATE OPERATIONS                    23,076           14,363            13,353

            Merger related and non-recurring charges              --           (4,272)           (2,300)
            Life insurance proceeds                           19,100               --                --
            Internet-based businesses, net                   (14,993)          (1,580)               --
            Internet impairment write-downs                  (18,435)              --                --
            Internet depreciation                             (1,288)              --                --
            Income tax benefit                                14,327            1,787                --
                                                         ---------------    ------------    ---------------
                                                              (1,289)          (4,065)           (2,300)
                                                         ---------------    ------------    ---------------

         INCOME BEFORE CUMULATIVE EFFECT OF A
            CHANGE IN ACCOUNTING PRINCIPLE                    21,787           10,298            11,053

                                                         ---------------    ------------    ---------------
            Cumulative effect of a change in
               principle                                     (30,420)              --                --
                                                         ---------------    ------------    ---------------

        NET (LOSS) INCOME                                   $ (8,633)        $ 10,298          $ 11,053
                                                         ===============    ============    ===============
</TABLE>


(1) Neither EBITDA nor Net EBITDA, 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. As compared to net income, the EBITDA and Net EBITDA
measures effectively eliminate the impact of non-cash charges for depreciation,
amortization of intangible assets and other non-recurring charges. Management


                                       23
<PAGE>

believes that the presentation of these supplemental measures enhance a reader's
understanding of the Company's operating performance as they provide a measure
of generated cash.

(2) 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. This measure is not defined by GAAP and Insignia's
usage of this term may differ from other companies' usage of the same or similar
terms. Management uses this supplemental measure in the evaluation of principal
real estate investment activities and believes that it provides a measure of
generated cash flows for the Company's real estate operations.

(3) Interest and other income for 2000 excludes $464,000 of interest income of
EdificeRex, which is reflected in Internet-based businesses.

YEARS ENDED DECEMBER 31, 2000 AND 1999

Real Estate Services

     Commercial Real Estate Services


     During 2000, Insignia's commercial real estate service operations included
Insignia/ESG in the United States, IRE in the United Kingdom, other businesses
in Germany, Italy, Belgium, the Netherlands and Asia. For 2000, these commercial
businesses produced aggregate service revenues of $641.9 million and EBITDA of
$82.5 million, reflecting gains of 29% for revenues and 46% for EBITDA, as
compared to 1999. These results for 2000 reflect year-over-year growth pursuant
to the SAB101 accounting change, which materially understates actual growth over
1999 on a comparable basis. Growth achieved for 2000 would have been 41% to
$701.2 million for service revenues and 78% to $100.4 million for EBITDA, had
adoption of SAB101 not been required. Alternatively, assuming SAB101 were
adopted for both 2000 and 1999 years, commercial real estate service operations
would have produced year-over year gains of 35%, or $165.8 million, for service
revenues and 88%, or $38.7 million, for EBITDA. Commercial real estate services
produced approximately 73% and 84%, respectively, of Insignia's total service
revenues and EBITDA (before unallocated administrative costs) for 2000.
Substantially all of the revenue and EBITDA gains in 2000 were from organic
growth, reflecting the Company's continued success in securing assignments from
new and existing commercial real estate customers in both the United States and
Europe. The Company's Asian operations were launched in December 2000 with the
acquisition of Brooke International.


     The 2000 year was an extraordinary period for the U.S. commercial real
estate services operation. The Company's well developed U.S. commercial service
delivery platform (which is well entrenched in most major central business
districts) and the continuation of strong economic conditions propelled
operating performance to record levels. For 2000, the Company generated U.S.
commercial service revenues of $500.2 million and EBITDA of $56.7 million,
representing material gains of 29% for revenues and 36% for EBITDA, compared to
1999. U.S. commercial leasing activity remained strong across the board, with
all Insignia/ESG regions contributing to the revenue and EBITDA growth for the
year. It is noteworthy to add that the year-over-year domestic gains were almost
entirely attributed to organic growth.

     The New York region, the Company's largest market, continued to produce
exceptional operating results, generating more than 50% of the Company's total
U.S. commercial services revenue and EBITDA for 2000. The Company participated
in 24 of Manhattan's 50 largest office-leasing assignments of 2000, including
the top three deals overall, according to the annual list published by Crain's
New York Business in February 2001. This represents the fourth consecutive year
in which Insignia/ESG claimed the top position on this list, and the 24
assignments are the highest annual total over that period.

     In Europe, financial results for the 2000 year were also significant with
reported services revenues of $141.8 million and EBITDA of $25.9 million. Such
operating results reflected revenue gains of $33.2 million, or 31%, and EBITDA
gains of $11.1 million, or 76%, over 1999. The 2000 year was one of the most
successful years in IRE's history with operating results reflective of the full
benefits of the 1999 merger with St. Quintin. The Company, through IRE, achieved
the number one market position in central London, with responsibility for more
leasing activity than any other firm. As evidence, the Company's U.K. operation
generated service revenues and EBITDA of $132.2 million and $24.6 million,
respectively, for 2000. These operating results represented growth of 26% in
revenues and 66% in EBITDA compared to 1999. The Company's continental European
businesses produced


                                       24
<PAGE>

aggregate service revenues and EBITDA of $9.6 million and $2.1 million (before
European administrative expenses), respectively, for 2000. These results, which
represented gains over 1999 of $5.5 million for revenues and $1.7 million for
EBITDA, were attributable primarily to marked improvement in Germany together
with positive contributions from the Netherlands operations, acquired in March
2000.

     Residential Real Estate Services


     The Company's residential real estate services operations, comprised of
Realty One, Douglas Elliman and Insignia Residential Group, generated aggregate
service revenues and EBITDA of $233.2 million and $16.1 million, respectively,
for 2000. This operating performance represented revenue gains of 29% and EBITDA
gains of 12% over 1999 and was entirely attributable to contributions from the
full year of operations for Douglas Elliman. Residential operating results were
adversely affected by soft demand for housing and declines in refinancing
activities in northern Ohio primarily due to higher mortgage interest rates. For
2000, Realty One's service revenues declined 5% to $99.2 million and EBITDA
declined 39% to $4.5 million compared to 1999. For the 2000 year, Realty One's
mortgage origination business experienced declines of approximately 21% in
mortgage volume. Douglas Elliman produced service revenue and EBITDA of $107.5
million and $11.2 million, respectively, for the 2000 year. These operating
results represented material increases of $57.8 million, or 116% for revenues
and $4.8 million, or 75%, for EBITDA, compared to 1999. Insignia Residential
Group produced relatively flat operating results for 2000, compared to 1999,
generating service revenues of $26.5 million and EBITDA of $452,000. The
comparable results for 1999 were service revenues of $26.9 million and EBITDA of
$581,000.


Real Estate Principal Investment Activities


     The Company's strategy of investing in qualifying real estate assets
continued to produce positive contributions to the commercial business. The
Company reported equity earnings from real estate ventures of approximately $1.5
million for 2000, reflecting a decline of 36% compared to $2.3 million for 1999.
This decline is primarily attributable to $1.8 million in impairment write-downs
on two under-performing assets, in combination with a $1.1 million increase in
pre-tax gains from property sales during 2000. Such property sales in 2000
generated pre-tax gains of $3.9 million, compared to $2.8 million in 1999.

     The Company produced FFO from real estate ownership of approximately $3.9
million for 2000, representing a modest 3% increase over 1999. FFO is defined as
income or loss from real estate operations before depreciation, gains or losses
on sales of property and provisions for impairment. This measure is not defined
by GAAP and Insignia's usage of this term may differ from other companies' usage
of the same or similar terms. Management uses this supplemental measure in the
evaluation of real estate activities and believes that it provides a measure of
cash generated by property operations.


Internet Initiatives


     In aggregate, the Company invested approximately $22.5 million in Internet
and technology-related businesses during the 2000 year. These investments
included both internally developed businesses and third-party Internet-oriented
businesses with a real estate focus. Internet-based business initiatives
adversely affected income, reflecting pre-tax losses of approximately $34.7
million for the 2000 year. These losses include approximately $18.4 million in
aggregate impairment write-downs (including both internal initiatives and
third-party investments), $9.3 million of EdificeRex operating losses during the
first half of 2000 prior to de-consolidation, and $7.0 million of other internal
operating expenses. Such internal operating costs were net of a realized gain of
$811,000 from the sale of stock in Homestore.com and interest income of $464,000
earned on cash holdings of EdificeRex prior to its de-consolidation.


     The Company's Internet initiatives have been a disappointment, primarily
due to adverse market conditions during the second half of 2000 that resulted in
the evaporation of equity financing for Internet technology initiatives.
Therefore, the Company has substantially ceased financing of internal and
third-party internet businesses and does not expect to invest materially in
Internet technology initiatives, other than certain Internet-related platforms
developed or invested in by Project Octane. A driving force behind this decision
was the Company's desire to eliminate all on-going exposure to the financial
requirements associated with such Internet-based initiatives.

     At December 31, 2000, Insignia held remaining equity investments of
approximately $10.5 million (after approximately $8 million of impairment
write-offs) in third-party Internet-related businesses. Insignia's equity


                                       25
<PAGE>

ownership in these businesses ranges from 1% to 10%. While these businesses
continue to operate, their future performance is highly dependent upon the
ability to raise incremental capital to fund the on-going development of their
business plans. If they are unsuccessful in raising the necessary capital,
Insignia could incur further losses from impairment write-offs.

     The Company also has a deferred credit of $3.2 million at December 31, 2000
representing losses incurred in excess of the Company's investment in EdificeRex
prior to its de-consolidation in the third quarter of 2000. EdificeRex, launched
in February 2000, represented Insignia's first internally developed
Internet-based business and the Company continues to hold an economic interest
of approximately 50% in EdificeRex. The $3.2 million excess loss is carried
as a deferred credit on the Company's balance sheet until such time as
EdificeRex achieves profitability or Insignia disposes of its interest in
EdificeRex. The Company has no obligation or intention to provide any additional
funding to EdificeRex. All other internal Internet-based operations were
terminated at December 31, 2000, resulting in a $10.4 million impairment
write-off of capitalized web-based development costs. Other than Project Octane
initiatives, the Company will look skeptically upon any future emerging
technology-related investment opportunities.

Other Items Affecting Net Income


     Administrative expenses rose 38% from $11.8 million in 1999 to
approximately $16.4 million in 2000. These increases reflect increased executive
compensation in connection with a new employment agreement with the Chairman and
robust performance meeting maximum incentive targets for the 2000 year.

     Interest and other income increased from $5.2 million in 1999 to $8.5
million in 2000 (including $464,000 of interest income of EdificeRex during the
first half of the 2000 year). The increase is attributed to materially higher
average cash holdings during the 2000 year, in combination with gains of
approximately $862,000 on forward contracts to purchase British Pounds
(Sterling). In addition, the Company realized foreign currency gains of
approximately $1.4 million in 2000, principally from facility borrowings in
declining European currencies. In comparison, foreign currency gains totaled
$827,000 for the 1999 year.


     Interest expense increased 59%, or $4.9 million, to approximately $13.1
million for 2000, compared to 1999. This increase is due principally to
increases in prevailing interest rates throughout 2000, interest charges on 1999
credit facility borrowings of approximately $110 million to finance the
acquisitions of Lynch Murphy, St. Quintin and Douglas Elliman and further
borrowings of $15 million in 2000 to finance Internet initiatives.

     Depreciation and amortization of intangibles from real estate service
operations (excluding property operations and Internet-based businesses)
increased 26%, in the aggregate, from $30.5 million in 1999 to $38.3 million in
2000. This increase is the result of substantial capital investments in property
and equipment (see also "Liquidity and Capital Resources") and the full year
impact of purchased intangible amortization for the 1999 acquisitions of St.
Quintin and Douglas Elliman.

     The comparative results for the 1999 year were adversely affected by the
$4.3 million ($3.1 million net of tax benefit) non-recurring charge for merger
related expenses in connection with the March 1999 acquisition of St. Quintin
and its subsequent combination with REGL. The one-time charge was substantially
composed of the costs to vacate excess office space and, to a lesser extent,
corresponding severance costs. The one time charge included provisions for rent
expense during the period from vacancy to sublease, costs of improvements
required for sublease, free rent concessions, excess rent over sublease terms
and severance. All excess office space was subleased and severance costs were
incurred prior to December 31, 1999. Also, certain excess office space was
subleased on more favorable terms than originally estimated, resulting in a $1.3
million pre-tax income credit in the fourth quarter of 1999.

     Income taxes for 2000 declined 69% compared to 1999, despite higher income,
due primarily to the non-taxable nature of the previously mentioned income of
$19.1 million from life insurance proceeds.



                                       26
<PAGE>

YEARS ENDED DECEMBER 31, 1999 AND 1998

     Insignia reported strong operating results for 1999, with service revenues
and Net EBITDA totaling $678.5 million and $58.9 million, respectively. These
operating results represented increases of 34% and 12%, respectively, over 1998.
Over $90 million, or approximately 55%, of the revenue growth was attributable
to 1999 acquisitions with the remainder representing internal growth from the
expansion of services and robust market conditions, primarily in the commercial
sector. Net EBITDA for the service businesses grew 15% to $60.5 million for
1999, in comparison to 1998. Net EBITDA for 1999 was favorably impacted by
foreign currency transaction gains of $827,000 attributable to the portion of
the Company's credit facility borrowings denominated in European currencies.
During 1999, Insignia held approximately $25 million of its credit facility
borrowings in European currencies to act as a partial hedge against decreases in
European earnings from declines in currency exchange rates against the U.S.
Dollar. Net EBITDA less income taxes increased 18% to $46.7 million in 1999 from
$39.5 million in 1998.

     Net income for 1999 totaled $10.3 million, reflecting a 7% decline from
$11.1 million in 1998. Net income per share, on a diluted basis, was $0.46 for
1999 compared with $0.50 for 1998. The $4.3 million one-time charge pertaining
to the operational merger of St. Quintin and REGL and fourth quarter 1999
expenses of $1.6 million related to the development of stand-alone
Internet-based businesses adversely affected earnings. On an after-tax basis,
these items reduced net income by approximately $4 million, or $0.17 per share.

     The results of operations for the Company are more fully described below.

Real Estate Services

     Commercial Real Estate Services

     The Company's commercial real estate service businesses produced an
aggregate service revenue increase of 32% to $497.8 million for 1999, in
comparison to $378.4 million for 1998. The increase in service revenue
attributable to the acquisitions of Lynch Murphy in Boston and St. Quintin in
the U.K. totaled approximately $49 million, or 41% of the overall growth over
1998. The Company's European operations, most notably Insignia Richard Ellis,
accounted for approximately 36% of the growth over 1998. The remainder of the
revenue growth, approximately $70 million, was attributable to the full year
impact of the mid-1998 acquisitions of Hotel Partners and Jackson Cross,
internal growth from the expansion of services in key U.S. markets and favorable
market conditions, most notably in the New York metropolitan area. The
commercial service businesses produced aggregate EBITDA gains of 21% to $56.4
million for 1999 compared to $46.7 million for 1998.

     The U.S. commercial service operations produced revenue increases of 24%
from $312.9 million in 1998 to $389.2 million in 1999. Lynch Murphy, acquired in
March 1999, contributed $13.9 million of the 1999 revenue growth. Additionally,
$17.5 million of the service revenue growth for 1999 was a result of the full
year impact of the mid-1998 acquisitions of Hotel Partners and Jackson Cross.
The New York metropolitan area was the primary catalyst behind the remaining
1999 internal growth of approximately $45 million. The New York region produced
record results, with service revenue totaling $186 million, reflecting a gain of
approximately $17.6 million over 1998 levels. Virtually every domestic operating
region reported revenue gains in 1999 in comparison to 1998.

     The U.S. commercial service operations produced EBITDA of $41.6 million for
1999, reflecting an increase of 6% over $39.3 million for 1998. The lower
percentage increase in EBITDA, as compared to revenues, was substantially
attributable to an $8.0 million increase in back office support costs resulting
from internal growth and higher information technology costs. The EBITDA results
for 1999 again reflected favorable year-over-year gains by the New York region,
which produced an EBITDA increase of 7% to $36.5 million for 1999 as compared to
1998. In addition, the Company's investment sales unit, Capital Advisors,
produced a $3.2 million increase in EBITDA in 1999 compared to 1998. This
increase for Capital Advisors clearly indicated the full recovery from the
turmoil in the capital markets experienced in the fourth quarter of 1998 and
first quarter of 1999 that resulted in a downturn in investment sales activity.

     In Europe, service revenues increased 66% over 1998 levels to $108.6
million in 1999. This increase was primarily attributable to the full year
impact of results for REGL in 1999 (compared to ten months in 1998), the
acquisition and operational merger of St. Quintin with REGL in March 1999 and
the full year impact of the German operation established in June 1998. In 1999,
the combined operation of Insignia Richard Ellis contributed service


                                       27
<PAGE>

revenues of $104.6 million and the German business contributed service revenues
of $3.7 million. These results represented gains of 72% and 147%, respectively,
compared to 1998. The Italian and Belgian businesses, established in mid-1999,
produced modest revenues of $245,000 and $28,000, respectively, for the 1999
periods of operation.

     The Company's European operations contributed EBITDA of $14.7 million for
1999, reflecting an increase of 101% or $7.3 million over 1998. This significant
EBITDA gain reflected the full recognition of cost savings and revenue growth
associated with the acquisition of St. Quintin and its operational merger with
REGL, which operate as Insignia Richard Ellis, and the robust real estate market
in the United Kingdom. The integration of these two U.K. market leaders exceeded
Insignia's expected timetable for expense recovery and operational efficiency.
In its first full year of operations, the German business contributed EBITDA of
$551,000 for 1999, reflecting a 51% increase over 1998.

     Residential Real Estate Services

     The Company's residential service operations produced an aggregate service
revenue increase of 40% from $129.0 million for 1998 to $180.7 million for 1999.
This growth was essentially attributable to the acquisition of Douglas Elliman,
which produced service revenues totaling $49.8 million for the six months of
ownership since its acquisition in June 1999. Douglas Elliman experienced
significant growth in its 1999 sales volume over 1998 due to the robust market
for cooperative and condominium sales in New York City. For the full 1999 year,
Douglas Elliman closed transactions valued at more than $2.2 billion, reflecting
an increase of 25% compared to 1998. In addition, Douglas Elliman's average
sales price for 1999 closed transactions saw a 13% increase over 1998 to
$657,000. Realty One produced a service revenue increase of a modest 1% from
$103.3 million in 1998 to $104.0 million for 1999. This achievement of revenue,
nearly in line with the record level of 1998, was noteworthy given Realty One's
sensitivity to interest rates fluctuations. Insignia Residential Group, which
saw its management portfolio expand to more than 62,000 units during 1999,
reported a 5% increase in service revenues from $25.7 million in 1998 to $26.9
million in 1999. First Ohio Mortgage, Realty One's mortgage loan subsidiary,
experienced a 2% decline in loan volume to $405 million compared to 1998 levels.
However, this result was significantly more favorable than that experienced by
most competing mortgage banking companies, which generally saw loan volumes
shrink by more than 30% in 1999.

     The residential service operations produced EBITDA gains of 62% from $8.9
million in 1998 to $14.4 million in 1999. Consistent with revenues, the EBITDA
increases are the result of the June 1999 acquisition of Douglas Elliman, which
produced EBITDA of $6.4 million for the six-month period since acquisition.
Realty One reported an EBITDA decline of 7% to $7.4 million in 1999. This
decrease reflected the effects of the year-over-year decline in first quarter
results attributable to the reversion to a more normal seasonal sales pattern in
1999 (compared to the record level experienced in the first quarter of 1998) and
the impact of rising interest rates on sales volume. Insignia Residential Group
reported an EBITDA decline of 36% from $915,000 in 1998 to $581,000 in 1999 as a
result of higher lease expense and support costs, compared to 1998.

Real Estate Principal Investment Activities

     The commercial operations of Insignia/ESG also included the property
operations of the three wholly-owned real estate properties that were
consolidated in the Company's financial statements for 1999. These properties
produced revenues and pre-tax losses of approximately $1.9 million and
($224,000), respectively. The results of operations for these properties were
excluded from service EBITDA and included in FFO from real estate operations.

     FFO from real estate ownership produced increases of 117% from $1.7 million
in 1998 to $3.8 million in 1999. This increase reflected the continued
enhancement of operating performance at existing properties resulting from
improved occupancy and further cost efficiencies and the continued investment in
qualifying properties. During 1999, the Company, in partnership with select
clients, concluded real estate investment purchases of 18 properties comprising
approximately 2.5 million square feet of commercial space and 400 residential
units.



                                       28
<PAGE>

     Equity earnings from real estate ownership totaled approximately $2.3
million for 1999, compared to losses of $1.9 million for 1998. This substantial
increase was fueled by aggregate realized gains of approximately $2.8 million
($1.7 million after tax) from the sale of eight co-investment properties in
1999. 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 increased 23% from $3.6
million in 1998 to $4.5 million in 1999.

Internet Initiatives

     Internet-based business expenses of approximately $1.6 million lowered
earnings for 1999. These expenses, incurred entirely in the fourth quarter of
1999, related to the development of new Internet-oriented business applications
and consisted primarily of costs for personnel and advertising and marketing
campaigns. In 1999, Insignia invested an aggregate $14.9 million in the
development of capitalized intellectual property for internal Internet-based
businesses and in third-party Internet-related businesses with a real estate
focus.

Other Items Affecting Net Income

     Administrative expenses rose 64% from $7.2 million in 1998 to $11.8 million
in 1999. This increase reflected the anticipated higher costs following the
Spin-Off as a separate company, continued growth of the Company through
acquisitions and expansion of services, and certain atypical expenses incurred
in connection with abandoned acquisition transactions. Administrative expenses
of the Company through the time of the Spin-Off in September 1998, which totaled
approximately $5.5 million, consisted entirely of estimated allocations of
Former Parent overhead costs.


     Interest and other income increased from $3.4 million in 1998 to $5.2
million in 1999 principally as a result of higher average cash holdings during
the 1999 year, as compared to 1998. Also, as previously noted, income for 1999
was enhanced by foreign currency transaction gains of $827,000 resulting from
the affect of exchange rate declines on credit facility borrowings denominated
in European currencies.

       Interest expense increased by $6.8 million over 1998 levels to $8.2
million for the 1999 year. The increase was due principally to interest charges
on 1999 credit facility borrowings of approximately $110 million to finance the
acquisitions of Lynch Murphy, St. Quintin and Douglas Elliman. Interest expense
for 1998 was attributable solely to asset financing consisting of Realty One
borrowings, principally under its warehouse line used in the origination of
mortgage loans for sale, and REGL borrowings substantially secured by restricted
cash deposits. The results for 1998 do not include any interest expense
allocation from the indebtedness of Former Parent.


     Depreciation and amortization of intangibles (exclusive of property
operations) increased 35% from $22.5 million in 1998 to $30.5 million in 1999.
These increases were the result of increased capital investments in property and
equipment and acquisitions substantially comprised of purchased intangibles.

     Results for 1999 were adversely affected by the $4.3 million ($3.1 million
net of tax benefit) non-recurring charge for merger related expenses in
connection with the March 1999 acquisition of St. Quintin and its subsequent
combination with REGL. As previously noted, the one-time charge was
substantially composed of the costs to vacate excess office space and, to a
lesser extent, corresponding severance costs. The one time charge included
provisions for rent expense during the period from vacancy to sublease, costs of
improvements required for sublease, free rent concessions, excess rent over
sublease terms and severance. All excess office space was subleased and
severance costs were incurred prior to December 31, 1999. Also, certain excess
office space was subleased on more favorable terms than originally estimated,
resulting in a $1.3 million pre-tax income credit in the fourth quarter of 1999.

     Earnings for 1998 were adversely affected by the one-time impairment charge
of $2.3 million for the write-down of the Company's 60% investment in its
Italian subsidiary, Insignia/CAGISA, to the then estimated disposition value of
approximately $1 million. The Company completed the disposition of its interest
in this subsidiary in March 1999, realizing a gain of approximately $50,000.

     Income taxes declined 6% to $12.2 million in 1999, in comparison to 1998,
as a result of lower income.




                                       29
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Insignia's liquidity and capital resources consist of its unrestricted cash
on hand, available credit under its $185 million revolving credit facility and
cash provided by operations. The Company utilizes cash holdings and available
credit for general corporate purposes, expansion of the service platform through
acquisitions and office openings and to fund ongoing real estate investment
activities.


     Unrestricted cash at December 31, 2000 totaled approximately $124.5
million. However, in March 2001, a substantial portion of this cash is to be
used for payment of approximately $75 million in incentive compensation and
$22.5 million for remaining purchase consideration for the U.K. operation. The
Company's total debt at December 31, 2000 and 1999 consisted of the following:


<TABLE>
<CAPTION>
              (In thousands)                                                   2000            1999
                                                                          --------------- ----------------

<S>                                                                            <C>              <C>
              Credit facility borrowings                                       $ 122,350        $ 109,025
              Notes payable to sellers of acquired businesses,
               secured by restricted cash holdings                                 6,219           11,815
              Other debt of subsidiaries                                           7,213            8,792
                                                                          --------------- ----------------
                   Notes payable                                                 135,782          129,632

              Mortgage warehouse line of credit                                    9,502            6,235
              Real estate mortgage notes payable                                  48,369           28,455

                                                                          --------------- ----------------
                   TOTAL DEBT                                                  $ 193,653        $ 164,322
                                                                          =============== ================
</TABLE>


     The real estate mortgages, mortgage warehouse line and cash-secured
acquisition indebtedness are all self-liquidating from the related assets and do
not affect Insignia's liquidity and capital resources. Other debt of $130
million, together with approximately $14.4 million in letters of credit
supporting real estate investments, represent the outstanding obligations under
facilities aggregating approximately $195 million. Approximately $50 million in
unused credit was available at December 31, 2000.

     Insignia believes that its cash on hand, available credit and anticipated
cash flows from operations are sufficient for its short term and long term
operating and capital requirements. For 2001, Insignia has budgeted
approximately $20 million in capital expenditures, has a range of $20 - $30
million allocated for potential acquisitions or geographic expansions and
expects to allocate up to $30 million to real estate activities. With $50
million in credit available and in excess of $50 million in cash from operations
expected in 2001, no further external capital is anticipated.

     The $185 million revolving credit facility matures in October 2001.
Insignia has commenced the process to renew this facility for another three
years and expects to complete the renewal process during the second quarter of
2001.

     During 2000, cash provided by operations of approximately $82.1 million
(which included $19.1 million of non-recurring life insurance proceeds) was
supplemented by $15 million borrowed under Insignia's credit facility, $25
million from a private placement of preferred stock and more than $6 million in
proceeds from employee stock purchases. The principal uses of this cash were
Internet investments of approximately $22.6 million, capital expenditures of
more than $30 million, acquisition payments of $14 million and net real estate
investments of approximately $20 million. The remainder is included in cash at
December 31, 2000.


RECENT ACCOUNTING PRONOUNCEMENTS


     In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards 133 ("SFAS"), Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS 137. 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


                                       30
<PAGE>

in earnings. SFAS 133 is effective as of January 1, 2001 for the Company and its
implementation will not have a material effect on the Company's financial
position or results of operations.


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.
Increases in mortgage interest rates during 2000, which resulted in a weak
environment for single-family home sales in the northern Ohio marketplace,
adversely affected the revenues and profits of Realty One's home brokerage and
mortgage origination business. Consequently, Realty One reported year-over-year
declines in revenue and EBITDA of $4.9 million and $2.9 million, respectively,
for the 2000 year compared to 1999.

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 SAB 101 accounting change may affect seasonality.


     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.


                                       31
<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,
expansion plans, credit facility renewal plans, estimated capital expenditures
and statements concerning the performance of the U.S. and international
commercial and residential brokerage markets. Such information also includes
statements regarding the Company's plans to substantially limit its e-commerce
business expenses. Actual results will be affected by a variety of risks and
factors, including, without limitation, international, national and local
economic conditions and real estate and financing risks.


     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.












                                       32
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosure of Market Risk


     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: the U.K., Germany, Italy, Belgium, Ireland, Northern
Ireland, the Netherlands, Hong Kong, China, Thailand and Mexico. The British
Pound (Sterling) represents the only foreign currency of a material business
operation, as more than 90% of Insignia's foreign operations were derived in the
U.K. for both 2000 and 1999.

     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; however, they could potentially have a
material adverse affect on the Company's future financial position and results
of operations. A 10% change in the British pound at December 31, 2000 would have
had an estimated impact of approximately $14 million on revenues and $1.4
million on earnings. As previously noted, the Company realized foreign currency
gains of approximately $1.4 million in 2000 and $827,000 in 1999, principally
from facility borrowings in declining European currencies.

     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. A 100 basis point change in
interest rates at current cash and debt levels would have an estimated annual
net impact of less than $1 million on the Company's results of operations.
However, changes in interest rates can have a material adverse effect on Realty
One's home brokerage and mortgage origination business in northern Ohio. As
evidence, increases in mortgage interest rates during 2000 spurred a weak
environment for single-family home sales. As a result, Realty One experienced a
sharp decline in sales volume and mortgage financing activities with revenues
and earnings for 2000 off $4.9 million and $2.9 million, respectively, compared
to 1999.



Item 8.  Financial Statements and Supplementary Data

     The response to this item is submitted in Item 14 (a) of this Report.


Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

     None.



                                       33
<PAGE>

                                    Part III

Item 10.  Directors and Executive Officers of the Registrant

Incorporated herein by reference to Registrant's definitive Proxy Statement to
be filed in connection with the 2001 Annual Meeting of Stockholders.


Item 11.  Executive Compensation

Incorporated herein by reference to Registrant's definitive Proxy Statement to
be filed in connection with the 2001 Annual Meeting of Stockholders.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

Incorporated herein by reference to Registrant's definitive Proxy Statement to
be filed in connection with the 2001 Annual Meeting of Stockholders.


Item 13.  Certain Relationships and Related Transactions

Incorporated herein by reference to Registrant's definitive Proxy Statement to
be filed in connection with the 2001 Annual Meeting of Stockholders.


                                       34
<PAGE>

                                     Part IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a) (1) and (2):      The response to this portion of Item 14 is submitted
                           as a separate section of this Report. See Page F-2.

         (3) Exhibits:

1

               2.1          Amended and Restated Agreement and Plan of Merger,
                            dated as of May 26, 1998, by and among Apartment
                            Investment and Management Company, AIMCO Properties,
                            L.P., Former Parent and Insignia Financial Group,
                            Inc. (incorporated herein by reference to Exhibit
                            2.1 to the Registration Statement on Form S-4 (the
                            "Form S-4") filed by Apartment Investment and
                            Management Company on August 4, 1998)

               2.2          Form of Agreement and Plan of Distribution, dated as
                            of September 16, 1998, by and between Former Parent
                            and Insignia Financial Group, Inc. (incorporated
                            herein by reference to Exhibit 2.2 to Report on Form
                            10-K of Insignia Financial Group, Inc.
                            filed on March 29, 2000)

               3.1(a)       Certificate of Incorporation of Insignia Financial
                            Group, Inc. (incorporated herein by referenced to
                            Exhibit 3.1 of the Form 10)

               3.1(b)       Certificate of Amendment to the Certificate of
                            Incorporation of Insignia Financial Group, Inc.,
                            dated October 16, 1998, changing the name of the
                            corporation from Insignia/ESG Holdings, Inc. to
                            Insignia Financial Group, Inc. (incorporated herein
                            by reference to Exhibit 3.1 of the Report on Form
                            10-Q of Insignia Financial Group, Inc. filed on
                            November 16, 1998)

               3.1(c)       Certificate of Designation of Insignia Financial
                            Group, Inc. classifying 250,000 of the authorized
                            shares of Preferred Stock of the Company as
                            "Convertible Preferred Stock" (incorporated herein
                            by reference to Exhibit 3.1(c) to Report on Form
                            10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               3.2          By-laws of Insignia Financial Group, Inc.
                            (incorporated herein by reference to Exhibit 3.2 of
                            the Form 10)

               4.1          Registration Rights Agreement, dated as of February
                            9, 2000, by and among Insignia Financial Group, Inc.
                            and the initial stockholders specified therein
                            (incorporated herein by reference to Exhibit 4.1(b)
                            to Report on Form 10-K of Insignia Financial Group,
                            Inc. filed on March 29, 2000)

               10.1(a)      Asset and Stock Purchase Agreement, dated as of June
                            17, 1996, among Former Parent, Insignia Buyer
                            Corporation, Edward S. Gordon Company Incorporated,
                            Edward S. Gordon Company of New Jersey, Inc. and
                            Edward S. Gordon (incorporated herein by reference
                            to Exhibit 10.15 of the Report on Form 10-K of
                            Former Parent filed on March 24, 1998)

               10.1(b)      Stock Purchase Agreement, dated March 19, 1997, by
                            and among Insignia Commercial Group, Inc., Former
                            Parent, Kirkland B. Armour, Scott J. Brandwein,
                            Harvey B. Camins, James L. Deiter, Lyan Homewood
                            Fender, Ronald T. Frain, Jay Hinshaw, Thomas E.
                            Moxley, Robert B. Rosen, James H. Swartchild, Jr.,
                            David Tropp, Gregg F. Witt, Frain, Camins &
                            Swartchild Incorporated, FC&S Management Company and
                            Construction Interiors, Incorporated (incorporated
                            herein by reference to Exhibit 10.22 to the Report
                            on Form 10-K of Former Parent filed on March 24,
                            1998)



                                       35
<PAGE>

               10.1(c)      Stock Purchase Agreement, dated as of September 18,
                            1997, by and among Former Parent, Insignia RO, Inc.,
                            Joseph T. Aveni, Vincent T. Aveni, James C. Miller,
                            Richard A. Golbach, Joseph T. Aveni as Trustee of
                            the Joseph T. Aveni Declaration of Trust dated April
                            25, 1988, as amended on August 10, 1995, Vincent T.
                            Aveni as Trustee of the Vincent T. Aveni Declaration
                            of Trust dated February 11, 1988, as restated on
                            September 14, 1995, Joseph T. Aveni as Trustee of
                            the Vincent T. Aveni Declaration Trust, dated July
                            13, 1994, and Vincent T. Aveni as Trustee of the
                            Joseph T. Aveni Declaration Trust, dated July 13,
                            1994 (incorporated herein by reference to Exhibit
                            10.27 to Report on Form 10-K of Former Parent filed
                            on March 24, 1998)

               10.1(d)      Deed of Warranty & Indemnity, dated February 25,
                            1998, by and among Former Parent and each of the
                            Shareholders of Richard Ellis Group Limited
                            (incorporated herein by referenced to Exhibit 10.4
                            of the Form 10)

               10.1(e)      Amended and Restated Indemnification Agreement,
                            dated as of May 26, 1998, by and between Apartment
                            Investment and Management Company and Insignia
                            Financial Group, Inc. (incorporated herein by
                            reference to Exhibit 2.2 to the Form S-4)

               10.1(f)      Deed of Assumption and Variation, dated September
                            30, 1998, by and among Former Parent, Certain
                            Covenantors and Insignia/ESG, Inc. (incorporated
                            herein by reference to Exhibit 10.1(f) to Report on
                            Form 10-K of Insignia Financial Group, Inc. filed on
                            March 31, 1999)

               10.1(g)      Deed of Variation, dated as of March 5, 1999,
                            between Insignia Financial Group, Inc. and Alan
                            Charles Froggatt, as agent and attorney for the
                            Covenantors (incorporated herein by reference to
                            Exhibit 10.1(g) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 31, 1999)

               10.1(h)      Agreement for the Sale and Purchase of Shares in the
                            Capital of St. Quintin Holdings Limited, dated March
                            5, 1999, by and among the Vendors listed therein and
                            Insignia Financial Group, Inc. (incorporated herein
                            by reference to the Report on Form 8-K of Insignia
                            Financial Group, Inc. filed on March 18, 1998)

               10.1(i)      Purchase Agreement, dated May 27, 1999, among
                            Douglas Elliman, Douglas Elliman, Inc. and Douglas
                            Elliman Insurance Brokerage Corp. as seller and DE
                            Acquisition, LLC as buyer (incorporated herein by
                            reference to the Report on Form 8-K of Insignia
                            Financial Group, Inc. filed on July 8, 1999)

               10.2(a)      Second Amended and Restated Employment Agreement,
                            dated as of July 31, 1998, by and between Insignia
                            Financial Group, Inc., Insignia/ESG, Inc. and
                            Stephen B. Siegel (incorporated herein by reference
                            to Exhibit 10.6 of the Form 10)

               10.2(b)      Employment Agreement, dated as of August 3, 1998, by
                            and between Insignia Financial Group, Inc. and
                            Ronald Uretta (incorporated herein by reference to
                            Exhibit 10.7 of the Form 10)

               10.2(c)      Employment Agreement, dated as of June 17, 1996, by
                            and among Former Parent, Insignia Buyer Corporation
                            and Edward S. Gordon (incorporated herein by
                            reference to Exhibit 10.2 to the Report on Form 8-K
                            of Former Parent dated July 12, 1996)

               10.2(d)      Amendment No. 1 to Employment Agreement, dated April
                            1, 1997, by and among Former Parent, Insignia/Edward
                            S. Gordon Co., Inc. and Edward S. Gordon
                            (incorporated herein by reference to Exhibit 10.24
                            to the Report on Form 10-K of Former Parent filed on
                            March 24, 1998)

               10.2(e)      Assignment, Assumption, Consent and Release
                            Agreement, dated as of July 1, 1998, by and among
                            Former Parent, Insignia Financial Group, Inc. and
                            Edward S. Gordon (Exhibit A thereto is omitted
                            because it is the same document as Exhibit 10.7 to
                            the Form 10)



                                       36
<PAGE>

               10.2(f)      Employment Agreement, dated as of August 3, 1998, by
                            and between Insignia Financial Group, Inc. and James
                            A. Aston (incorporated herein by reference to
                            Exhibit 10.13 of the Form 10)

               10.2(g)      Executive Service Agreement, dated February 4, 1998,
                            by and between Richard Ellis Group Limited and
                            Andrew John Mack Huntley (incorporated herein by
                            reference to Exhibit 10.2(j) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 31,
                            1999)

               10.2(h)      Supplemental Service Agreement, dated February 24,
                            1998, by and between Insignia Financial Group, Inc.
                            and Andrew John Mack Huntley (incorporated herein by
                            reference to Exhibit 10.2(k) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 31,
                            1999)

               10.2(i)      Assignment, Assumption, Consent and Release
                            Agreement, dated July 1, 1998, by and among Former
                            Parent, Insignia Financial Group, Inc. and Andrew
                            John Mack Huntley (incorporated herein by reference
                            to Exhibit 10.2(l) to Report on Form 10-K of
                            Insignia Financial Group, Inc. filed on March 31,
                            1999)

               10.2(j)      Employment Agreement, entered into on May 18, 2000,
                            effective as of January 1, 2000, by and between
                            Insignia Financial Group, Inc. and Andrew Lawrence
                            Farkas, including, as Exhibit A thereto, resolutions
                            of the Compensation Committee empowering Andrew L.
                            Farkas, as Chief Executive Officer of the Company,
                            to direct and participate in the grants of equity
                            interests in certain subsidiaries of the Company
                            (incorporated herein by reference to Exhibit 10.2(a)
                            to the Report on Form 8-K of Insignia Financial
                            Group, Inc. filed on May 25, 2000)

               10.2(k)      Amended and restated Employment Agreement, dated as
                            of May 19, 2000, by and between Insignia Financial
                            Group, Inc. and Adam B. Gilbert (incorporated herein
                            by reference to Exhibit 10.2(b) to the Report on
                            Form 8-K of Insignia Financial Group, Inc. filed on
                            May 25, 2000)

               10.2(l)      Amended and restated Employment Agreement, dated as
                            of May 12, 2000, by and between Insignia Financial
                            Group, Inc. and Jeffrey B. Cohen (incorporated
                            herein by reference to Exhibit 10.2(c) to the Report
                            on Form 8-K of Insignia Financial Group, Inc. filed
                            on May 25, 2000)

               10.2(m)      Employment Agreement, dated as of August 1, 2000, by
                            and between Insignia Financial Group, Inc. and Frank
                            M. Garrison (incorporated herein by reference to
                            Exhibit 10.2 of the Report on Form 10-Q of Insignia
                            Financial Group, Inc. filed on August 14, 2000)

               10.2(n)      Executive Service Agreement, dated as of January 31,
                            2001, between Insignia Richard Ellis Limited and
                            Alan Charles Froggatt

               10.2(o)      Form of Transferee Agreement, dated as of September
                            24, 1999, by and between Insignia Financial
                            Services, Inc., as a Member of Insignia Opportunity
                            Directives, LLC, and certain individuals (see
                            attached schedule thereto) (incorporated herein by
                            reference to Exhibit 10.2(n) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.2(p)      Form of Transferee Agreement, dated as of November
                            17, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-SLI Holdings,
                            LLC, and certain individuals (see attached schedule
                            thereto) (incorporated herein by reference to
                            Exhibit 10.2(o) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)



                                       37
<PAGE>

               10.2(q)      Form of Transferee Agreement, dated as of November
                            24, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-OSA Holdings,
                            LLC, and certain individuals (see attached schedule
                            thereto) (incorporated herein by reference to
                            Exhibit 10.2(p) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(r)      Form of Transferee Agreement, dated as of December
                            30, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-MCI Holdings,
                            LLC, and the individuals listed on the schedule
                            annexed thereto (incorporated herein by reference to
                            Exhibit 10.2(q) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(s)      Form of Transferee Agreement, dated as of December
                            30, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-LNI Holdings,
                            LLC, and certain individuals (see attached schedule
                            thereto) (incorporated herein by reference to
                            Exhibit 10.2(r) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(t)      Form of Transferee Agreement, dated as of December
                            30, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-PFI Holdings,
                            LLC, and certain individuals (see attached schedule
                            thereto) (incorporated herein by reference to
                            Exhibit 10.2(s) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(u)      Form of Transferee Agreement, dated as of January
                            21, 2000, by and between Insignia Financial Group,
                            Inc., as a Member of ERX Advisors, LLC, and certain
                            individuals (see attached schedule thereto)
                            (incorporated herein by reference to Exhibit 10.2(t)
                            to Report on Form 10-K of Insignia Financial Group,
                            Inc. filed on March 29, 2000)

               10.2(v)      Form of Transferee Agreement, dated as of December
                            30, 1999, by and between Insignia Internet
                            Initiatives, Inc., as a Member of IIII-CCI Holdings,
                            LLC, and certain individuals (see attached schedule
                            thereto) (incorporated herein by reference to
                            Exhibit 10.2(u) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(w)      Form of Warrant Agreement, dated as of January 14,
                            2000, between Insignia Financial Group, Inc. and
                            each of the executive officers listed on the
                            schedule annexed thereto (incorporated herein by
                            reference to Exhibit 10.2(v) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.2(x)      Form of Warrant Agreement, dated as of January 14,
                            2000, between Insignia Financial Group, Inc. and
                            each of the non-employee directors listed on the
                            schedule annexed thereto (incorporated herein by
                            reference to Exhibit 10.2(w) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.2(y)      Form of Assignment of Limited Liability Company
                            Interest, dated as of January 12, 2000, by and
                            between ("Assignor") and certain individuals (see
                            attached exhibit thereto) (Assignees") (incorporated
                            herein by reference to Exhibit 10.2(x) to Report on
                            Form 10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.2(z)      Form of Assignment of Member or Limited Partner
                            Interests by and among Insignia Financial Group,
                            Inc., Insignia/ESG, Inc. ("Assignors") and certain
                            individuals (see attached schedule thereto)
                            (Assignees") (incorporated herein by reference to
                            Exhibit 10.2(y) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               10.2(aa)     Form of Assignment of Member or Limited Partner
                            Interests by and among Insignia Financial Group,
                            Inc., Insignia/ESG, Inc. ("Assignors") and the
                            individual identified therein (Assignee")
                            (incorporated herein by reference to Exhibit 10.2(z)
                            to Report on Form 10-K of Insignia Financial Group,
                            Inc. filed on March 29, 2000)



                                       38
<PAGE>

               10.2(ab)     Form of Agreement for potential incentive
                            compensation in connection with development
                            activities, by and between Insignia/ESG, Inc.
                            ("Assignor") and certain individuals (see attached
                            schedule thereto) (Assignees") (incorporated herein
                            by reference to Exhibit 10.2(aa) to Report on Form
                            10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.3(a)      Insignia Financial Group, Inc. 1998 Stock Incentive
                            Plan (incorporated herein by referenced to Exhibit
                            10.14 of the Form 10)

               10.3(b)      Insignia Financial Group, Inc. 1998 Supplemental
                            Stock Purchase and Loan Program Under the Insignia
                            Financial Group, Inc. 1998 Stock Incentive Plan
                            (incorporated herein by referenced to Exhibit 10.15
                            of the Form 10)

               10.3(c)      Insignia Financial Group, Inc. Executive Performance
                            Incentive Plan (incorporated herein by referenced to
                            Exhibit 10.16 of the Form 10)

               10.3(d)      Insignia Financial Group, Inc. 1998 Employee Stock
                            Purchase Plan (incorporated herein by referenced to
                            Exhibit 10.17 of the Form 10)

               10.3(e)      Form of Indemnification Agreement to be entered into
                            separately by and between Insignia Financial Group,
                            Inc. and each of the directors and executive
                            officers listed on the schedule annexed thereto
                            (incorporated herein by referenced to Exhibit 10.18
                            of the Form 10)

               10.3(f)      Insignia Financial Group, Inc. 401(k) Savings Plan
                            (incorporated herein by reference to Exhibit 4.1 to
                            the Registration Statement on Form S-8 filed by
                            Insignia Financial Group, Inc. on September 2, 1998)

               10.3(g)      Richard Ellis Group Limited 1997 Unapproved Share
                            Option Scheme (incorporated herein by reference to
                            Exhibit 4.1 to the Registration Statement on Form
                            S-8 filed by Insignia Financial Group, Inc. on
                            November 18, 1998)

               10.3(h)      Insignia Financial Group, Inc. 401(k) Restoration
                            Plan (incorporated herein by reference to Exhibit
                            10.3(h) to Report on Form 10-K of Insignia Financial
                            Group, Inc. filed on March 31, 1999)

               10.3(i)      St. Quintin Holdings Limited 1999 Unapproved Share
                            Option Scheme, as amended (incorporated herein by
                            reference to Exhibit 4.1 to the Registration
                            Statement on Form S-8 filed by Insignia Financial
                            Group, Inc. on April 29, 1999)

               10.3(j)      Form of Non-Qualified Stock Option Agreement and
                            form of amendment thereto (incorporated herein by
                            reference to Exhibit 4 to the Registration Statement
                            on Form S-8 filed by Insignia Financial Group, Inc.
                            on October 4, 1999)

               10.3(k)      Brooke International (China) Limited Share Option
                            Scheme (incorporated herein by reference to Exhibit
                            4.1 to the Registration Statement on Form S-8 filed
                            by Insignia Financial Group, Inc. on February 16,
                            2001)

               10.4         [Intentionally Omitted]

               10.5         (a) Credit Agreement, dated as of October 22, 1998,
                            by and among Insignia Financial Group, Inc., as
                            Borrower, the Lenders referred to therein, First
                            Union National Bank, as Administrative Agent, and
                            Lehman Commercial Paper, Inc., as Syndication Agent
                            (incorporated herein by reference to Exhibit 10.5 to
                            Report on Form 10-K of Insignia Financial Group,
                            Inc. filed on March 31, 1999)



                                       39
<PAGE>

               10.5(b)      Amendment No. 1 to Credit Agreement, dated as of
                            March 19, 1999, by and among Insignia Financial
                            Group, Inc., as Borrower, the Lenders referred to
                            therein, First Union National Bank, as
                            Administrative Agent, and Lehman Commercial Paper,
                            Inc., as Syndication Agent (incorporated herein by
                            reference to Exhibit 10.5(b) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.5(c)      Amendment No. 2 to Credit Agreement, dated as of
                            July 21, 1999, by and among Insignia Financial
                            Group, Inc., as Borrower, the Lenders referred to
                            therein, First Union National Bank, as
                            Administrative Agent, and Lehman Commercial Paper,
                            Inc., as Syndication Agent (incorporated herein by
                            reference to Exhibit 10.5(c) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.5(d)      Amendment No. 3 to Credit Agreement, dated as of
                            August 25, 2000, by and among Insignia Financial
                            Group, Inc., as Borrower, the Lenders referred to
                            therein, First Union National Bank, as
                            Administrative Agent, and Lehman Commercial Paper,
                            Inc., as Syndication Agent

               10.5(e)      Amendment No. 4 to Credit Agreement, dated as of
                            March 15, 2001, by and among Insignia Financial
                            Group, Inc., as Borrower, the Lenders referred to
                            therein, First Union National Bank, as
                            Administrative Agent, and Lehman Commercial Paper,
                            Inc., as Syndication Agent

               10.6(a)      Warrant Agreement, dated as of September 15, 1998,
                            between Insignia/ESG Holdings, Inc. and APTS
                            Partners, L.P. (incorporated herein by reference to
                            Exhibit 4.1 of the Report on Form 10-Q of Insignia
                            Financial Group, Inc. filed on November 16, 1998)

               10.6(b)      Amendment No. 1 to Warrant Agreement, dated as of
                            August 30, 1999, between Insignia Financial Group,
                            Inc. and APTS Partners, L.P. (incorporated herein by
                            reference to Exhibit 10.6(b) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.6(c)      Amendment No. 2 to Warrant Agreement, dated as of
                            September 15, 1999, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P. (incorporated
                            herein by reference to Exhibit 10.6(c) to Report on
                            Form 10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.6(d)      Warrant Agreement, dated as of September 15, 1998,
                            between Insignia/ESG Holdings, Inc. and APTS
                            Partners, L.P. (incorporated herein by reference to
                            Exhibit 4.2 of Form 10-Q of Insignia Financial
                            Group, Inc. filed on November 16, 1998)

               10.6(e)      Amendment No. 1 to Warrant Agreement, dated as of
                            September 15, 1999, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P. (incorporated
                            herein by reference to Exhibit 10.6(e) to Report on
                            Form 10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.6(f)      Warrant Agreement, dated as of September 15, 1998,
                            between Insignia Financial Group, Inc. and APTS
                            Partners, L.P. (incorporated herein by reference to
                            Exhibit 4.3 of the Report on Form 10-Q of Insignia
                            Financial Group, Inc. filed on November 16, 1998)

               10.6(g)      Amendment No. 1 to Warrant Agreement, dated as of
                            September 14, 1999, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P. (incorporated
                            herein by reference to Exhibit 10.6(g) to Report on
                            Form 10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.6(h)      Warrant Agreement, dated as of September 15, 1998,
                            between Insignia Financial Group, Inc. and APTS V,
                            L.L.C. (incorporated herein by reference to Exhibit
                            4.4 of the Report on Form 10-Q of Insignia Financial
                            Group, Inc. filed on November 16, 1998)



                                       40
<PAGE>

               10.6(i)      Amendment No. 1 to Warrant Agreement, dated as of
                            December 18, 1998, between Insignia Financial Group,
                            Inc. and APTS V, L.L.C. (incorporated herein by
                            reference to Exhibit 10.6(i) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.6(j)      Amendment No. 2 to Warrant Agreement, dated as of
                            August 30, 1999, between Insignia Financial Group,
                            Inc. and APTS V, L.L.C. (incorporated herein by
                            reference to Exhibit 10.6(j) to Report on Form 10-K
                            of Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.6(k)      Amendment No. 3 to Warrant Agreement, dated as of
                            September 15, 1999, between Insignia Financial
                            Group, Inc. and APTS V, L.L.C. (incorporated herein
                            by reference to Exhibit 10.6(k) to Report on Form
                            10-K of Insignia Financial Group, Inc. filed on
                            March 29, 2000)

               10.6(l)      Warrant Agreement, dated as of September 30, 1998,
                            between Insignia Financial Group, Inc. and First
                            Union National Bank of Delaware (incorporated herein
                            by reference to Exhibit 4.6 of the Report on Form
                            10-Q of Insignia Financial Group, Inc. filed on
                            November 16, 1998)

               10.6(m)      Amendment No. 5 to Warrant Agreement, dated as of
                            September 18, 2000, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P., providing for
                            the issuance of warrants to purchase 266,667 shares
                            of common stock (incorporated herein by reference to
                            Exhibit 10.6 (m) of the Report on Form 10-Q of
                            Insignia Financial Group, Inc. filed on November 14,
                            2000)

               10.6(n)      Amendment No. 5 to Warrant Agreement, dated as of
                            September 18, 2000, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P., providing for
                            the issuance of warrants to purchase 293,333 shares
                            of common stock (incorporated herein by reference to
                            Exhibit 10.6 (n) of the Report on Form 10-Q of
                            Insignia Financial Group, Inc. filed on November 14,
                            2000)

               10.6(o)      Amendment No. 6 to Warrant Agreement, dated as of
                            September 18, 2000, between Insignia Financial
                            Group, Inc. and APTS Partners, L.P., providing for
                            the issuance of warrants to purchase 316,667 shares
                            of common stock (incorporated herein by reference to
                            Exhibit 10.6 (o) of the Report on Form 10-Q of
                            Insignia Financial Group, Inc. filed on November 14,
                            2000)

               10.6(p)      Amendment No. 7 to Warrant Agreement, dated as of
                            September 18, 2000, between Insignia Financial
                            Group, Inc. and APTS V, L.L.C., providing for the
                            issuance of warrants to purchase 51,944 shares of
                            common stock (incorporated herein by reference to
                            Exhibit 10.6 (p) of the Report on Form 10-Q of
                            Insignia Financial Group, Inc. filed on November 14,
                            2000)

               10.7         Stock Subscription Agreement, dated as of February
                            9, 2000, among Insignia Financial Group, Inc. and
                            the purchasers named therein (incorporated herein by
                            reference to Exhibit 10.7 to Report on Form 10-K of
                            Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.8(a)      Amended and Restated Series C Preferred Stock
                            Purchase Agreement, dated March 15, 2000, by and
                            among EdificeRex.com, Inc. and the investors
                            identified therein (incorporated herein by reference
                            to Exhibit 10.8(a) to Report on Form 10-K of
                            Insignia Financial Group, Inc. filed on March 29,
                            2000)

               10.8(b)      Stockholders Agreement, dated as of March 15, 2000,
                            by and among EdificeRex.com, Inc., Insignia
                            Financial Group, Inc., the persons listed therein
                            and any transferee who subsequently becomes a party
                            to the Agreement in accordance with the terms
                            thereof (incorporated herein by reference to Exhibit
                            10.8(b) to Report on Form 10-K of Insignia Financial
                            Group, Inc. filed on March 29, 2000)



                                       41
<PAGE>

               10.8(c)      Registration Rights Agreement, dated as of March 15,
                            2000, between EdificeRex.com, Inc. and the investors
                            listed therein (incorporated herein by reference to
                            Exhibit 10.8(c) to Report on Form 10-K of Insignia
                            Financial Group, Inc. filed on March 29, 2000)

               21.1         Subsidiaries of Insignia Financial Group, Inc.

               23.1         Consent of Independent Auditors to Annual Report on
                            Form 10-K for the year ended December 31, 2000



(b)      Reports on Form 8-K filed in the fourth quarter of 2000:

         None.



                                       42
<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

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.


<TABLE>
<CAPTION>
<S>                                                       <C>
By:    /s/Andrew L. Farkas                                By:   /s/Robin L. Farkas
       -----------------------------------------------          --------------------------------------------------
       Andrew L. Farkas                                         Robin L. Farkas
       Chairman of the Board and                                Director
       Chief Executive Officer



By:    /s/Stephen B. Siegel                               By:   /s/Robert G. Koen
       -----------------------------------------------          --------------------------------------------------
       Stephen B. Siegel                                        Robert G. Koen
       Director and President                                   Director



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



By:    /s/Alan C. Froggatt                                By:   /s/Robert J. Denison
       -----------------------------------------------          --------------------------------------------------
       Alan C. Froggatt                                         Robert J. Denison
       Director and Chief Executive Officer of                  Director
       Insignia Richard Ellis
</TABLE>



                                       43
<PAGE>



                           ANNUAL REPORT ON FORM 10-K

                            ITEMS 8, 14(a)(1) AND (2)

                          LIST OF FINANCIAL STATEMENTS

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          YEAR ENDED DECEMBER 31, 2000

                         INSIGNIA FINANCIAL GROUP, INC.

                               NEW YORK, NEW YORK




                                      F-1
<PAGE>


FORM 10-K - ITEM 14(a)(1) AND (2)

INSIGNIA FINANCIAL GROUP, INC.

LIST OF FINANCIAL STATEMENTS


The following consolidated financial statements of Insignia Financial Group,
Inc. are included in Item 8:

      INSIGNIA FINANCIAL GROUP, INC.

         Consolidated balance sheets - December 31, 2000 and 1999

         Consolidated statements of operations - Years ended December 31, 2000,
         1999 and 1998

         Consolidated statements of stockholders' equity - Years ended
         December 31, 2000, 1999 and 1998

         Consolidated statements of cash flows - Years ended December 31, 2000
         1999 and 1998

         Notes to consolidated financial statements


ALL OTHER FINANCIAL STATEMENTS AND SCHEDULES FOR WHICH PROVISION IS MADE IN THE
APPLICABLE ACCOUNTING REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION ARE
NOT REQUIRED UNDER THE RELATED INSTRUCTIONS OR ARE INAPPLICABLE AND THEREFORE
HAVE BEEN OMITTED.







                                      F-2
<PAGE>

                Report of Ernst & Young LLP, Independent Auditors


Board of Directors
Insignia Financial Group, Inc.

We have audited the accompanying consolidated balance sheets of Insignia
Financial Group, Inc. as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Insignia Financial
Group, Inc. at December 31, 2000 and 1999, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

As discussed in Note 3 to the financial statements, in 2000 the Company changed
its method of accounting for revenue recognition for leasing commissions.


                                                              ERNST & YOUNG LLP

New York, New York
February 16, 2001



                                      F-3
<PAGE>

                         Insignia Financial Group, Inc.
                           Consolidated Balance Sheets




<TABLE>
<CAPTION>
                                                                                              DECEMBER 31
                                                                                         2000            1999
                                                                                    --------------------------------
                                                                                            (In thousands)
ASSETS
<S>                                                                                      <C>           <C>
   Cash and cash equivalents                                                             $124,527      $  61,600
   Receivables, net of allowance of $5,661 (2000) and $4,847 (1999)                       183,819        198,364
   Mortgage loans held for sale                                                            11,443          8,290
   Restricted cash                                                                          6,555         13,685
   Property and equipment                                                                  74,502         60,842
   Real estate interests                                                                  102,170         76,298
   Investments                                                                             10,458         10,095
   Property management contracts                                                           22,357         30,802
   Costs in excess of net assets of acquired businesses                                   324,631        311,481
   Deferred taxes                                                                          26,579          7,380
   Other assets                                                                            23,301         16,476
                                                                                    --------------------------------
Total assets                                                                             $910,342       $795,313
                                                                                    ================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Accounts payable                                                                     $  28,282      $  25,306
   Commissions payable                                                                     71,688         82,547
   Accrued incentives                                                                      89,963         44,509
   Accrued and sundry liabilities                                                          99,320         67,019
   Loss in excess of investment                                                             3,222              -
   Deferred taxes                                                                          15,333         18,541
   Mortgage warehouse line of credit                                                        9,502          6,235
   Notes payable                                                                          135,782        129,632
   Real estate mortgage notes payable                                                      48,369         28,455
                                                                                    --------------------------------
                                                                                          501,461        402,244

Commitments and contingencies

Stockholders' Equity:
   Common Stock, par value $.01 per share - authorized 80,000,000 shares
     21,573,928 (2000) and 20,719,862 (1999) issued and outstanding shares,
     net of 1,502,600 (2000 and 1999) shares held in treasury                                 216            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                                                             413,831        382,784
   Notes receivable for Common Stock                                                       (2,051)        (1,758)
   Retained earnings                                                                        2,846         11,954
   Accumulated other comprehensive loss                                                    (5,964)          (118)
                                                                                    --------------------------------
Total stockholders' equity                                                                408,881        393,069
                                                                                    --------------------------------
Total liabilities and stockholders' equity                                               $910,342       $795,313
                                                                                    ================================
</TABLE>

See accompanying notes.




                                      F-4
<PAGE>

                         Insignia Financial Group, Inc.
                      Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31
                                                                          2000           1999            1998
                                                                     -----------------------------------------------
                                                                                     (In thousands)
REVENUES
<S>                                                                        <C>            <C>             <C>
    Real estate services                                                   $875,151       $678,471        $507,351
    Property operations                                                       5,212          1,877               -
                                                                     -----------------------------------------------
                                                                            880,363        680,348         507,351
                                                                     -----------------------------------------------

COSTS AND EXPENSES
    Real estate services                                                    776,505        607,722         451,774
    Property operations                                                       4,214          1,589               -
    Internet-based businesses                                                17,168          1,580               -
    Administrative                                                           16,355         11,826           7,232
    Depreciation                                                             15,302          7,156           3,090
    Amortization of intangibles                                              25,894         23,823          19,453
                                                                     -----------------------------------------------
                                                                            855,438        653,696         481,549
                                                                     -----------------------------------------------

    Operating income                                                         24,925         26,652          25,802

OTHER INCOME AND EXPENSES:
    Life insurance proceeds                                                  19,100              -               -
    Gain on sale of marketable securities                                       811              -               -
    Merger related expenses and non-recurring charges                             -         (4,272)         (2,300)
    Provisions for loss on Internet investments                             (18,435)             -               -
    Interest and other income                                                 8,454          5,191           3,429
    Interest expense                                                        (13,061)        (8,206)         (1,378)
    Foreign currency transaction gains                                        1,365            827               -
    Equity earnings in real estate ventures                                   1,455          2,284          (1,896)
    Minority interests                                                          900              -             371
                                                                     -----------------------------------------------

Income before income taxes and cumulative effect
    of a change in accounting principle                                      25,514         22,476          24,028

    Provision for income taxes                                               (3,727)       (12,178)        (12,975)
                                                                     -----------------------------------------------

Income before cumulative effect of a change in
    accounting principle                                                     21,787         10,298          11,053

Cumulative effect of a change in accounting principal, net of
    applicable taxes                                                        (30,420)             -               -
                                                                     -----------------------------------------------

Net (loss) income                                                            (8,633)        10,298          11,053

Preferred stock dividends                                                      (890)             -               -
                                                                     -----------------------------------------------

Net (loss) income available to common shareholders                        $  (9,523)     $  10,298       $  11,053
                                                                     ===============================================
</TABLE>



                                      F-5
<PAGE>

                         Insignia Financial Group, Inc.
                Consolidated Statements of Operations (continued)



<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31
                                                                                  2000          1999          1998
                                                                            --------------------------------------------
                                                                               (In thousands, except per share data)
PER SHARE AMOUNTS:
   Earnings per common share - basic
<S>                                                                           <C>               <C>          <C>
     Income before cumulative effect of a change in accounting principle      $    0.99         $  0.48      $  0.52
                                                                            ============================================
     Cumulative effect of a change in accounting principle                    $   (1.44)              -            -
                                                                            ============================================
     Net (loss) income                                                        $   (0.45)        $  0.48      $  0.52
                                                                            ============================================

   Earnings per common share - assuming dilution:
     Income before cumulative effect of a change in accounting principle
                                                                              $    0.89         $  0.46       $ 0.50
                                                                            ============================================
     Cumulative effect of a change in accounting principle                    $   (1.24)              -            -
                                                                            ============================================
     Net (loss) income                                                        $   (0.35)        $  0.46       $ 0.50
                                                                            ============================================

   Pro forma amounts assuming the new accounting principle is applied
     retroactively:
       Net income                                                              $ 21,787         $ 3,158       $5,669
                                                                            ============================================
       Earnings per common share - basic                                     $     0.99         $  0.15       $ 0.27
                                                                            ============================================
       Earnings per common share - assuming dilution                         $     0.89         $  0.14       $ 0.26
                                                                            ============================================

   Weighted average common shares and assumed conversions:
       - basic                                                                   21,200          21,294       21,063
                                                                            ============================================
       - assuming dilution                                                       24,428          22,622       21,993
                                                                            ============================================
</TABLE>

See accompanying notes.



                                      F-6
<PAGE>

                         Insignia Financial Group, Inc.
                 Consolidated Statements of Stockholders' Equity
findme

<TABLE>
<CAPTION>
                                                             INVESTMENT AND                                 NOTES
                                                              NET ADVANCES                ADDITIONAL     RECEIVABLE
                                                                  FROM         COMMON       PAID-IN      FOR COMMON      RETAINED
(In thousands, except share data)                            FORMER PARENT     STOCK        CAPITAL         STOCK        EARNINGS
                                                            -----------------------------------------------------------------------

<S>                                                         <C>             <C>            <C>            <C>            <C>
Balances at December 31, 1997                               $    208,444    $              $       -      $      -       $      -
                                                                                   -
   Net transactions with Former Parent                           165,137           -               -             -              -
   Net income (from January 1, 1998 through September 30,          9,397           -               -             -              -
     1998)
   Distribution of Common Stock in connection with Spin-Off     (382,978)        214         382,764             -              -
   Net income (from October 1, 1998 through December 31,               -           -               -             -          1,656
     1998)
   Other comprehensive income:
     Foreign currency translation, net of tax of $95                   -           -               -             -              -

   Total comprehensive income                                          -           -               -             -              -


   Exercise of stock options - 25,707 shares of Common                 -           -             150             -              -
     Stock issued
   Notes receivable from employees for shares of Common                -           1           1,842        (1,843)             -
     Stock
   Purchase of treasury shares                                         -          (1)         (1,852)            -              -
   Restricted stock awards                                             -           -             171             -              -
                                                            ----------------------------------------------------------------------
Balances at December 31, 1998                                          -         214         383,075        (1,843)         1,656
   Net income                                                          -           -               -             -         10,298
   Other comprehensive income:
     Foreign currency translation, net of tax benefit of               -           -               -             -              -
     $1,113
     Unrealized gains on securities, net of tax of                     -           -               -             -              -
     $900

   Total comprehensive income


   Exercise of stock options and warrants - 155,558 shares
     of Common Stock issued                                            -           2           1,166             -              -
   Issuance of 112,006 shares of Common Stock under
     Employee Stock Purchase Program                                   -           1           1,017             -              -
   Issuance of 305,981 shares of Common Stock pursuant to
     the St. Quintin acquisition                                       -           3           8,097             -              -
   Notes receivable from employees for shares of Common                -           1             299          (300)             -
     Stock
   Payments on notes receivable for shares of Common Stock             -           -               -           385              -
   Purchase of treasury shares                                         -         (14)        (14,323)            -              -
   Restricted stock awards                                             -           -             737             -              -
   Adjustment for certain amounts estimated at Spin-Off                -           -           2,716             -              -
                                                            ----------------------------------------------------------------------
Balances at December 31, 1999                                          -         207         382,784        (1,758)        11,954
</TABLE>

<PAGE>

<TABLE>
    ACCUMULATED
       OTHER
   COMPREHENSIVE   COMPREHENSIVE
       INCOME         INCOME         TOTAL
------------------------------------------------

   <S>             <C>               <C>
   $       -       $   208,444

           -                          165,137
           -                            9,397

           -                                -
           -       $     1,656          1,656


         141               141            141
                   ----------------
           -       $     1,797              -
                   ================
           -                              150

           -                                -

           -                           (1,853)
           -                              171
-------------------              ---------------
         141                          383,243
           -       $    10,298         10,298

      (1,474)           (1,474)        (1,474)

       1,215             1,215          1,215

                  ----------------
                  $     10,039
                  ================

           -                            1,168

           -                            1,018

           -                            8,100
           -                                -

           -                              385
           -                          (14,337)
           -                              737
           -                            2,716
-------------------              ---------------
        (118)                         393,069

</TABLE>




                                      F-7
<PAGE>

                         Insignia Financial Group, Inc.
           Consolidated Statements of Stockholders' Equity (continued)

<TABLE>
<CAPTION>
                                                        INVESTMENT                                               NOTES
                                                     AND NET ADVANCES                           ADDITIONAL    RECEIVABLE
                                                          FROM        COMMON      PREFERRED      PAID-IN      FOR COMMON
(In thousands, except share data)                     FORMER PARENT    STOCK        STOCK        CAPITAL        STOCK
                                                      ------------------------------------------------------------------

<S>                                                   <C>                         <C>           <C>          <C>
Balances at December 31, 1999                         $    -          $    207    $       -     $  382,784   $   (1,758)

   Net loss                                                -                 -            -           -               -
   Other comprehensive loss:
     Foreign currency translation, net of tax benefit      -                 -            -           -               -
      of $4,518
     Unrealized loss on securities, net of tax             -                 -            -           -               -
      benefit of $456
     Reclassification  adjustment for realized gains,      -                 -            -           -               -
      net of tax of $324


   Total comprehensive loss


   Exercise of stock options and warrants - 446,541
     shares of Common Stock issued                         -                              5          3,777            -
   Issuance of 307,413 shares of Common Stock under
     Employee Stock Purchase Program                       -                 3            -          2,380            -
   Issuance of 250,000 shares of Preferred Stock           -                 -            3         24,948            -
   Restricted stock awards - 62,135 shares of Common       -                 1            -            708            -
     Stock issued
   Assumption of options pursuant to Brooke                -                 -            -            479            -
     acquisition
   Preferred stock dividend                                -                 -            -            475            -
   Notes receivable from employees for shares of           -                 -            -            405         (405)
     Common Stock
   Payments on notes receivable for shares of Common       -                 -            -              -          112
     Stock
   Adjustment for certain amounts estimated at             -                 -            -         (2,125)           -
     Spin-Off
                                                      -----------------------------------------------------------------
Balances at December 31, 2000                         $    -          $    216    $       3     $  413,831   $   (2,051)
                                                      ================================================================
</TABLE>


See accompanying notes

<PAGE>

<TABLE>
<CAPTION>

                 ACCUMULATED
                    OTHER
    RETAINED    COMPREHENSIVE  COMPREHENSIVE
    EARNINGS        INCOME         INCOME        TOTAL
-----------------------------------------------------------

    <S>         <C>             <C>           <C>
    $  11,954   $     (118)                   $  393,069

       (8,633)           -      $   (8,633)       (8,633)

            -       (4,674)         (4,674)       (4,674)

            -         (685)           (685)         (685)

            -
                      (487)           (487)         (487)

                               -------------
                               -------------
                                $  (14,479)
                               =============
                               =============
           -             -                         3,782

           -             -                         2,383
           -             -                        24,951
           -             -                           709

           -             -                           479

        (475)            -                             -
           -             -                             -

           -             -                           112

           -             -                        (2,125)

--------------------------------             --------------
    $  2,846    $   (5,964)                   $  408,881

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

</TABLE>



                                      F-8
<PAGE>

                         Insignia Financial Group, Inc.
                      Consolidated Statements of Cash Flows




<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31
                                                                                  2000             1999             1998
                                                                           -----------------------------------------------------
                                                                                              (In thousands)
         OPERATING ACTIVITIES
<S>                                                                              <C>              <C>              <C>
         Net (loss) income                                                       $   (8,633)      $  10,298        $  11,053
         Cumulative effect of a change in accounting principle                       30,420               -                -
                                                                           -----------------------------------------------------

         Income before cumulative effect of a change in accounting
            principle                                                                21,787          10,298           11,053

         Adjustments to reconcile net income to net cash provided by operating
            activities:
              Depreciation and amortization                                          41,196          30,979           22,543
              Merger related and non-recurring expenses                                   -           4,272            2,300
              Equity (earnings) losses in real estate ventures                       (1,455)         (2,284)           1,896
              Minority interests                                                       (900)              -             (371)
              Foreign currency transaction gains                                     (1,365)           (827)               -
              Gain on sale of marketable securities                                    (811)              -                -
              Provisions for loss on Internet investments                            18,435               -                -
              Deferred income taxes                                                  (3,465)          4,213            3,966
              Changes in operating assets and liabilities:
                Receivables                                                         (80,850)        (37,142)         (36,852)
                Other assets                                                            356          (3,843)             644
                Accounts payable and accrued expenses                                58,625          32,465           25,509
                Commissions payable                                                  30,588          26,679            5,169
                                                                           -----------------------------------------------------
         Cash provided by operating activities                                       82,141          64,810           35,857

         INVESTING ACTIVITIES
         Additions to property and equipment, net                                   (31,289)        (30,255)         (18,167)
         Investment in Internet-based businesses                                    (22,552)        (14,907)               -
         Proceeds from sale of marketable securities                                  1,293               -                -
         Payments made for acquisition of businesses                                (13,981)       (107,835)         (65,357)
         (Increase) decrease in mortgage loans held for sale                         (3,153)         10,119           (6,418)
         Investment in real estate                                                  (37,099)        (40,711)         (40,563)
         Distributions from real estate investments                                  18,215          24,589            9,097
         Decrease (increase) in restricted cash                                       7,130          (6,844)          (6,732)
                                                                           -----------------------------------------------------
         Cash used in investing activities                                          (81,436)       (165,844)        (128,140)
</TABLE>




                                      F-9
<PAGE>

                         Insignia Financial Group, Inc.
                Consolidated Statements of Cash Flows (continued)




<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31
                                                                                  2000             1999             1998
                                                                           -----------------------------------------------------
                                                                                              (In thousands)
         FINANCING ACTIVITIES
<S>                                                                               <C>            <C>             <C>
         Proceeds from issuance of Common Stock                                   $   2,383      $    1,018      $       150
         Proceeds from issuance of Preferred Stock                                   24,951               -                -
         Proceeds from exercise of stock options                                      3,782           1,168                -
         Purchase of treasury stock                                                       -         (14,337)          (1,853)
         Net advances (payments) on mortgage warehouse line                           3,267         (11,680)           5,420
         Payments on notes payable                                                   (7,659)         (5,192)          (6,129)
         Proceeds from notes payable                                                 16,253         118,653            5,949
         Proceeds from real estate mortgage notes payable                            19,914          19,799                -
         Debt issuance costs                                                              -               -           (1,262)
         Net transactions with Former Parent                                              -               -          137,919
                                                                           -----------------------------------------------------
         Cash provided by financing activities                                       62,891         109,429          140,194
         Effect of exchange rate changes in cash                                       (669)           (284)              64
                                                                           -----------------------------------------------------
         Net increase in cash and cash equivalents                                   62,927           8,111           47,975
         Cash and cash equivalents at beginning of year                              61,600          53,489            5,514
                                                                           -----------------------------------------------------
         Cash and cash equivalents at end of year                                 $ 124,527       $  61,600        $  53,489
                                                                           =====================================================
</TABLE>

See accompanying notes



                                      F-10
<PAGE>

                         Insignia Financial Group, Inc.
                   Notes to Consolidated Financial Statements
                                December 31, 2000


1.       BUSINESS

ORGANIZATION

Insignia Financial Group, Inc. ("Insignia" or the "Company"), a Delaware
corporation headquartered in New York, New York, is an international real estate
services company with operations throughout the United States and United Kingdom
as well as in continental Europe, Asia and Latin America.

Insignia provides diversified real estate services including commercial agency
leasing, tenant representation, brokerage, property and asset management,
investment sales, development, redevelopment and consulting services, mortgage
origination and title services, escrow agency, real estate oriented financial
services, equity co-investment and other services to owners and users of real
estate. In addition to real estate services, Insignia invests in real estate
assets through co-investment initiatives with institutional clients, principal
development activities and real estate funds. Insignia's principal real estate
service businesses are Insignia/ESG, Inc. (U.S. commercial real estate
services), Insignia Richard Ellis (U.K. commercial real estate services),
Douglas Elliman LLC (residential sales and rentals), Realty One, Inc.
(single-family home brokerage and mortgage origination) and Insignia Residential
Group, Inc. (condominium and cooperative apartment management). Insignia
operates other commercial real estate service businesses throughout the world in
Germany, Italy, Belgium, Ireland, Northern Ireland, the Netherlands, Japan, Hong
Kong, China, Thailand and Mexico.

Further, in late 1999, Insignia embarked upon an Internet strategy comprising
equity investment in third-party Internet-oriented businesses and development of
proprietary e-commerce business applications with a real estate focus.
Insignia's Internet initiatives were sharply curtailed in late 2000 due to the
evaporation of equity financing for Internet ventures.

SPIN-OFF

Insignia was incorporated on May 6, 1998 under the name Insignia/ESG Holdings,
Inc. and originally was a wholly-owned subsidiary of a company also named
Insignia Financial Group, Inc. ("Former Parent"). On September 21, 1998, Former
Parent effected the spin-off of Insignia through a pro rata distribution (the
"Spin-Off") to the holders of common stock of Former Parent of all the
outstanding common stock of Insignia (the "Common Stock"). On November 2, 1998,
Insignia assumed the name of Former Parent, "Insignia Financial Group, Inc.",
and reclaimed Former Parent's original New York Stock Exchange symbol, "IFS."




                                      F-11
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements present the consolidated balance sheets of Insignia
as of December 31, 2000, and 1999, and the related consolidated statements of
operations and cash flows for each of the three years in the period ended
December 31, 2000 (which included the combined results of those Insignia
businesses included in the Spin-Off for the 1998 period prior to Spin-Off).

Prior to Spin-Off, Insignia utilized Former Parent's centralized systems for
cash management, payroll, employee benefit plans, insurance and various
administrative services. As a result, real estate services and administrative
expenses, capital expenditures and other cash requirements of the Insignia
businesses in the Spin-Off generally were paid by Former Parent and charged
directly or allocated to Insignia. Administrative expenses, which included,
among other things, investment banking, information technology, legal, finance,
accounting, and facilities expenses of the Former Parent, were allocated to
Insignia for all periods prior to the Spin-Off which occurred in September 1998.
The allocation in 1998 for the period prior to Spin-Off totaled approximately
$5,543,000. The administrative allocation was based upon an analysis of the
operations of Former Parent using various methods, including employee headcount,
acquisition activities and estimated management time devoted to the operations
of those Insignia businesses. The comparative financial results for 1998 may not
be comparable to other periods presented due to the allocation of administrative
expenses to Insignia for the period prior to Spin-Off.

Interest expense is based upon the historical debt of Insignia and does not
include interest expense related to Former Parent's indebtedness for the 1998
period prior to Spin-Off.

PRINCIPLES OF CONSOLIDATION

The financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany balances and transactions have been
eliminated. Certain amounts for prior years have been reclassified to conform to
the 2000 presentation.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.


                                      F-12
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH AND CASH EQUIVALENTS

The amount of cash on deposit in federally insured institutions generally
exceeds the limit on insured deposits. The Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.

RESTRICTED CASH

At December 31, 2000, restricted cash consisted of approximately $4.8 million in
cash pledged to collateralize notes issued in connection with the Richard Ellis
Group Limited ("REGL") and St. Quintin Holdings Limited ("St. Quintin")
acquisitions, and approximately $1.8 million restricted for contingent payments
related to other business acquisitions. At December 31, 1999, restricted cash
consisted of approximately $1.4 million pledged to collateralize notes payable
of REGL, approximately $9.4 million in cash pledged to collateralize notes
issued in connection with the REGL and St. Quintin acquisitions, and
approximately $2.9 million restricted for contingent payments related to other
business acquisitions.

REAL ESTATE INTERESTS

Real estate interests include investments in co-invested partnerships owning
commercial and residential real estate, properties under development, land held
for development and an investment in Insignia Opportunity Trust ("IOT"), a real
estate investment trust formed in 1999 (see Note 9). These investments are
accounted for using the equity method, with earnings (losses) recorded to equity
earnings in real estate ventures.

ADVERTISING EXPENSE

The cost of advertising is expensed as incurred. The Company incurred
approximately $25,105,000 $16,850,000, and $12,800,000, in advertising costs
during 2000, 1999, and 1998, respectively.

INTANGIBLE ASSETS

The Company's intangible assets consist of property management contracts and
costs paid in excess of net assets of acquired businesses. Property management
contracts are stated at cost, less accumulated amortization of $47,476,000
(2000), and $38,828,000 (1999). These contracts are amortized using the
straight-line method over 3 to 15 years. Costs in excess of net assets of
acquired businesses are amortized by the straight-line method, over 5 to 25
years. Accumulated amortization was $46,719,000 (2000) and $30,125,000 (1999).
Property management contracts and costs in excess of net assets of acquired
businesses are reviewed when indicators of impairment exist. An undiscounted
cash flow methodology is used to determine whether underlying operating cash
flows are insufficient to recover the assets' carrying amount.


                                      F-13
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets, typically ranging from 3 to 10 years.

REVENUE RECOGNITION

Real estate services revenue includes commercial leasing, tenant representation,
property and asset management, investment sales, consulting, residential
brokerage, mortgage origination, escrow agency, and commission revenue related
to real estate sales. Such revenues are recorded when the related services are
performed or at closing in the case of real estate sales. Prior to 2000, leasing
commission revenue was recorded when the related service was performed
(generally at lease signing), unless significant contingencies existed.
Effective January 1, 2000, the Company changed its method of accounting to
comply with the Securities and Exchange Commission's Staff Accounting Bulletin
101 ("SAB 101"), Revenue Recognition in Financial Statements. As a result,
leasing commissions that are payable upon tenant occupancy, payment of rent or
other specified events are now recognized upon the occurrence of such events
(see Note 3).

FOREIGN CURRENCY TRANSLATION

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

OTHER COMPREHENSIVE INCOME

Other comprehensive income consists of unrealized gains (losses) on marketable
equity securities and foreign currency translation adjustments, which at
December 31, 2000 aggregated, net of tax, approximately $43,000 in unrealized
gains and $6,007,000 in translation losses, respectively.



                                      F-14
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MINORITY INTEREST

Minority interests in 2000 consisted of minority equity in EdificeRex.com
("EdificeRex"); the Company's internally developed Internet-based business that
launched in February 2000. During the first half of 2000, Insignia consolidated
EdificeRex and recorded net operating losses of approximately $9.3 million, or
$3.2 million in excess of the Company's investment. EdificeRex was
de-consolidated in the third quarter of 2000, due to a restructuring which
reduced the Company's voting interest to approximately 47%. The $3.2 million
excess loss is carried as a deferred credit on the Company's balance sheet
at December 31, 2000 and will be recognized in earnings once EdificeRex achieves
profitability or the Company disposes of its interest in EdificeRex. The Company
has no obligation or intention to provide additional funding to EdificeRex.

Minority interests in 1998 consisted of the 40% minority equity of
Insignia/CAGISA, which was sold in March 1999 (see Note 4).

INCOME TAXES

Deferred income tax assets and liabilities are recorded to reflect the tax
consequences on future years of temporary differences of revenue and expense
items for financial statement and income tax purposes. Valuation allowances are
provided against deferred tax assets that are unlikely to be realized. Federal
income taxes are not provided on the unremitted earnings of foreign subsidiaries
because it has been the practice of the Company to reinvest those earnings in
the businesses outside the United States.

IMPAIRMENT

Impairment losses are recognized for long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows are not
sufficient to recover the assets' carrying amount. Impairment losses are
measured for assets held for sale by comparing the fair value of assets (less
costs to dispose) to their respective carrying amounts.

RISKS AND UNCERTAINTIES

The Company's future results could be adversely affected by a number of factors,
including (i) a general economic downturn in the Company's principal markets,
most notably New York and London; (ii) unfavorable foreign currency
fluctuations; (iii) changes in interest rates; (iv) fluctuations in rental rates
and real estate values; and (v) an inability of Internet-based businesses, in
which the Company is invested, to acquire equity financing to fund ongoing
operating and development activities.


                                      F-15
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

Basic earnings per share is calculated using income available to common
shareholders divided by the weighted average of common shares outstanding during
the year. Diluted earnings per share is similar to basic earnings per share
except that the weighted average of common shares outstanding is increased to
include the number of additional common shares that would have been outstanding
if the potentially dilutive securities, such as preferred stock, options and
warrants, had been issued or exercised.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into forward exchange contracts for firm foreign currency
commitments to reduce its exposure to foreign currency risk. At December 31,
2000, the Company had two contracts to purchase 12 million British pounds
(Sterling) maturing at various dates through March 2001. The fair market value
of the forward exchange contracts, based on rates in effect at December 31,
2000, was approximately $862,000 and is included in other assets at December 31,
2000. Changes in fair market value of the contracts are recorded currently in
earnings.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 133 ("SFAS"), Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS 137. 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 as of January 1, 2001 for the
Company and its implementation will not have a material effect on the Company's
financial position or results of operations.




                                      F-16
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



3. CHANGE IN ACCOUNTING PRINCIPLE

In December 1999, the Securities and Exchange Commission ("SEC") issued SAB 101,
which discusses the SEC's views on the recognition of revenues from certain
transactions. At December 31, 2000, the Company changed its method of accounting
for revenue recognition for leasing commissions, in compliance with SAB 101, as
a cumulative effect of a change in accounting principle, effective as of January
1, 2000. As such, operating results for the year ended December 31, 2000 are
presented in compliance with the requirements of this accounting change.
Historically, the Company generally recognized leasing commissions upon
execution of the underlying lease, unless significant contingencies existed.
Under the new accounting method, adopted retroactive to January 1, 2000, the
Company's leasing commissions that are payable upon certain events such as
tenant occupancy or payment of rent will be recognized upon the occurrence of
such events. While this accounting change affects the timing of recognition of
leasing revenues (and corresponding commission expense), it does not impact the
Company's cash flow from operations.

The cumulative effect of the accounting change for prior years resulted in a
reduction to income for the 2000 year of $30.4 million, net of applicable taxes
of $23.3 million. The effect of the change on 2000 was to decrease revenues by
$59.8 million and income exclusive of the cumulative effect of the accounting
change by $10.5 million, or $0.43 per share (assuming dilution). The effect of
the change on income for each quarter of the 2000 year is provided in Note 19.

4. MERGER RELATED AND NON-RECURRING CHARGES

Insignia, in 1999, recorded a non-recurring charge of $4.3 million ($3.1 million
net of tax benefit) for merger related expenses in connection with the March
1999 acquisition of St. Quintin and its subsequent combination with REGL. The
one-time charge was substantially composed of the costs to vacate excess office
space and, to a lesser extent, corresponding severance costs. The one time
charge included provisions for rent expense during the period from vacancy to
sublease, costs of improvements required for sublease, free rent concessions,
excess rent over sublease terms and severance. All excess office space was
subleased and severance costs were incurred prior to December 31, 1999. Also,
certain excess office space was subleased on more favorable terms than
originally estimated, resulting in a $1.3 million pre-tax income credit in the
fourth quarter of 1999.

A one-time impairment charge of $2.3 million was recorded in 1998 to write down
the Company's 60% investment in its Italian subsidiary, Insignia/CAGISA, to
estimated disposition value of approximately $1 million. This write-down was
principally comprised of costs in excess of net assets of acquired businesses
and was made in response the Company's decision to sell its interest in its
residential apartment management business in 1998. The Company completed the
disposition of its interest in this subsidiary in March 1999, realizing a gain
of approximately $50,000.


                                      F-17
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


5. EARNINGS PER SHARE

The following table sets forth the computation of the numerator and denominator
used for the computation of basic and diluted earnings per share for the periods
indicated.

<TABLE>
<CAPTION>
                                                                                   2000              1999               1998
                                                                              ----------------------------------------------------
                                                                                                (In thousands)
      NUMERATOR:
<S>                                                                            <C>                <C>               <C>
    Numerator for basic earnings per share - income available to common
       stockholders (before cumulative effect)                                 $ 20,897           $ 10,298          $ 11,053

    Effect of dilutive securities:
       Preferred stock dividends                                                    890                  -                 -
                                                                            -----------------  ----------------  ----------------
    Numerator for diluted earnings per share - income available to common
       stockholders after assumed conversions (before
       cumulative effect)                                                      $ 21,787           $ 10,298          $ 11,053
                                                                            =================  ================  ================

    DENOMINATOR
    Denominator for basic earnings per share - weighted
       average common shares                                                     21,200             21,294            21,063
    Effect of dilutive securities:
       Stock options, warrants and unvested restricted stock                      1,442              1,328               930
       Convertible preferred stock                                                1,786                  -                 -

                                                                            -----------------  ----------------  ----------------
     Denominator for diluted earnings per share - weighted
       average common shares and assumed conversions                             24,428             22,622            21,993
                                                                            =================  ================  ================
</TABLE>


6. ACQUISITIONS

The Company's acquisitions during the last three years are discussed below. The
acquisitions for 1998 were completed by Former Parent and contributed to
Insignia at the date of the Spin-Off. All acquisitions were accounted for as
purchases and the results of operations have been included in Insignia's
statement of operations from the respective date of acquisition. Contingent
purchase consideration is generally accounted for as additional costs in excess
of net assets of acquired businesses when incurred.



                                      F-18
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


6. ACQUISITIONS (CONTINUED)

2000 ACQUISITIONS

BROOKE INTERNATIONAL

In December 2000, Insignia acquired Brooke International ("Brooke"), a
commercial real estate service company based in Hong Kong with additional
offices in China and Thailand. The base purchase price was approximately $1.6
million, comprised of approximately (i) $1.1 million paid in cash and (ii)
$500,000 in reserved Common Stock and an assumed option plan enabling certain
Brooke employees to purchase 110,000 shares of the Company's Common Stock.
Options to purchase 40,000 shares of the Company's Common Stock at $11.8125 had
been granted under this plan and remained outstanding at December 31, 2000.
Additional purchase consideration of up to $1 million, payable over three years,
is contingent on the future performance of Brooke.

BDR

In March 2000, the Company entered into a definitive agreement to acquire BDR, a
Dutch real estate services company headquartered in Amsterdam, the Netherlands.
The base purchase price was approximately $2.4 million, all of which was paid in
cash upon final closing in September 2000. BDR provides a variety of commercial
real estate services with a specialization in international advisory assignments
and other corporate services. Additional purchase consideration of approximately
$2.5 million, payable over three years, is contingent on the future performance
of this business.

1999 ACQUISITIONS

LYNCH MURPHY WALSH & PARTNERS

On March 1, 1999, Insignia acquired Lynch Murphy Walsh & Partners ("Lynch
Murphy"), a provider of commercial real estate services located in Boston,
Massachusetts. Lynch Murphy specializes in brokerage services, including
representation of tenants and landlords, investment sales and debt placements,
valuation services and advisory/consulting services. The base purchase price was
$12.0 million, all of which was paid in cash from borrowings under Insignia's
revolving credit facility. Additional purchase consideration of up to $10.0
million, payable over three years, is contingent on the future performance of
Lynch Murphy. As of December 31, 2000, $3.0 million of additional purchase
consideration had been paid and the maximum remaining potential consideration
was approximately $7 million.


                                      F-19
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


6. ACQUISITIONS (CONTINUED)

ST. QUINTIN

On March 5, 1999, Insignia acquired St. Quintin a British real estate services
firm headquartered in London. The base purchase price for St. Quintin was
approximately $32.0 million. The base purchase price was funded with
approximately $24.3 million in borrowings under the Company's revolving credit
facility, the issuance of approximately 306,000 shares of the Company's Common
Stock and assumed options enabling certain employees of St. Quintin to purchase
approximately 612,000 shares of the Company's Common Stock. The remaining
additional purchase consideration of approximately $11.2 was incurred for 2000
and is included in accrued and sundry liabilities at December 31, 2000.

The operations of St. Quintin were merged with REGL in 1999 and the combined
entities now operate under the name Insignia Richard Ellis throughout the United
Kingdom.

DOUGLAS ELLIMAN

On June 23, 1999, Insignia acquired Douglas Elliman Brokerage, a residential
real estate brokerage firm located in New York City. The base purchase price was
approximately $65 million, paid in cash from borrowings under Insignia's
revolving credit facility. Additional purchase consideration of up to $10
million, payable over five years, is contingent on the future revenues of
Douglas Elliman. As of December 31, 2000 approximately $2 million of additional
purchase consideration had been paid and the maximum remaining potential
consideration was approximately $8 million.

1998 ACQUISITIONS

GOLDIE B. WOLFE & COMPANY

On January 20, 1998, 100% of the stock of Goldie B. Wolfe & Company ("Goldie
Wolfe") was acquired. Goldie Wolfe is a commercial real estate services firm
located in Chicago, Illinois. The purchase price was approximately $5.3 million,
all of which was paid in cash.

REGL

In February 1998, 100% of the stock of REGL was acquired. The base purchase
price was approximately $71.5 million, inclusive of approximately $3.3 million
paid in April 1999. The acquisition was funded by Former Parent from borrowings
on its revolving credit facility, and the issuance of 617,371 shares of Former
Parent common stock and the assumption of options enabling REGL employees to
purchase 853,741 shares of Former Parent common stock. The options were assumed
by Insignia in the Spin-Off for options to purchase up to 1,289,329 shares of
the Company's Common Stock. Approximately $35 million of the purchase price was
paid in cash with the remainder paid in the form of equity and deferred purchase
obligations. The remaining additional purchase consideration of approximately
$11.3 was incurred in 2000 and is included in accrued and sundry liabilities at
December 31, 2000.


                                      F-20
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



6. ACQUISITIONS (CONTINUED)

HOTEL PARTNERS

On May 11, 1998, Hotel Partners was acquired. Hotel Partners is a Chicago-based
international brokerage firm focused exclusively on the hospitality segment of
the real estate industry. The base purchase consideration paid for Hotel
Partners was approximately $7.0 million, which was paid in cash at closing.
Additional purchase consideration of up to $29.1 million, over a five-year
period, is contingent on the future performance of Hotel Partners. As of
December 31, 2000, no additional purchase consideration had been paid and the
maximum remaining potential consideration was approximately $18.9 million.

JACKSON CROSS COMPANY

On June 15, 1998, Jackson Cross Company ("Jackson Cross"), a prominent
commercial real estate service firm with operations primarily in the
Philadelphia area, was acquired. The base purchase consideration paid for
Jackson Cross was approximately $9.1 million, consisting of $8.6 million paid in
cash at closing and $500,000 in guaranteed deferred payments. Additional
purchase consideration of up to $5.4 million, payable over three years, is
contingent on the future performance of Jackson Cross. As of December 31, 2000,
approximately $1.1 million of additional purchase consideration had been paid
and the maximum remaining potential consideration was approximately $2.8
million.

OTHER INFORMATION (UNAUDITED)

Pro forma unaudited results of operations for the years ended December 31, 1999,
and 1998 assuming consummation of the Lynch Murphy, St. Quintin and Douglas
Elliman acquisitions at January 1, 1999 and 1998, and assuming consummation of
the Goldie Wolfe, REGL, Hotel Partners, and Jackson Cross acquisitions at
January 1, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                              1999                1998
                                                                     ---------------------------------------
                                                                                 (In thousands)

<S>                                                                        <C>                 <C>
                 Revenues                                                  $733,215            $665,638
                 Net income                                                  13,834              17,470

                 Pro forma per share amounts:
                    Net income - basic                                        $0.65               $0.82
                    Net income - assuming dilution                            $0.61               $0.77
</TABLE>

Pro forma results for the year ended December 31, 2000 are not provided as the
impact of 2000 acquisitions on the Company's results of operations were not
material. The 1998 acquisitions were funded utilizing the working capital of
Former Parent and no debt or interest was allocated to the Company.


                                      F-21
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



6. ACQUISITIONS (CONTINUED)

These pro forma results do not purport to represent the operations of the
Company nor are they necessarily indicative of the results that actually would
have been realized by the Company if the purchase of these businesses had
occurred at the beginning of the period.

The base purchase consideration for the BDR and Brooke (2000), Lynch Murphy, St.
Quintin and Douglas Elliman (1999), and Goldie Wolfe, REGL, Hotel Partners and
Jackson Cross (1998), acquisitions is summarized as follows:

<TABLE>
<CAPTION>
                                                                   2000         1999            1998
                                                          -------------------------------------------------
                                                                           (In thousands)

<S>                                                        <C>               <C>               <C>
Notes payable                                              $          -      $          -      $   2,405
Common Stock                                                        479             8,100         22,865
Accrued and sundry liabilities                                    2,398             4,316         36,428
Pension liability                                                     -             2,105              -
Cash paid at the closing dates                                    3,458           101,609         54,928
                                                          -------------------------------------------------
                                                               $  6,335          $116,130       $116,626
                                                          =================================================
</TABLE>

The base purchase consideration was allocated as follows:

<TABLE>
<CAPTION>
                                                                       2000             1999            1998
                                                                 --------------------------------------------------
                                                                                  (In thousands)

<S>                                                                 <C>              <C>               <C>
        Cash acquired                                               $          -     $          -      $    6,624
        Receivables                                                        1,600              873          12,181
        Property and equipment                                               152            2,824           1,810
        Property management contracts                                          -                -             175
        Non-compete agreements                                                 -              120             238
        Costs in excess of net assets of acquired
           businesses                                                      4,070          107,280          89,389
        Other assets                                                         513            5,033           6,209
                                                                 --------------------------------------------------
                                                                       $   6,335         $116,130        $116,626
                                                                 ==================================================
</TABLE>



                                      F-22
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



6. ACQUISITIONS (CONTINUED)

The base purchase consideration allocated to costs in excess of net assets of
acquired businesses and the corresponding amortization period for each
acquisition is summarized as follows:

<TABLE>
<CAPTION>
                                                                                                      AMORTIZATION
ACQUISITION                                                       YEAR               AMOUNT              PERIOD
----------------------------------------------------------- ------------------ ------------------- -------------------
                                                                                 (In thousands)
<S>                                                               <C>                     <C>           <C>
BDR                                                               2000                    $ 2,190       15 year
Brooke                                                            2000                      1,880       15 year
Lynch Murphy                                                      1999                     11,838       15 year
St. Quintin                                                       1999                     33,215       25 year
Douglas Elliman                                                   1999                     62,227       25 year
Goldie Wolfe                                                      1998                      5,387       15 year
REGL                                                              1998                     68,292       25 year
Hotel Partners                                                    1998                      7,133       10 year
Jackson Cross                                                     1998                      8,577       15 year
</TABLE>


7. RECEIVABLES

Receivables consist of the following:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31
                                                                                      2000              1999
                                                                                ------------------------------------
                                                                                          (In thousands)

<S>                                                                                   <C>              <C>
Accounts receivable                                                                   $   10,469       $   10,948
Commissions receivable                                                                   160,625          179,742
Notes receivable:
   Brokerage and other employees                                                          10,276            6,897
   Executive officers with interest ranging from 6.7% to 8.4%                              1,304              444
   Other                                                                                   1,145              333
                                                                                ------------------------------------
                                                                                       $ 183,819        $ 198,364
                                                                                ====================================
</TABLE>



                                      F-23
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



7. RECEIVABLES (CONTINUED)

Accounts receivable consists primarily of property management fees and cost
reimbursements. Commissions receivable consists primarily of brokerage and
leasing commissions from users of the Company's real estate services. The
Company's receivables are not collateralized; however, credit losses have been
insignificant and within management's estimate.

Principal collections on notes receivable are as follows (In thousands):


    2001                                                   $   5,143
    2002                                                       2,246
    2003                                                       1,564
    2004                                                       1,355
    2005                                                       1,095
    Thereafter                                                 1,322
                                                    ---------------------
                                                            $ 12,725
                                                    =====================

8. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31
                                                                                      2000              1999
                                                                                ------------------------------------
                                                                                          (In thousands)

<S>                                                                                    <C>              <C>
         Data processing equipment                                                     $29,161          $17,591
         Computer software                                                              25,789           22,698
         Furniture and fixtures                                                         14,324           11,732
         Leasehold improvements                                                         16,227           13,501
         Other equipment                                                                12,401            7,238
                                                                                ------------------------------------
                                                                                        97,902           72,760
         Less: Accumulated depreciation                                                (23,400)         (11,918)
                                                                                ------------------------------------
                                                                                       $74,502          $60,842
                                                                                ====================================
</TABLE>



                                      F-24
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



9. REAL ESTATE INTERESTS

At December 31, 2000, the Company held investments totaling approximately $28.7
million, in 33 co-investment partnerships that own real estate consisting
primarily of apartment and commercial property throughout the United States and
the United Kingdom. The Company's ownership interests in these partnerships
ranged from 1% to 30%. These partnerships own 44 operating properties comprising
approximately 4,700 multi-family apartment and hotel units and over 9.2 million
square feet of commercial space. The Company recorded pre-tax gains from the
sale of real estate totaling approximately $3.9 million and $2.8 million in 2000
and 1999, respectively. Also, Insignia recorded impairment write-downs of $1.8
million in 2000 for two of its real estate investments to reflect their
estimated fair market value. The gains and write-downs are included in equity
earnings in real estate ventures in Insignia's statement of operations and its
commercial segment.

In addition, the Company held an investment of approximately $7.5 million in IOT
at December 31, 2000. Through its subsidiary operating partnership, Insignia
Opportunity Trust ("IOP"), IOT invests primarily in commercial mortgage-backed
securities, unsecured commercial real estate related debt and real estate equity
instruments. Insignia holds an ownership interest of approximately 12% in IOT
and a 1.25% general partner and 10% non-subordinated promoted equity interest in
IOP. In 2000, the Company recorded equity earnings of approximately $593,000
related to its investment in IOT.

Summarized financial information of IOT and the unconsolidated co-investment
partnerships is as follows:

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED DECEMBER 31
                                                                          2000               1999               1998
                                                                    -------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS INFORMATION                                          (In thousands)
----------------------------------------------

<S>                                                                      <C>                <C>                <C>
Revenues                                                                 $  166,101         $  110,324         $    91,968

Total operating expenses                                                   (176,252)          (112,726)            (96,815)
                                                                    ----------------- ------------------- -----------------
Loss before gains on sale of property                                       (10,151)            (2,402)             (4,847)
Gains on sale of property                                                    24,939             18,196               3,691
                                                                    ----------------- ------------------- -----------------
Net income (loss)                                                       $    14,788         $   15,794         $    (1,156)
                                                                    ================= =================== =================
Company's share of net income (loss)                                   $      1,455        $     2,284         $    (1,896)
                                                                    ================= =================== =================
</TABLE>


                                      F-25
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


9.  REAL ESTATE INTEREST (CONTINUED)


<TABLE>
<CAPTION>
                                                                                    DECEMBER 31
                                                                             2000                 1999
                                                                      ---------------------------------------
CONDENSED BALANCE SHEET INFORMATION                                               (In thousands)
-----------------------------------

<S>                                                                      <C>                   <C>
Cash and investments                                                     $     35,257          $    14,481
Receivables and deposits                                                       23,438               14,432
Investments in commercial mortgage backed securities                           69,053                    -
Investments in mezzanine loans                                                  2,669                    -
Other assets                                                                   27,542               37,681

Real estate                                                                 1,152,522              832,797
Less accumulated depreciation                                                 (60,085)             (29,545)
                                                                      -------------------- ------------------
Net real estate                                                             1,092,437              803,252
                                                                      -------------------- ------------------
Total assets                                                               $1,250,396              869,846
                                                                      ==================== ==================

Mortgage notes payable                                                    $   847,706           $  640,357
Other liabilities                                                              34,842               18,790
                                                                      -------------------- ------------------
Total liabilities                                                             882,548              659,147
Partners' capital                                                             367,848              210,699
                                                                      -------------------- ------------------
Total liabilities and partners' capital                                    $1,250,396           $  869,846
                                                                      ==================== ==================
</TABLE>


At December 31, 2000, the Company also owned four real estate properties that
are consolidated in the Company's financial statements. Brookhaven Village
(Norman, Oklahoma) and Dolphin Village (St. Petersburg, Florida) are retail
properties totaling an aggregate 291,000 square feet. One Telecom (developed by
Insignia) and Sun Microsystems (in development by Insignia) are commercial
office properties totaling an aggregate 317,000 square feet. The aggregate
carrying amount of these properties was approximately $57.6 million and $41.5
million at December 31, 2000 and 1999, respectively (see Note 20).

In addition, at December 31, 2000 the Company held a 25% ownership interest in
an office property under development; owned 30% interests in two parcels of land
held for development; and solely owned one parcel of land also held for
development. Development activities on these properties are being directed by
Insignia and are not expected to be complete until later in 2001 or thereafter.
The Company's investment in these properties totaled $9.1 million at December
31, 2000. At December 31, 1999, the Company held investments of $4.3 million in
two office properties under development and a parcel of land held for
development. Interest capitalized in connection with development properties
totaled approximately $1,225,000 and $1,074,000 for 2000 and 1999, respectively.



                                      F-26
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


10. INVESTMENTS

At December 31, 2000, Insignia held equity investments of approximately $10.5
million, net of impairment write-downs of approximately $8 million, in 18
third-party Internet-related businesses. Additionally, Insignia recorded a
write-down of approximately $10.4 million for an internally developed
Internet-oriented business based on a decision to terminate this business. The
internal write-down was principally comprised of capitalized web-based
development costs. These impairment write-downs, which were taken due to the
conclusion that these capital investments were permanently impaired, are
included in the Company's statement of operations and its Internet initiatives
segment as provisions for loss on Internet investments. The Company's remaining
third-party Internet investments include equity interests in the following:
eziaz, inc.; LoopNet, Inc; PropertyFirst.com, Inc.; MyContracts.com, Inc.;
Wireless, Inc.; We Media, Inc.; Bizbash.com; ActBig.com, Inc.; Homestore.com,
Inc.; WorkSpeed, Inc.; Bid4space.com, Inc.; Sitestuff.com, Inc.; Internet Realty
Partners Inc. and Viva Group, Inc. Insignia's equity ownership in these
businesses ranges from 1% to 10%.

11. ACCRUED AND SUNDRY LIABILITIES

Accrued and sundry liabilities consist of the following:
<TABLE>
<CAPTION>
                                                                                            DECEMBER 31
                                                                                       2000              1999
                                                                                ------------------------------------
                                                                                          (In thousands)

<S>                                                                                   <C>                <C>
Employee compensation and benefits                                                    $   17,498         $ 14,045
Lease and annuity liabilities                                                              7,259           10,305
Amounts payable in connection with acquisitions                                           26,263            4,844
Deferred compensation                                                                     13,345            9,955
Deferred revenue                                                                           6,823            4,524
Current taxes payable                                                                      5,912            6,100
Value added taxes                                                                          5,194            3,681
Accrued rent                                                                               2,418            2,547
Other                                                                                     14,608           11,018
                                                                                ------------------------------------
                                                                                         $99,320         $ 67,019
                                                                                ====================================
</TABLE>

At December 31, 2000, amounts payable in connection with acquisitions includes
$22.5 million of remaining additional purchase consideration for the combined
U.K. entity (comprising St. Quintin and REGL). This amount is payable in March
2001.

Deferred revenue consists of the Company's ownership portion of acquisition and
development fees in certain real estate partnerships and unearned lease
commissions collected. Deferred acquisition and development fees are realized in
income upon disposal of the Company's ownership, generally from property sales,
and deferred leasing commissions are recognized upon the fulfillment of all
conditions to commission payment, such as tenant occupancy or payment of rent.


                                      F-27
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


12. NOTES PAYABLE AND OTHER DEBT

In October 1998, the Company entered into a three-year revolving credit facility
totaling $185 million. The revolving credit facility bears interest at the
annual rate of either prime rate or Federal Funds Rate plus an applicable margin
ranging from .75% - 1.25%, or LIBOR plus an applicable margin ranging from 1.5%
- 2.0%. At December 31, 2000 and 1999, all outstanding borrowings were subject
to the LIBOR based rates.

The facility provides for borrowings up to an aggregate $50 million in British
pounds (Sterling), Euro, or Canadian Dollars, provided that only $20 million may
at any time be denominated in Canadian Dollars. The facility is collateralized
by a pledge of the stock of substantially all material subsidiaries. The
outstanding balance on the revolving credit facility included foreign
denominated borrowings of 7,750,000 British pound (Sterling) and 11,450,000
Euros as of December 31, 2000 and 1999, respectively. The interest rates on
these borrowings at December 31, 2000 and 1999 were as follows: 8.56% and 8.25%
for U.S. denominated borrowings; 7.94% and 7.87% for British pounds (Sterling);
and 6.625% and 5.125% for Euros. In addition, the Company had outstanding
letters of credit against the facility in the amount of $14,400,000 and
$17,350,000 at December 31, 2000 and 1999, respectively.

Notes payable consist of the following:
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31
                                                                                     2000               1999
                                                                              --------------------------------------
                                                                                         (In thousands)
<S>                                                                            <C>
Revolving credit facility with interest due quarterly at LIBOR plus 1.75%.
   Final payment due date is October 22, 2001                                        $122,350           $109,025
Realty One $5.5 million revolving credit agreement with a bank,
   collateralized by property and receivables, with a maturity date of June
   1, 2001.  The interest rate was 7.3% at December 31, 2000                            5,500              5,500
Realty One $3 million revolving line, collateralized by accounts receivable
   and due on demand.  The interest rate was 9.5% at December 31, 2000                  1,713              1,111
Insignia Richard Ellis term loan with a bank, collateralized by restricted
   cash at December 31, 1999                                                                -              2,181
Insignia Richard Ellis $3 million loan collateralized by restricted cash and
   due on demand.  The interest rate was 5.6% at December 31, 2000                      1,832              2,888
Acquisition loan notes, with final maturity in June 2003                                4,387              8,927
                                                                              --------------------------------------
                                                                                     $135,782           $129,632
                                                                              ======================================
</TABLE>


                                      F-28
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


12. NOTES PAYABLE AND OTHER DEBT (CONTINUED)

Realty One's $5.5 million revolving credit facility is collateralized by pledged
property and receivables. The carrying amounts of property and equipment was
approximately $12.1 million and $8.6 million and receivables was approximately
$3.2 million and $2.2 million at December 2000 and 1999, respectively.

Certain notes payable and other debt agreements contain various restrictive
covenants requiring, among other things, minimum consolidated net worth and
certain other financial ratios. The Company's revolving credit facility
restricts the payment of cash dividends to an amount not to exceed twenty-five
percent of net income for the immediately preceding fiscal quarter. At December
31, 2000 and 1999, the Company was in compliance with all debt covenants.

MORTGAGE WAREHOUSE LINE OF CREDIT

Realty One's affiliate First Ohio Mortgage Corporation maintains a $30,000,000
line of credit. Borrowings on the line of credit were $9,502,000 and $6,235,000
at December 31, 2000 and 1999, respectively. The line of credit is
collateralized by substantially all the assets of First Ohio Mortgage Company
and a $10,000,000 guaranty by Insignia. At December 31, 2000 and 1999, First
Ohio Mortgage Corporation had assets, comprised primarily of mortgage loans held
for sale, totaling approximately $15.1 million and $13.5 million, respectively.
Advances on the line of credit can only be drawn with evidence of a committed
residential mortgage and each advance is limited to the committed sales price of
the related mortgage loan. Repayment of each advance is to be made within 14
business days of the funding. The line of credit cannot be used to fund any
single residential mortgage in excess of $400,000. The interest rate on all
advances under the line of credit is at a per annum rate equal to 1% below the
prime rate (8.5% at December 31, 2000).



                                      F-29
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



12. NOTES PAYABLE AND OTHER DEBT (CONTINUED)

REAL ESTATE MORTGAGE NOTES PAYABLE

Real estate mortgage notes payable represent non-recourse loans collateralized
by real estate properties consisting of the following:

<TABLE>
<CAPTION>
                                                                                           2000              1999
                                                                                    -------------------------------------
                                                                                               (In thousands)
<S>                                                                                       <C>                <C>
Brookhaven Village, mortgage loan bearing interest at 10% at December 31, 2000.
   The note matures in December 2002, with principal payable in full on such date         $   8,305          $   8,305
Dolphin Village, mortgage loan bearing interest at 10.47% at December 31, 2000.
   The note matures on October 8, 2003                                                        6,977              6,875
One Telecom, $26.1 million credit facility bearing interest at 9.16% and having a
   maturity date of April 1, 2004                                                            26,100             13,275
Sun Microsystems, mortgage loan bearing interest at 9.0% and
   having a final maturity date of January 5, 2001                                            6,987                  -
                                                                                    -------------------------------------
                                                                                           $ 48,369          $  28,455
                                                                                    =====================================
</TABLE>

The mortgage note encumbering Brookhaven Village includes a participation
feature whereby the lender is entitled to 35% of the net cash flow, net
refinancing proceeds or net sales proceeds after the Company has achieved a 10%
annual return on equity. The participation liability to the lender totaled
approximately $600,000 and $500,000 at December 31, 2000 and 1999, respectively.

Scheduled principal maturities on notes payable and other debt after December
2000 are as follows (In thousands):

         2001                                     $146,052
         2002                                       15,282
         2003                                        4,387
         2004                                       27,932
                                          ------------------
                                                  $193,653
                                          ==================


The Company paid interest of approximately $10,588,000, $6,445,000 and
$1,601,000 in 2000, 1999, and 1998, respectively.


                                      F-30
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



13. STOCK COMPENSATION PLANS

The Company's 1998 Stock Incentive Plan (the "1998 Plan") authorized the grant
of options and restricted stock awards to management personnel totaling up to
3,500,000 shares of the Company's Common Stock. The term of each option is
determined by the Company's Board of Directors but will in no event exceed ten
years from the date of grant. Options granted typically have five-year terms and
are granted at prices not less than 100% of the fair market value of the
Company's Common Stock on the date of grant. The 1998 Plan may be terminated by
the Board of Directors at any time. At the Spin-Off date, the Company assumed,
under this plan, approximately 1,787,000 options issued by Former Parent to
employees of the Insignia Businesses. At December 31, 2000, approximately
3,138,000 options were outstanding under the 1998 Plan.

At December 31, 2000, approximately 248,000 unvested restricted stock awards to
acquire shares of the Company's Common Stock were outstanding under the 1998
Plan. These awards, which have a five-year vesting period, were granted to
executive officers and other employees of the Company. Compensation expense
recognized by the Company for these awards totaled approximately $709,000,
$737,000 and $720,000 for 2000, 1999 and 1998, respectively.

The Company assumed 1,482,879 options under Non-Qualified Stock Option
Agreements in connection with the acquisition of Edward S. Gordon Company
Incorporated and Edward S. Gordon Company of New Jersey, Inc. on June 30, 1996.
The options had five-year terms at the date of grant and the terms remained
unchanged at the date of assumption. At December 31, 2000, approximately 102,000
options remain outstanding.

The Company assumed 1,289,329 options under Non-Qualified Stock Option
Agreements in connection with the acquisition of REGL. The options had five-year
terms at the date of grant and the terms remained unchanged at the date of
assumption. At December 31, 2000, approximately 974,000 options remain
outstanding.

The Company assumed approximately 612,000 options under Non-Qualified Stock
Option Agreements in connection with the acquisition of St. Quintin. The options
had five-year terms at the date of grant and the terms remained unchanged at the
date of assumption. At December 31, 2000, approximately 438,000 options remain
outstanding.

The Company assumed 110,000 options under a Non-Qualified Stock Option Plan in
connection with the acquisition of Brooke. At December 31, 2000, 40,000 options
had been issued and remained outstanding under the plan. The options had five
and one half-year terms at the date of grant and the terms remained unchanged at
the date of assumption.

The terms of all options assumed in connection with acquisitions remained
subject to continued vesting over their original terms. These options have been
accounted for as additional purchase consideration for each respective business
combination.


                                      F-31
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)




13. STOCK COMPENSATION PLANS (CONTINUED)

During 2000, Insignia granted 1,493,000 warrants to certain key executives,
non-employee directors and other employees under Warrant Agreements to purchase
Insignia Common Stock. Such warrant had five-year terms at the date of grant. At
December 31, 2000, approximately 1,488,000 warrants remain outstanding.

The Company also has sold shares of its Common Stock to certain employees in
exchange for notes receivable collateralized by the common shares. The
outstanding principal balances of these notes amounted to approximately
$2,051,000 and $1,758,000 at December 31, 2000 and 1999, respectively. These
notes receivable are classified as a reduction of stockholders' equity.

The Company's 1998 Employee Stock Purchase Plan (the "Employee Plan") was
adopted to provide employees with an opportunity to purchase Common Stock
through payroll deductions at a price not less than 85% of the fair market value
of the Company's Common Stock. The Employee Plan was developed to qualify under
Section 423 of the Internal Revenue Code of 1986.

In connection with the Spin-Off, 1,196,000 warrants to purchase Common Stock of
the Company were issued to holders of the Convertible Preferred Securities of
Former Parent. The terms of each warrant is five years. Former Parent purchased
the warrants from Insignia in 1998 for approximately $8.5 million. At December
31, 2000, all warrants remain outstanding and are fully exercisable.

The Company's Common Stock reserved for future issuance in connection with stock
compensation plans totaled approximately 8.4 million shares at December 31,
2000.

The Company has elected to follow Opinion No. 25, Accounting for Stock Issued to
Employees ("APB 25"), in accounting for its employee stock based compensation
because, as discussed below, the alternative fair value accounting provided for
under SFAS 123, Accounting for Stock-Based Compensation, requires use of option
valuation models that were not developed for use in valuing employee stock
options, warrants and unvested restricted stock awards. Under APB 25, when the
exercise price equals the market price, no compensation expense is recognized.
Restricted stock is recorded as compensation cost over the requisite vesting
periods based on the market value on the date of grant.



                                      F-32
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)

13. STOCK COMPENSATION PLANS (CONTINUED)

Pro forma information regarding net income and earnings per share is required by
Statement 123, which also requires that the information be determined as if the
Company has accounted for its employee stock options, warrants and unvested
restricted stock awards granted subsequent to December 31, 1994 under the fair
value method required by that Statement. The fair value for these options,
warrants and restricted stock awards have been estimated at the date of grant
using a Black-Scholes option-pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
                                                                         2000              1999              1998
                                                                  -------------------------------------------------------

<S>                                                                       <C>               <C>                <C>
Risk-free interest rate                                                   5.1%              6.2%               4.9%
Dividend yield                                                            N/A               N/A                N/A
Volatility factors of the expected market price                           0.52              0.43               0.45
Weighted-average expected life of the options                             4.3               3.3                4.4
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options and warrants having no vesting restrictions and
that are fully transferable. In addition, option valuation models required the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options, warrants and
restricted stock awards have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options, warrants and restricted stock awards.

For purposes of pro forma disclosures, the estimated fair values of all options,
warrants and unvested restricted stock awards are amortized to expense over the
respective vesting periods. The Company's pro forma information follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                         2000             1999              1998
                                                                   -----------------------------------------------------
<S>                                                                 <C>                   <C>              <C>
PRO FORMA:
   Income before cumulative effect of a change in accounting
     principle                                                       $  16,598          $   7,116        $   8,929
   Net (loss) income                                                   (13,822)             7,116            8,929

PER SHARE AMOUNTS:
Pro forma earnings per share - basic
   Income before cumulative effect of a change in accounting
     principle                                                       $    0.74          $    0.33       $     0.42
   Net (loss) income                                                 $   (0.69)         $    0.33       $     0.42
Proforma earnings per share - assuming dilution Income before
   cumulative effect of a change in accounting principle             $    0.68          $    0.31       $     0.41
   Net (loss) income                                                 $   (0.57)         $    0.31       $     0.41
</TABLE>


                                      F-33
<PAGE>


                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


13. STOCK COMPENSATION PLANS (CONTINUED)

Summaries of the Company's stock option, warrant and restricted stock activity,
and related information for the years ended December 31, 2000, 1999 and 1998 are
as follows:

<TABLE>
<CAPTION>
                                                    2000                         1999                         1998
                                          --------------------------------------------------------------------------------------
                                                          WEIGHTED                      WEIGHTED                    WEIGHTED
                                                           AVERAGE                      AVERAGE                     AVERAGE
                                                          EXERCISE                   EXERCISE PRICE              EXERCISE PRICE
                                              SHARES        PRICE         SHARES                       SHARES
                                          --------------------------------------------------------------------------------------
<S>                                           <C>             <C>          <C>            <C>           <C>           <C>
Outstanding at beginning of year              6,859,368       $ 10.02      6,643,398      $ 10.29       4,614,120     $ 10.66
Options and warrants granted                  2,189,174          8.54        128,897         6.65       1,077,949       12.67
Options assumed in connection with Brooke
  acquisition                                    40,000        11.81               -             -              -            -
Options assumed in connection with
   St. Quintin acquisition                            -            -         611,962         6.58               -            -
Warrants issued to holders of Convertible
   Preferred Securities of Former Parent              -            -               -             -      1,196,000       14.50
Exercised                                      (508,676)         6.36       (155,558)        5.87         (25,707)       3.67
Forfeited/canceled                             (275,711)         8.62       (369,331)       11.27        (218,964)       9.49
                                          --------------------------------------------------------------------------------------
Outstanding at end of year                    8,304,155       $ 10.06      6,859,368      $ 10.02       6,643,398     $ 10.29
                                          ======================================================================================


Exercisable at end of year                    4,359,468       $ 11.24      2,200,701     $   9.45       1,585,955    $   8.82
                                          ======================================================================================
Weighted-average fair value of grants
during the year                                               $  4.09                    $   6.59                     $  6.29
                                                         ==============               ===============             ===============
</TABLE>

Significant option, warrant and unvested restricted stock groups outstanding at
December 31, 2000 and related weighted average price and life information
follows:


<TABLE>
<CAPTION>
                                     OUTSTANDING                                                      EXERCISABLE
--------------------------------------------------------------------------------------   ---------------------------------------
                                                 WEIGHTED AVERAGE        WEIGHTED                             WEIGHTED AVERAGE
     RANGE OF                    NUMBER        REMAINING CONTRACTUAL      AVERAGE         NUMBER EXERCISABLE   EXERCISE PRICE
 EXERCISE PRICES              OUTSTANDING              LIFE           EXERCISE PRICE
--------------------------------------------------------------------------------------   ---------------------------------------
<S>                                <C>               <C>                 <C>                            <C>      <C>
$0.00 to $3.00                     217,725           3.2 years           $   0.00                       198      $   0.05
$3.01 to $6.00                     101,407           0.5 years               3.98                   101,407          3.98
$6.01 to $9.00                   3,192,315           3.6 years               7.30                   902,496          7.35
$9.01 to $12.00                  1,604,756           2.2 years              10.41                 1,266,880         10.16
$12.01 to $15.00                 3,150,259           2.8 years              13.60                 2,050,794         13.90
$15.01 to $18.00                    37,693           2.2 years              15.49                    37,693         15.49
                           -------------------                        ----------------   ---------------------------------------
                                 8,304,155                                $ 10.06                 4,359,468       $ 11.24
                           ===================                        ================   =======================================
</TABLE>




                                      F-34
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


14. INCOME TAXES

In the tax period from Spin-Off on September 21, 1998 through December 31, 1998
and in the fiscal year 1999 Insignia generated tax net operating losses for
federal and state income tax purposes. State net operating loss carryforwards
were substantially utilized in 1999.

During 1999, the Company's U.K. operations utilized the operating losses
recorded on acquisition of approximately $5,575,000. During 1999, the Company's
Italian and Belgian operations generated operating losses of approximately
$90,000 and $75,000 respectively. In 1998, the Company recorded a loss of $2.3
million to reflect the net realizable value in its Insignia/CAGISA Italian
subsidiary. Due to the lack of other profitable operations in Italy, which could
benefit from the use of the loss, the Company has provided a valuation allowance
for the tax benefit of this loss.

Net operating losses in the U.S. carried forward into 2000 included
approximately $37 million and $25 million for federal and state purposes,
respectively. The remaining net operating loss carryforwards at December 31,
2000 totaled approximately $16 million and $5.2 million for federal and state
purposes, respectively. These loss carryforwards begin expiring in the calendar
year ended December 31, 2018. No valuation allowances have been provided.

As a result of a 1995 acquisition, net operating losses included above of
approximately $5 million were acquired. These losses carryforward to the
calendar year ended December 31, 2009. The carryforward is subject to provisions
of the Internal Revenue Code Section 382, which limits the use of the
carryforward to the lesser of the value of the stock multiplied by the Federal
long-term tax-exempt rate or the subsidiary's income.

Undistributed earnings of IRE amount to approximately $20,636,000 in aggregate.
Deferred income taxes are not provided on these earnings as it is intended that
the earnings will be permanently reinvested outside of the U.S.

In 2000, the Internal Revenue Service ("IRS") commenced an examination of the
income tax returns for the 1998 (January 1, 1998 through September 30, 1998),
1997 and 1996 tax years. No determinations have been made as to any potential
tax liability that may arise as a result of the examination, therefore, no
amounts have been provided for the possible outcome of such examination.


                                      F-35
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


14. INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31
                                                                                    2000                    1999
                                                                         -------------------------------------------------
                                                                                          (In thousands)
Deferred tax liabilities:
<S>                                                                              <C>                       <C>
   Acquisition related intangibles                                               $ (7,560)                 $ (8,974)
   Tax over book depreciation                                                      (1,747)                   (3,043)
   Commission income, net                                                               -                      (231)
   Partnership earnings differences                                                     -                      (142)
   Compensation                                                                    (4,866)                   (4,966)
   Other, net                                                                      (1,160)                   (1,185)
                                                                         -------------------------------------------------
Total deferred tax liabilities                                                    (15,333)                  (18,541)

Deferred tax assets:
   Net operating losses                                                             6,422                     3,486
   Alternative minimum tax credit                                                     417                         -
   Partnership earnings differences                                                 2,329                         -
   Bad debt reserves                                                                1,111                     1,272
   Valuation reserve                                                                  943                       943
   Compensation and benefits                                                       16,968                     3,874
   Other, net                                                                         584                         -
                                                                         -------------------------------------------------
Total deferred tax assets                                                          28,774                     9,575
Valuation allowance for deferred tax assets                                        (2,195)                   (2,195)
                                                                         -------------------------------------------------
Deferred tax assets, net of valuation allowance                                    26,579                     7,380
                                                                         -------------------------------------------------
Net deferred tax assets (liabilities)                                          $   11,246                 $ (11,161)
                                                                         =================================================
</TABLE>



                                      F-36
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



14. INCOME TAXES (CONTINUED)

For financial reporting purposes, income before income taxes includes the
following components:

<TABLE>
<CAPTION>
                                                                     2000            1999            1998
                                                                -----------------------------------------------
                                                                                (In thousands)
<S>                                                                   <C>              <C>             <C>
Pretax income (loss):
   United States                                                      $  7,049         $17,400         $21,953
   Foreign                                                              18,465           5,076           2,075
                                                                -----------------------------------------------
                                                                       $25,514         $22,476         $24,028
                                                                ===============================================

Significant components of the provision for income taxes are as follows:

                                                                  2000            1999           1998
                                                             -----------------------------------------------
                                                                             (In thousands)
Current:
   Federal                                                        $     417      $    5,679     $    5,809
   Foreign                                                            6,619             808          1,057
   State                                                                156           1,478          2,143
                                                             -----------------------------------------------
Total current                                                         7,192           7,965          9,009

Deferred:
   Federal                                                           (1,465)          2,260          1,598
   Foreign                                                             (804)           (142)         1,481
   State                                                             (1,196)          2,095            887
                                                             -----------------------------------------------
Total deferred                                                       (3,465)          4,213          3,966
                                                             -----------------------------------------------
                                                                   $  3,727       $  12,178       $ 12,975
                                                             ===============================================
</TABLE>





                                      F-37
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


14. INCOME TAXES (CONTINUED)

The reconciliation of income tax attributable to continuing operations computed
at the U.S. statutory rate to income tax expense is shown below (In thousands):

<TABLE>
<CAPTION>
                                                2000                      1999                       1998
                                      ------------------------- -------------------------- -------------------------
                                         AMOUNT      PERCENT        AMOUNT      PERCENT       AMOUNT      PERCENT
                                      ------------------------- -------------------------- -------------------------

<S>                                       <C>         <C>          <C>           <C>         <C>           <C>
Tax at U.S. statutory rates               $8,930      35.0%        $ 7,867       35.0%       $  8,410      35.0%
Effect of incremental tax rates                -       -                 -        -               (82)     (0.3)
Effect of different tax rates in
   foreign jurisdictions                    (867)     (3.4)           (310)      (1.3)           (410)     (1.7)
State income taxes, net of federal
   tax benefit                              (157)     (0.6)          1,437        6.4           1,605       6.7
Effect of nondeductible meals and
   entertainment expenses                    819       3.2           1,150        5.1             993       4.1
Effect of nondeductible goodwill
   amortization                              824       3.2           1,009        4.5             659       2.7
Valuation allowance for Italian
   subsidiary write-down                       -       -                 -        -               943       3.9
Valuation allowance for Italian
   operating losses                            -       -                 -        -               306       1.3
Change in valuation allowance for
   U.S. operating  losses                      -       -               303        1.3             281       1.2
Effect of life insurance proceeds         (7,000)    (27.4)              -        -                 -       -
Other                                      1,178       4.6             722        3.2             270       1.1
                                      ------------------------- -------------------------- -------------------------
                                        $  3,727      14.6%       $ 12,178       54.2%        $12,975      54.0%
                                      ========================= ========================== =========================
</TABLE>

Income tax payments were approximately $11,779,000 (2000), $766,000 (1999), and
$6,081,000 (1998).

15. EMPLOYEE BENEFIT PLANS

401(K) RETIREMENT PLANS

The Company established a 401(k) savings plan covering substantially all U.S.
employees. The Company may make a contribution equal to 50% of the employees'
contribution up to a maximum of 3% of the employees' compensation and
participants fully vest in employer contributions after 5 years. All
contributions to the 401(k) plan are expensed currently in earnings. The Company
expensed approximately $2,044,000, $1,681,000, and $1,340,000 in contributions
to the plan during 2000, 1999, and 1998, respectively.

The Company participated in Former Parent's 401(k) savings plan, which covered
substantially all of its employees, prior to the Spin-Off in September 1998. The
Company's share of contributions for the 1998 period prior to Spin-Off was
approximately $1,020,000.



                                      F-38
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


15.  EMPLOYEE BENEFIT PLANS (CONTINUED)

Realty One maintains a separate 401(k) savings plan covering its employees.
Realty One may make a contribution equal to 20% of the employees' contribution
up to a maximum of $1,000 or 5% of the employees' compensation and participants
fully vest in employer contributions immediately. Realty One, expensed
approximately $103,000, $87,000, and $94,000 in contributions to the plan during
2000, 1999, and 1998, respectively.

DEFINED CONTRIBUTION PLAN

Insignia Richard Ellis maintains a defined contribution plan that is available
to all employees at their option after the completion of six months of service
and the attainment of 25 years of age. Insignia Richard Ellis contributions are
3.5% of salary for ages 25 to 30, 4.5% of salary for ages 31 to 35 and 5.5% of
salary for ages 36 and over. Insignia Richard Ellis expensed approximately
$1,558,000, $996,000 and $768,000 in contributions to the plan during 2000, 1999
and 1998, respectively.

DEFINED BENEFIT PLAN

Insignia Richard Ellis maintains two defined benefit plans for certain of its
employees. The plans provide for benefits based upon the final salary of
participating employees. The funding policy is to contribute annually an amount
to fund pension cost as actuarially determined by an independent pension
consulting firm. Insignia Richard Ellis expensed approximately $572,000,
$778,000 and $600,000 in net periodic pension expense during 2000, 1999 and
1998, respectively.


                                      F-39
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


15.  EMPLOYEE BENEFIT PLANS (CONTINUED)

The following table summarizes the funded status and net periodic pension cost
of the Insignia Richard Ellis defined benefit plans:
<TABLE>
<CAPTION>
                                                                                    DECEMBER 31
PROJECTED BENEFIT OBLIGATION ("PBO")                                            2000            1999
------------------------------------                                      ---------------------------------
                                                                                   (In thousands)

<S>                                                                            <C>             <C>
 PBO - Beginning of year                                                       $ 51,227        $ 23,792
   Service cost                                                                   1,370           1,401
   Interest cost                                                                  2,545           2,326
   Plan participants' contributions                                                 184             205
   Net actuarial (gain) loss                                                     (4,269)          2,185
   Foreign currency exchange rate changes                                        (3,924)           (652)
   Benefits paid                                                                   (903)         (2,429)
   PBO in acquisition                                                                 -          24,399
                                                                          ---------------------------------
 PBO - End of year                                                               46,230          51,227
                                                                          ---------------------------------

CHANGE IN PLAN ASSETS

Fair value of plan assets at beginning of year                                   51,062          23,828
   Actual return on plan assets                                                   2,579           6,529
   Employer contributions                                                         1,103           1,280
   Plan participants' contributions                                                 184             205
   Foreign currency exchange rate changes                                        (3,911)           (645)
   Benefits paid                                                                   (903)         (2,429)
   Plan assets at acquisition                                                         -          22,294
                                                                          ---------------------------------
Fair value of plan assets at end of year                                         50,114          51,062
                                                                          ---------------------------------
Funded status of the plans                                                        3,884            (165)
Unrecognized net actuarial gain                                                  (3,857)           (381)
                                                                          ---------------------------------
Net pension asset (liability) recognized in the
   consolidated balance sheet                                                $       27       $    (546)
                                                                          =================================
                                                                          =================================

NET PERIODIC PENSION COST
   Service cost                                                                $  1,370       $   1,401
   Interest cost                                                                  2,545           2,326
   Return on plan assets                                                         (3,343)         (2,949)
                                                                          ---------------------------------
                                                                              $     572      $      778
                                                                          =================================
ASSUMPTIONS USED IN DETERMINING PBO
   Discount rate                                                                  6.0%            5.5%
   Weighted average increase in compensation levels                               5.0%            5.0%
   Rate of return on plan assets                                                  7.0%            7.0%
</TABLE>


                                      F-40
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

ANTITRUST LITIGATION

In 1994, Re/Max International and various franchisees filed suit in federal
court in Ohio against Realty One, alleging claims under the federal antitrust
laws and related state law claims. Re/Max International alleged in its complaint
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.
Re/Max International claimed actual damages of $30 million. The federal
antitrust laws provide for trebling of actual damages.

Insignia acquired Realty One in October 1997. In connection with the
acquisition, the sellers agreed to indemnify the Company for any loss arising
from the Re/Max International litigation up to the amount of the acquisition
price of approximately $40 million. The Re/Max International case was recently
tried before a jury, which resulted in a mistrial. The parties subsequently
settled Re/Max International's claims in July 2000, whereby Realty One agreed to
cease to impose reduced commission splits on the Re/Max plaintiffs, subject to
reinstatement in accordance with the terms of the settlement. In September 2000,
the court entered a judgment against Realty One in the amount of approximately
$6.7 million, as agreed to by the parties; however, also included in its
judgment were several terms governing Realty One's conduct to which the parties
had not agreed. Realty One has appealed the court's judgment. The sellers have
funded the initial cash portion of the settlement, totaling approximately $3.6
million, on behalf of Realty One pursuant to their indemnification obligations
to Insignia and are obligated to fund the remainder in semi-annual installments
over five years. The payment of the first portion of the judgment was made
without prejudice to Realty One's rights of appeal.

LITIGATION CLAIMS

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



                                      F-41
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (CONTINUED)

INDEMNIFICATION

In 1998, Former Parent entered into a merger agreement with AIMCO and one of
AIMCO's subsidiaries, pursuant to which Former Parent was merged into AIMCO.
Shortly before the merger, Former Parent distributed the stock of Insignia to
its shareholders in a Spin-Off transaction. As a requirement of the merger
agreement, Insignia entered into an Indemnification Agreement with AIMCO. In the
Indemnification Agreement, Insignia agreed generally to indemnify AIMCO against
all losses exceeding $9.1 million that result from: (i) breaches by the Company
or Former Parent of representations, warranties or covenants in the Merger
Agreement; (ii) actions taken by or on behalf of Former Parent prior to the
merger; and (iii) the spin-off. The Company also agreed generally to indemnify
AIMCO against all losses, without regard to any dollar value limitation, that
result from: (i) amounts AIMCO paid to employees of Former Parent that were not
retained as employees of AIMCO; (ii) pre-merger obligations for goods, services,
taxes or indebtedness except for those that AIMCO agreed to assume; and (iii)
the businesses of the Former Parent that Insignia now owns and operates as a
result of the Spin-Off.

Since the merger transaction in October 1998, there have been no related claims
except for an examination of the federal income tax returns of Former Parent
being conducted by the Internal Revenue Service for the years ended December 31,
1996, December 31, 1997 and the period ended October 1, 1998. AIMCO has notified
the Company that it is seeking indemnity from Insignia for any liability as a
result of this examination. Insignia agreed to indemnify AIMCO for taxes,
penalties, interest and professional fees for which it is liable as a result of
this audit and reimbursed approximately $500,000 in early 2001 to AIMCO for
professional fees incurred in connection with the audit.

Pursuant to the merger agreement, Insignia and AIMCO were required to settle in
cash any differences between the actual adjusted net liabilities of Former
Parent on the date of the Merger and the $458 million of such adjusted net
liabilities stipulated in the Merger Agreement. Settlement negotiations were
concluded in 1999, resulting in a final payment by AIMCO to Insignia of
approximately $1,400,000. The Company recorded net adjustments of $2,716,000 to
stockholders' equity, as additional paid-in capital, in 1999 to correct certain
settlement amounts estimated at the time of Spin-Off. In 2000, an additional
$2,125,000 was recorded to stockholders' equity, as a reduction to additional
paid-in capital, related to the overstatement of certain net assets estimated at
Spin-Off. These adjustments pertained to amounts estimated at Spin-Off and had
no impact on the Company's results of operations.



                                      F-42
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)



16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (CONTINUED)

IRS EXAMINATION

In 2000, the IRS notified the Former Parent of their intention to conduct an
examination of the income tax returns for the tax years 1998 (January 1, 1998
through September 30, 1998), 1997 and 1996. This examination is ongoing and no
determinations have been made or can be made at this time as to any potential
tax liability that may arise as a result of this examination.

ENVIRONMENTAL LIABILITIES

Under various federal and state environmental laws and regulations, a current or
previous owner or operator of real estate may be required to investigate and
clean up certain hazardous or toxic substances or petroleum product releases at
the property, and may be held liable to a governmental entity or to third
parties for property damage and for investigation and cleanup costs incurred by
such parties in connection with contamination. In addition, some environmental
laws create a lien on the contaminated site in favor of the government for
damages and costs it incurs in connection with the contamination. The owner or
operator of a site may be liable under common law to third parties for damages
and injuries resulting from environmental contamination emanating from the site.
The presence of contamination or the failure to remediate contamination may
adversely affect the owner's ability to sell or lease real estate or to borrow
using the real estate as collateral.

There can be no assurance that the Company, or any assets owned or controlled by
the Company, currently are in compliance with all of such laws and regulations,
or that the Company will not become subject to liabilities that arise in whole
or in part out of any such laws, rules, or regulations. Management is not
currently aware of any environmental liabilities that are expected to have a
material adverse effect on the operations or financial condition of the Company.


                                      F-43
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)

16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (CONTINUED)

OPERATING LEASES

The Company leases office space and equipment under noncancelable operating
leases. Minimum annual rentals under operating leases for the five years ending
after December 31, 2000 and thereafter are as follows (In thousands):

2001                                            $  38,157
2002                                               35,589
2003                                               30,875
2004                                               29,265
2005                                               20,340
Thereafter                                         77,435
                                                ------------
Total minimum payments                           $231,661
                                                ============

Rental expense, which is recorded on a straight-line basis, was approximately
$31,159,000 (2000) $28,267,000 (1999) and $21,753,000 (1998). Certain of the
leases are subject to renewal options and annual escalation based on the
Consumer Price Index or annual increases in operating expenses.

STOCK REPURCHASE

At December 31, 2000 and 1999, Insignia held in treasury 1,502,600 repurchased
shares of its Common Stock. Such shares were repurchased at an aggregate cost of
approximately $16.2 million and are reserved for issuance upon the exercise of
warrants granted in 2000 to certain executive officers, non-employee directors
and other employees of the Company (See Note 13).

PREFERRED STOCK ISSUANCE

On February 9, 2000, Insignia sold 250,000 shares of non-voting perpetual
convertible preferred stock with a stated value of $100 per share to investment
funds advised by Blackacre Capital Management, LLC for an aggregate purchase
price of $25 million. The preferred stock pays a 4% cumulative 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 stated value,
at any time on or after February 15, 2004. Stock dividends of $475,000 were paid
in 2000 through the issuance of 43,417 shares of the Company's Common Stock.


                                      F-44
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (CONTINUED)

LIFE INSURANCE PROCEEDS

In October 2000, Insignia collected $20 million in life insurance proceeds from
a "key man" insurance policy on the life of Edward S. Gordon, a member of the
Company's Office of the Chairman who passed away on September 21, 2000. The
policy was purchased as a part of Insignia's acquisition of Edward S. Gordon
Incorporated in June 1996. Insignia incurred approximately $900,000 in
obligations payable to Mr. Gordon's estate at the time of his death. The Company
recognized the resulting income of $19.1 million in the third quarter of 2000.

17. INDUSTRY SEGMENTS

Insignia's operating activities encompass three reportable segments. The
Company's segments include (i) commercial real estate services and principal
investment activities; (ii) residential real estate services; and (iii)
Internet-based e-commerce initiatives. The commercial segment provides services
including tenant representation, property and asset management, agency leasing
and brokerage, investment sales, development, consulting and other services. The
commercial segment also includes the Company's principal real estate investment
activities. The residential segment provides services including apartment
brokerage and leasing, single-family home brokerage services, property
management services, mortgage origination and other services. Insignia's
Internet initiatives, which were launched in late 1999, involve equity
investments in third-party Internet-based businesses and internally developed
business activities. The Company terminated its internally developed Internet
initiatives and substantially ceased equity financing activities with
third-party Internet-based businesses at December 31, 2000. The Company's
unallocated administrative expenses and corporate assets, consisting primarily
of cash and property and equipment, are included in "Other" in the segment
reporting.

The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. The Company's
reportable segments are business units that offer similar products and services
and are managed separately because of the distinction between services.


                                      F-45
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)

17. INDUSTRY SEGMENTS (CONTINUED)

The following tables summarize certain financial information by industry
segment:

<TABLE>
<CAPTION>
                                                                                 INTERNET
YEAR ENDED DECEMBER  31, 2000                      COMMERCIAL     RESIDENTIAL   INITIATIVES          OTHER         TOTAL
                                               ------------------------------------------------------------------------------
                                                                              (In thousands)
REVENUES:
<S>                                                 <C>            <C>       <C>              <C>                <C>
   Real estate services                             $ 641,904      $ 233,247 $            -   $            -     $  875,151
   Property operations                                  5,212              -              -                -          5,212
                                               ------------------------------------------------------------------------------
                                                      647,116        233,247              -                -        880,363
                                               ------------------------------------------------------------------------------

COSTS AND EXPENSES:
   Real estate services                               559,400        217,105              -                -        776,505
   Property operations                                  4,214              -              -                -          4,214
   Internet-based businesses                                -              -         17,168                -         17,168
   Administrative                                           -              -              -           16,355         16,355
   Depreciation                                         9,707          4,247          1,288               60         15,302
   Amortization of intangibles                         19,853          6,041              -                -         25,894
                                               ------------------------------------------------------------------------------
                                               ------------------------------------------------------------------------------
                                                      593,174        227,393         18,456           16,415        855,438
                                               ------------------------------------------------------------------------------

   Operating income (loss)                             53,942          5,854        (18,456)         (16,415)        24,925

OTHER INCOME AND EXPENSE:
   Life insurance proceeds                                  -              -              -           19,100         19,100
   Gain on sale of marketable securities                    -              -            811                -            811
   Provisions for loss on Internet investments              -              -        (18,435)               -        (18,435)
   Interest and other income                            2,316          1,218            464            4,456          8,454
   Interest expense                                    (1,032)        (1,364)             -          (10,665)       (13,061)
   Foreign currency transaction gains                       -              -              -            1,365          1,365
   Equity earnings in real estate ventures              1,455              -              -                -          1,455
   Minority interests                                       -              -            900                -            900
                                               ------------------------------------------------------------------------------

Income   (loss)   before   income   taxes   and
   cumulative  effect of a change in accounting
   principle                                           56,681          5,708        (34,716)          (2,159)        25,514

   Provision (benefit) for income taxes                22,691          1,112        (14,327)          (5,749)         3,727
                                               ------------------------------------------------------------------------------

Income (loss) before cumulative effect of a
   change in accounting principle                      33,990          4,596        (20,389)           3,590         21,787

Cumulative effect of a change in accounting
   principle, net of applicable taxes                 (30,420)             -              -                -        (30,420)
                                               ------------------------------------------------------------------------------

Net income (loss)                                 $     3,570    $     4,596     $  (20,389)    $      3,590    $    (8,633)
                                               ==============================================================================

Total assets                                        $ 630,706      $ 162,213    $    10,963       $  106,460      $ 910,342
Real estate interests                                 102,170              -              -                 -       102,170
Capital expenditures, net                              20,444         10,772              -                          31,289
                                                                                                          73
</TABLE>



                                      F-46
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


17. INDUSTRY SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                  INTERNET
 YEAR ENDED DECEMBER  31, 1999                  COMMERCIAL      RESIDENTIAL      INITIATIVES          OTHER         TOTAL
                                            ------------------------------------------------------------------------------------
                                                                              (In thousands)
 REVENUES:
<S>                                             <C>              <C>          <C>              <C>                <C>
    Real estate services                        $  497,770       $  180,701   $            -   $            -     $  678,471
    Property operations                              1,877                -                -                -          1,877
                                            ------------------------------------------------------------------------------------
                                                   499,647          180,701                -                -        680,348
                                            ------------------------------------------------------------------------------------
 COSTS AND EXPENSES:
    Real estate services                           441,416          166,306                -                -        607,722
    Property operations                              1,589                -                -                -          1,589
    Internet-based businesses                            -                -            1,580                -          1,580
    Administrative                                       -                -                -           11,826         11,826
    Depreciation                                     5,226            1,813                -              117          7,156
    Amortization of intangibles                     19,050            4,773                -                -         23,823
                                            ------------------------------------------------------------------------------------
                                            ------------------------------------------------------------------------------------
                                                   467,281         172,892             1,580          11,943        653,696
                                            ------------------------------------------------------------------------------------

    Operating income (loss)                         32,366            7,809           (1,580)         (11,943)        26,652

 OTHER INCOME AND EXPENSE:
    Merger related expenses                         (4,272)               -                -                -         (4,272)
    Interest and other income                        1,357            1,088                -            2,746          5,191
    Interest expense                                (1,419)          (1,189)               -           (5,598)        (8,206)
    Foreign currency transaction gains                   -                -                -              827            827
    Equity earnings in real estate ventures          2,284                -                -                -          2,284
                                            ------------------------------------------------------------------------------------

 Income (loss) before income taxes                  30,316            7,708           (1,580)         (13,968)        22,476

    Provision (benefit) for income taxes            15,383            3,356             (709)          (5,852)        12,178
                                            ------------------------------------------------------------------------------------

 Net income (loss)                           $      14,933    $       4,352    $        (871)    $     (8,116)   $    10,298
                                            ====================================================================================

 Total assets                                 $    573,095      $   156,649      $    20,175      $    45,394     $  795,313
 Real estate interests                              76,298                -                -                -        76,298
 Capital expenditures, net                          20,706            9,103                -              446         30,255
</TABLE>



                                      F-47
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


<TABLE>
<CAPTION>
17. INDUSTRY SEGMENTS (CONTINUED)

YEAR ENDED DECEMBER  31, 1998                                COMMERCIAL    RESIDENTIAL          OTHER          TOTAL
                                                       -------------------------------------------------------------------
                                                       -------------------------------------------------------------------
                                                                                 (In thousands)
REVENUES:
<S>                                                         <C>              <C>         <C>                <C>
   Real estate services                                     $ 378,362        $128,989    $            -     $  507,351
                                                       -------------------------------------------------------------------
                                                              378,362         128,989                 -        507,351
                                                       -------------------------------------------------------------------

COSTS AND EXPENSES:
   Real estate services                                       331,686         120,088                 -        451,774
   Administrative                                                   -               -             7,232          7,232
   Depreciation                                                 2,176             910                 4          3,090
   Amortization of intangibles                                 15,888           3,565                 -         19,453
                                                       -------------------------------------------------------------------
                                                              349,750         124,563             7,236        481,549
                                                       -------------------------------------------------------------------

   Operating income (loss)                                     28,612           4,426            (7,236)        25,802

OTHER INCOME AND EXPENSE:
   Provision for loss on disposal                              (2,300)              -                 -         (2,300)
   Interest and other income                                    1,429           1,153               847          3,429
   Interest expense                                                 -          (1,301)              (77)        (1,378)
   Equity losses in real estate ventures                       (1,896)              -                 -         (1,896)
   Minority Interests                                             371               -                 -            371
                                                       -------------------------------------------------------------------

Income (loss) before income taxes                              26,216           4,278            (6,466)        24,028

   Provision (benefit) for income taxes                        13,850           1,840            (2,715)        12,975
                                                       -------------------------------------------------------------------

Net income (loss)                                         $    12,366     $     2,438      $     (3,751)   $    11,053
                                                       ===================================================================

Total assets                                               $  458,293      $   96,347       $    40,849     $  595,489
Real estate interests                                          58,196               -                 -         58,196
Capital expenditures, net                                      10,946           7,221                 -         18,167
</TABLE>



                                      F-48
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)

17. INDUSTRY SEGMENTS (CONTINUED)

Certain geographic information for the Company is as follows:

<TABLE>
<CAPTION>
                                   YEAR ENDED                        YEAR ENDED                        YEAR ENDED
                               DECEMBER 31, 2000                  DECEMBER 31, 1999                 DECEMBER 31, 1998
                       ---------------------------------------------------------------------------------------------------------
                           REVENUES     LONG-LIVED ASSETS     REVENUES     LONG-LIVED ASSETS     REVENUES     LONG-LIVED ASSETS
                       ---------------------------------------------------------------------------------------------------------

<S>                            <C>              <C>              <C>               <C>              <C>               <C>
United States                  $733,399         $327,070         $571,786          $299,267         $441,929          $209,720
United Kingdom                  133,809           90,781          104,565           102,765           60,935            65,791
Other countries                  13,155            3,639            3,997             1,093            4,487             4,248
                       ---------------------------------------------------------------------------------------------------------
                               $880,363         $421,490         $680,348          $403,125         $507,351          $279,759
                       =========================================================================================================
</TABLE>

Long-lived assets include property and equipment, property management contracts
and costs in excess of net assets of acquired businesses.

18. FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair value estimates of financial instruments are not necessarily indicative
of the amounts the Company might pay or receive in actual market transactions.
The carrying amount reported on the balance sheet for cash and cash equivalents
approximates its fair value. Receivables reported on the balance sheet generally
consist of property and lease commission receivables and various note
receivables. The property and note receivables approximate their fair values.
Lease commission receivables are carried at their discounted present value;
therefore the carrying amount and fair value amount are the same. Interest rates
generally approximate current market interest rates for similar instruments,
therefore, the carrying amounts for notes payable, real estate mortgage notes
payable and the mortgage warehouse line approximate their respective fair value.


                                      F-49
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


19. QUARTERLY FINANCIAL DATA  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      2000
                                                  ------------------------------------------------------------------------------
                                                                     FOURTH          THIRD          SECOND          FIRST
                                                      TOTAL          QUARTER        QUARTER        QUARTER         QUARTER
                                                  ------------------------------------------------------------------------------
                                                  ------------------------------------------------------------------------------
                                                                      (In thousands, except per share data)

<S>                                               <C>                 <C>             <C>            <C>             <C>
Revenues (as restated)                            $880,363           $276,994       $203,851       $229,358        $170,160
Income (loss) before cumulative effect of a
   change in accounting principle (as restated)
                                                    21,787              3,521         23,790           (811)         (4,713)
Net (loss) income (as restated)                     (8,633)             3,521         23,790           (811)        (35,133)

PER SHARE AMOUNTS - AS RESTATED:
Earnings per share - basic
   Income (loss) before cumulative effect of a
     change in accounting principle (as restated)
                                                  $   0.99           $    .15       $   1.10       $   (.05)       $  (0.23)
   Net (loss) income (as restated)                $  (0.45)          $    .15       $   1.10       $   (.05)       $  (1.69)
Earnings per share - assuming dilution
   Income (loss) before cumulative effect of a
     change in accounting principle
                                                  $   0.89           $    .14       $    .98       $   (.05)       $  (0.23)
   Net (loss) income                              $  (0.35)          $    .14       $    .98       $   (.05)       $  (1.69)

Revenues (as previously reported)                      N/A                N/A       $221,401       $246,017        $175,096
Net income (as previously reported)                    N/A                N/A         27,028          2,767          (4,312)

PER SHARE AMOUNTS - AS PREVIOUSLY REPORTED:
Earnings per share - basic                             N/A                N/A       $   1.25       $    .12        $   (.21)
Earnings per share - assuming dilution                 N/A                N/A       $   1.11       $    .11        $   (.21)
</TABLE>

Quarterly results for 2000 are restated in compliance with the SAB 101
accounting change. First quarter results are reduced by the $30.4 million
cumulative effect of the accounting change for prior years. The third quarter
results of 2000 include income of $19.1 million from life insurance proceeds and
a $2.3 million impairment write-down on the Company's equity investment in an
Internet-based business. Fourth quarter results of 2000 include further
impairment write-downs of $16.1 million in the Company's third-party and
internally developed Internet-based business investments.


                                      F-50
<PAGE>

                         Insignia Financial Group, Inc.
             Notes to Consolidated Financial Statements (continued)


19. QUARTERLY FINANCIAL DATA  (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                                                       1999
                                                  --------------------------------------------------------------------------------
                                                                   FOURTH           THIRD           SECOND          FIRST
                                                   TOTAL           QUARTER          QUARTER         QUARTER         QUARTER
                                                  --------------------------------------------------------------------------------
                                                  --------------------------------------------------------------------------------
                                                                       (In thousands, except per share data)

<S>                                                <C>             <C>              <C>            <C>             <C>
Revenues                                           $680,348        $215,135         $193,620       $156,942        $114,651
Net income (loss)                                    10,298           6,965            5,406          3,033          (5,106)

PER SHARE AMOUNTS:
Earnings per share - basic                         $    .48        $    .33         $    .25       $    .14        $   (.24)
Earnings per share - assuming dilution             $    .46        $    .33         $    .24       $    .13        $   (.24)
</TABLE>

First quarter results of 1999 include a $5.5 million pre-tax provision for costs
primarily associated with surplus office space of REGL vacated as a result of
the combining of operations with St. Quintin. Fourth quarter results of 1999
include a pre-tax reduction of $1.2 million to the provision based on the
disposal of such surplus office space on more favorable terms than originally
estimated (see also Note 4).



                                      F-51