10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2019

OR

☐ 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: 001-33280

HFF, Inc.

(Exact name of registrant as specified in its charter)

Delaware	51-0610340
(State of Incorporation)	(I.R.S. Employer Identification No.)
One Victory Park
2323 Victory Avenue, Suite 1200
Dallas, Texas	75219
(Address of Principal Executive Offices)	(Zip code)

(214) 265-0880

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller Reporting Company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☑

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	HF	New York Stock Exchange

Number of shares of Class A common stock, par value $0.01 per share, of the registrant outstanding as of April 30, 2019 was 39,823,827 shares.

HFF, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures	35

2

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include, but are not limited to, those described under the caption “Risk Factors” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q. Additionally, risks and uncertainties related to the merger are set forth in the preliminary Proxy Statement/Prospectus filed by Jones Lang LaSalle Incorporated on Form S-4 with the Securities and Exchange Commission on April 29, 2019, and incorporated herein by reference. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q and our other periodic filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by securities laws.

SPECIAL NOTE REGARDING THE REGISTRANT

In connection with our initial public offering in February 2007, we effected a reorganization of our business into a holding company holding the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the “Operating Partnerships”), held through the wholly owned subsidiary HFF Partnership Holdings, LLC, a Delaware limited liability company, and all of the outstanding shares of Holliday GP Corp. (“Holliday GP”), the sole general partner of each of the Operating Partnerships. The transactions that occurred in connection with the initial public offering and reorganization are referred to as the “Reorganization Transactions.”

Unless the context otherwise requires, references to (1) “HFF Holdings” refer solely to HFF Holdings LLC, a Delaware limited liability company that was previously the holding company for our consolidated subsidiaries, and not to any of its subsidiaries, (2) “HFF LP” refer to Holliday Fenoglio Fowler, L.P., a Texas limited partnership, (3) “HFF Securities” refer to HFF Securities L.P., a Delaware limited partnership and registered broker-dealer, (4) “Holliday GP” refer to Holliday GP Corp., a Delaware corporation and the general partner of HFF LP and HFF Securities, (5) “HoldCo LLC” refer to HFF Partnership Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiary of HFF, Inc., (6) “Holdings Sub” refer to HFF LP Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of HFF Holdings, (7) “HFF Real Estate” refer to HFF Real Estate Limited, a company incorporated in England and Wales and (8) “HFF Securities Limited” refer to HFF Securities Limited, a company incorporated in England and Wales (collectively, with HFF Real Estate, the “UK Subsidiaries” and, with HFF Securities, the “Securities Subsidiaries”). Except where specifically noted, references in this Quarterly Report on Form 10-Q to “the Company,” “we” or “us” mean HFF, Inc., a Delaware corporation and its consolidated subsidiaries after giving effect to the Reorganization Transactions.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HFF, Inc.

Consolidated Balance Sheets

(Dollars in thousands, except share data)

	March 31,			December 31,
	2019			2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	235,212		$	305,555
Restricted cash		5,234			1,723
Accounts receivable		10,283			8,150
Mortgage notes receivable		966,694			351,194
Prepaid taxes		1,240			671
Prepaid expenses and other current assets		18,787			13,021
Total current assets		1,237,450			680,314
Property and equipment, net		18,778			17,196
Operating lease right-of-use asset		34,970			—
Deferred tax asset, net		35,863			41,124
Goodwill		8,581			8,512
Intangible assets, net		74,313			73,862
Securities - held to maturity		25,000			25,000
Other noncurrent assets		12,820			12,045
Total assets	$	1,447,775		$	858,053
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	79		$	3,898
Current portion of operating lease liabilities		9,397			—
Warehouse line of credit		961,252			348,378
Accrued compensation and related taxes		49,705			67,653
Accounts payable		4,359			3,204
Payable under tax receivable agreement		8,313			8,313
Other current liabilities		29,094			21,968
Total current liabilities		1,062,199			453,414
Deferred rent credit		—			11,825
Payable under the tax receivable agreement, less current portion		41,977			41,977
Long-term debt, less current portion		52			66
Noncurrent operating lease liabilities		37,436			—
Other noncurrent liabilities		608			225
Total liabilities		1,142,272			507,507
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 175,000,000 authorized; 39,857,514    and 39,143,253 shares issued, respectively; 39,823,827 and 39,116,745 shares    outstanding, respectively		399			391
Treasury stock, 33,687 and 26,508 shares at cost, respectively		(1,501	)		(1,220	)
Additional paid-in-capital		159,229			159,636
Accumulated other comprehensive loss		(728	)		(743	)
Retained earnings		148,104			192,482
Total equity		305,503			350,546
Total liabilities and stockholders’ equity	$	1,447,775		$	858,053

See accompanying notes to the consolidated financial statements.

4

HFF, Inc.

Consolidated Statements of Comprehensive Income

(Dollars in thousands, except per share data)

	Three Months Ended March 31,
	2019			2018
	(Unaudited)
Revenues
Capital markets services revenue	$	153,366		$	125,458
Interest on mortgage notes receivable		4,589			5,244
Other		1,227			916
		159,182			131,618
Expenses
Cost of services		90,271			78,644
Personnel		20,289			22,064
Occupancy		4,160			3,813
Travel and entertainment		5,918			6,382
Supplies, research, and printing		2,316			2,191
Insurance		692			689
Professional fees		3,239			1,670
Depreciation and amortization		6,127			5,481
Interest on warehouse line of credit		3,911			4,211
Other operating		3,403			3,766
		140,326			128,911
Operating income		18,856			2,707
Interest and other income, net		14,211			15,171
Interest expense		(1	)		(5	)
(Increase) decrease in payable under the tax receivable agreement		—			—
Income before income taxes		33,066			17,873
Income tax expense		5,256			805
Net income	$	27,810		$	17,068
Other comprehensive income:
Foreign currency translation adjustments		15			495
Comprehensive income	$	27,825		$	17,563
Earnings per share - Basic and Diluted
Earnings per share available to HFF, Inc. common stockholders    - Basic	$	0.70		$	0.44
Earnings per share available to HFF, Inc. common stockholders    - Diluted	$	0.69		$	0.42

See accompanying notes to the consolidated financial statements.

5

HFF, Inc.

Consolidated Statements of Stockholders’ Equity

(Dollars in thousands, except share data)

(Unaudited)

	Common Stock					Treasury Stock						Additional			Accumulated Other
												Paid in			Comprehensive			Retained			Total
(Dollars in thousands)	Shares			Amount		Shares			Amount			Capital			(Loss) Income			Earnings			Equity
Stockholders' Equity, December 31, 2018		39,116,745		$	391		26,508		$	(1,220	)	$	159,636		$	(743	)	$	192,482		$	350,546
Stock compensation and other, net		—			—		—			—			10,365			—			—			10,365
Issuance of Class A common stock, net		1,044,669			8		(330,408	)		14,231			(14,239	)		—			—			—
Repurchase of Class A common stock		(337,587	)		—		337,587			(14,512	)		—			—			—			(14,512	)
Foreign currency translation adjustment		—			—		—			—			—			15			—			15
Dividends paid		—			—		—			—			3,467			—			(72,188	)		(68,721	)
Net income		—			—		—			—			—			—			27,810			27,810
Stockholders' Equity, March 31, 2019		39,823,827		$	399		33,687		$	(1,501	)	$	159,229		$	(728	)	$	148,104		$	305,503
	Common Stock					Treasury Stock						Additional			Accumulated Other
												Paid in			Comprehensive			Retained			Total
(Dollars in thousands)	Shares			Amount		Shares			Amount			Capital			(Loss) Income			Earnings			Equity
Stockholders' Equity, December 31, 2017		38,579,544		$	387		163,154		$	(4,971	)	$	144,304		$	171		$	146,576		$	286,467
Cumulative effect of adoption of new accounting    standard		—			—		—			—			—			—			1,304			1,304
Stock compensation and other, net		—			—		—			—			10,188			—			—			10,188
Issuance of Class A common stock, net		822,207			4		(423,501	)		17,273			(17,277	)		—			—			—
Repurchase of Class A common stock		(298,931	)		—		298,931			(14,101	)		—			—			—			(14,101	)
Foreign currency translation adjustment		—			—		—			—			—			495			—			495
Dividends paid		—			—		—			—			3,663			—			(71,435	)		(67,772	)
Net income		—			—		—			—			—			—			17,068			17,068
Stockholders' Equity, March 31, 2018		39,102,820		$	391		38,584		$	(1,799	)	$	140,878		$	666		$	93,513		$	233,649

See accompanying notes to the consolidated financial statements.

6

HFF, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands)

	Three Months Ended March 31,
	2019			2018
	(Unaudited)
Operating activities
Net income	$	27,810		$	17,068
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		5,850			5,752
Deferred taxes		5,091			666
Increase (decrease) in payable under the tax receivable agreement		—			—
Depreciation		1,183			1,100
Amortization		4,944			4,381
Gain on sale and initial recording of mortgage servicing rights		(7,112	)		(8,573	)
Mortgage service rights assumed		(885	)		(935	)
Other		(370	)		—
Increase (decrease) in cash from changes in:
Accounts receivable		(2,133	)		(1,960	)
Mortgage notes receivable		(612,874	)		(508,586	)
Net borrowings on warehouse line of credit		612,874			508,586
Prepaid taxes, prepaid expenses and other current assets		(5,781	)		914
Other noncurrent assets		(538	)		1,159
Accrued compensation and related taxes		(13,263	)		(15,167	)
Accounts payable		1,155			(1,740	)
Other current liabilities		7,126			(4,279	)
Deferred rent and other noncurrent liabilities		—			(309	)
Net cash provided by operating activities		23,077			(1,923	)
Investing activities
Purchases of property and equipment		(2,788	)		(490	)
Purchase of securities and other investments		(3,800	)		—
Net cash used in investing activities		(6,588	)		(490	)
Financing activities
Payments on long-term debt		(33	)		(62	)
Dividends paid		(68,721	)		(67,772	)
Treasury stock		(14,512	)		(14,101	)
Net cash used in financing activities		(83,266	)		(81,935	)
Effects of exchange rate changes on cash and cash equivalents and restricted cash		(55	)		374
Net decrease in cash and cash equivalents and restricted cash		(66,832	)		(83,974	)
Cash and cash equivalents and restricted cash, beginning of period		307,278			276,802
Cash and cash equivalents and restricted cash, end of period	$	240,446		$	192,828

See accompanying notes to the consolidated financial statements.

7

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited)

1. Organization and Basis of Presentation

Organization

HFF, Inc., a Delaware corporation (the “Company”), through its wholly-owned subsidiaries, Holliday Fenoglio Fowler, L.P., a Texas limited partnership (“HFF LP”), HFF Securities L.P., a Delaware limited partnership and registered broker-dealer (“HFF Securities” and together with HFF LP, the “Operating Partnerships”), HFF Real Estate Limited and HFF Securities Limited, in the United Kingdom, is a commercial real estate financial intermediary providing commercial real estate and capital markets services including debt placement, investment advisory, equity placements, investment banking and advisory services, loan sales and loan sale advisory services, commercial loan servicing, and capital markets advice and maintains offices in 25 cities in the United States and one office in London, United Kingdom. The Company’s operations are impacted by the availability of equity and debt as well as credit and liquidity in the domestic and global capital markets especially in the commercial real estate sector. Significant disruptions or changes in domestic and global capital market flows, as well as credit and liquidity issues in the global and domestic capital markets, regardless of their duration, could adversely affect the supply and demand for capital from investors for commercial real estate investments which could have a significant impact on all of the Company’s capital market services revenues.

Initial Public Offering and Reorganization

The Company completed its initial public offering (“IPO”) and the Company’s Class A Common Stock began trading on the New York Stock Exchange under the symbol “HF” in the first quarter of 2007. The proceeds of the initial public offering, including the exercise of the underwriter’s option to purchase additional shares, were used to purchase from HFF Holdings LLC, a Delaware limited liability company (“HFF Holdings”), all of the shares of Holliday GP Corp. (“Holliday GP”) and purchase from HFF Holdings partnership units of the Operating Partnerships (including partnership units in the Operating Partnerships held by Holliday GP). HFF Holdings used a portion of its proceeds to repay all outstanding indebtedness under HFF LP’s credit agreement. Accordingly, the Company did not retain any of the proceeds from the initial public offering.

In addition to cash received for its sale of all of the shares of Holliday GP and approximately 45% of partnership units of each of the Operating Partnerships (including partnership units in the Operating Partnerships held by Holliday GP), HFF Holdings also received, through the issuance of one share of HFF, Inc.’s Class B common stock to HFF Holdings, an exchange right that permitted, subject to certain restrictions, HFF Holdings to exchange interests in the Operating Partnerships for shares of (i) the Company’s Class A common stock (the “Exchange Right”) and (ii) rights under a tax receivable agreement between the Company and HFF Holdings (the “TRA”). See Notes 16 and 17 for further discussion of the tax receivable agreement.

As a result of the reorganization in connection with the IPO, the Company became a holding company through a series of transactions pursuant to a sale and purchase agreement. As a result of the IPO and reorganization, the Company’s sole assets were partnership interests in Operating Partnerships (that are held through its wholly-owned subsidiary HFF Partnership Holdings, LLC, a Delaware limited liability company (“Partnership Holdings”) and all of the shares of Holliday GP, the sole general partner of each of the Operating Partnerships. The transactions that occurred in connection with the IPO and reorganization are referred to as the “Reorganization Transactions.”

The Reorganization Transactions were treated, for financial reporting purposes, as a reorganization of entities under common control. As of August 31, 2012, HFF Holdings had utilized its Exchange Right to exchange all of its remaining interests in the Operating Partnerships and therefore the Company, through its wholly-owned subsidiaries, became and continues to be the sole equity holder of the Operating Partnerships.

Proposed Merger with Jones Lang LaSalle Incorporated

On March 18, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Jones Lang LaSalle Incorporated, a Maryland corporation (“Parent”), JLL CM, Inc., a Delaware corporation and wholly owned subsidiary of JLL (“Merger Sub”), JLL CMG, LLC, a Delaware limited liability company and wholly owned subsidiary of JLL (“Merger LLC”), and the Company. The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub will merge with and into the Company, with the Company as the surviving corporation (the “Merger”), and (ii) following the completion of the Merger, the surviving corporation from the Merger will merge with and into Merger LLC (the “Subsequent Merger”), with Merger LLC surviving the Subsequent Merger and continuing as a wholly owned subsidiary of Parent.

8

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

The Company’s Board of Directors (the “Board”) has, by unanimous vote, approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, (the “Effective Time”), each share of Class A common stock of the Company, par value $0.01 per share (“Company Shares”), issued and outstanding immediately prior to the Effective Time (other than shares held by the Company, Parent or any of their respective subsidiaries and shares held by any holder of Company Shares who is entitled to demand and properly demands appraisal of such shares under Delaware law) will convert into (i) $24.63 per share in cash and (ii) 0.1505 of a share of common stock of Parent, par value $0.01 per share (“Parent Common Stock”). No fractional shares of Parent Common Stock will be issued in the Merger, and holders of Company Shares will receive cash in lieu of any fractional shares of Parent Common Stock.

The closing of the Merger is subject to certain conditions, including, among others, (i) the adoption of the Merger Agreement by the holders of at least a majority of the outstanding Company Shares entitled to vote thereon, (ii) the approval for listing on the New York Stock Exchange of the shares of Parent Common Stock issuable to the Company’s stockholders pursuant to the Merger Agreement, (iii) the expiration or earlier termination of the waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and regulatory approval by FINRA, the U.K. Financial Conduct Authority, the Federal Home Loan Mortgage Corporation and certain state regulatory authorities, (iv) no court order or other legal restraint or prohibition preventing the consummation of the Merger or the Subsequent Merger, (v) the effectiveness of a registration statement on Form S-4 to be filed with the Securities and Exchange Commission by Parent in connection with the issuance of shares of Parent Company Stock in the Merger, (vi) in the case of each party’s obligation to effect the Merger, the absence of a material adverse effect with respect to the other party since the date of the Merger Agreement and (vii) subject to materiality exceptions, the accuracy of the representations and warranties made by Parent, Merger Sub and Merger LLC, on the one hand, and the Company, on the other hand, and compliance by Parent, Merger Sub, Merger LLC and the Company in all material respects with their respective obligations under the Merger Agreement. Effective April 15, 2019, the early termination of the Hart-Scott-Rodino waiting period was granted by the Federal Trade Commission.

The Merger Agreement contains specified termination rights for both the Company and Parent. The Company must pay Parent a termination fee of $54,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) following a failure by the Company to obtain the requisite stockholder approval if the Company enters into a transaction with respect to a Company Competing Proposal (as defined in the Merger Agreement) within 12 months of such termination, (ii) if Parent terminates the Merger Agreement following a change of recommendation, (iii) if the Company terminates the Merger Agreement to enter into a Company Superior Proposal (as defined in the Merger Agreement) or (iv) if the Company has committed a material breach of the restrictions regarding dealing with third parties. Furthermore, Parent must pay the Company a termination fee of $75,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) as a result of a judgment or other legal prohibition or restraint arising under the antitrust laws, and solely in such case, as of the date of such termination, all of the conditions other than antitrust-related conditions have been satisfied or waived other than those conditions that by their nature are only capable of being satisfied at the closing and (ii) if, upon reaching the 9-month anniversary of the Merger Agreement (which may be extended by up to 6 months under certain circumstances), the Company or Parent terminates the Merger Agreement and all of the conditions other than approval under the antitrust laws have been satisfied or waived at such time, other than conditions that by their nature would be satisfied if the closing and the closing date had occurred on the date of such termination.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the terms and conditions of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on March 20, 2019.

Basis of Presentation

The accompanying consolidated financial statements of the Company include the accounts of HFF LP, HFF Securities, HFF Real Estate Limited and HFF Securities Limited, as well as the Company’s additional wholly-owned subsidiaries, Holliday GP, Partnership Holdings and HFF InvestCo LLC. All significant intercompany accounts and transactions have been eliminated.

Recent Accounting Pronouncements

In February 2016, the FASB issued guidance on the accounting for leases.  This guidance requires that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability.  The Company adopted the new standard on January 1, 2019 on a modified retrospective basis and did not restate comparative periods. Upon adoption, the Company elected to utilize the package of practical expedients permitted

9

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

under the transition guidance, which allows the Company to carryforward (i) the historical lease classification, (ii) its assessment on whether a contract is or contains a lease and (iii) previously capitalized initial direct costs for any leases that exist prior to adoption of the new standard. The Company will also elect to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of comprehensive income on a straight-line basis over the lease term. Upon adoption, approximately $37.0 million was recognized as a right-of-use asset and approximately $49.4million was recorded as a lease liability on our consolidated statement of financial position as of January 1, 2019. The new standard also requires expanded disclosure regarding the amounts, timing and uncertainties of cash flows related to a company’s lease portfolio. Refer to Note 9 for additional information on the adoption of the lease standard.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company is currently evaluating this standard to determine the impact of adoption on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07 “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, to simplify the accounting for share–based payments granted to nonemployees by aligning the accounting with the requirements for employee share–based compensation.The Company adopted the new standard on January 1, 2019 and the adoption did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for the Fair Value Measurement. The update eliminates the disclosure requirements associated with (a) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (b) policies related to the timing and transfers between levels of the fair value hierarchy and (c) the valuation processes for Level 3 fair value measurements. ASU 2018-13 will require disclosures related to the range and weighted averages used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for the Company on January 1, 2020 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements or disclosures.

2. Summary of Significant Accounting Policies

These interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Therefore, actual results could differ from those estimates. Furthermore, operating results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for the year ending December 31, 2019.

Revenue Recognition. Substantially all of the Company’s revenues are derived from capital markets services. These capital markets services revenues are in the form of fees collected from the Company’s clients, usually negotiated on a transaction-by-transaction basis, which includes origination fees, investment advisory fees earned for brokering sales of commercial real estate, loan sales and loan servicing fees. The Company also earns interest on mortgage notes receivable during the period between the origination of the loan and the subsequent sale to Freddie Mac in connection with the Company’s participation in the Freddie Mac Program.  

Total Revenues:

Capital markets services revenues.    The Company earns its capital markets services revenue through the following activities and sources:

• Origination fees.    Origination fees are earned through the placement of debt and equity or structured financing for commercial real estate transactions. Fees earned by the Securities Subsidiaries for discretionary and non-discretionary equity capital raises and other debt referral transactions are also included within origination fees in the Company’s consolidated statements of comprehensive income.

10

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

• Investment advisory fees.    The Company earns investment advisory fees by acting as a broker for commercial real estate owners seeking to sell a property or multiple properties or an interest in a property or multiple properties and by providing investment banking advisory services through the Securities Subsidiaries.

• Loan sales.    The Company generates loan sales fees through assisting its clients in their efforts to sell all or portions of commercial real estate debt notes.

The Company’s contracts are generally negotiated on a transaction-by-transaction basis with a success-based fee awarded upon the satisfaction of the origination, sale, referral, placement or equity raise.  The Company’s agreements generally include such success-based fees for services that are performed over time under one performance obligation. The variable consideration associated with the successful outcome remains constrained until the completion of the transaction, generally at the closing of the applicable financing or funding of the transaction.  Once the constraint is lifted, revenue is recognized as the Company’s fee agreements do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the transaction closes.  The substantial majority of the Company’s transactions are completed within one year and the Company has utilized the practical expedients within Topic 606 related to financing components and costs of obtaining a contract due to the short-term nature of the contracts.

• Loan servicing fees and loan performance fees.    The Company generates loan servicing fees through the provision of collection, remittance, recordkeeping, reporting and other related loan servicing functions, activities and services for either lenders or borrowers on mortgages placed with third-party lenders. The Company also generates loan performance fees associated with indemnification obligations related to the Risk Transfer Agreement. Revenue is recognized as the Company fulfills its stand ready obligation to satisfy such indemnification obligations.

The revenues associated with loan servicing fees are accounted for in accordance with Topic 860, Transfers and Servicing, whereby the Company recognizes loan servicing revenues at the time services are rendered, provided the loans are current and the debt service payments are made by the borrowers.

Interest on mortgage notes receivable.    The Company recognizes interest income on the accrual basis during the holding period based on the contract interest rate in the loan that is to be purchased by Freddie Mac in connection with the Company’s participation in the Freddie Mac Multifamily Approved Seller/Servicer for Conventional and Senior Housing Loans program (“Freddie Mac Program”), provided that the debt service is paid by the borrower.

Other.     Certain of the Company’s fee agreements provide for reimbursement of transaction-related costs which the Company recognizes as other revenue. Reimbursements received from clients for out-of-pocket expenses are characterized as revenue in the consolidated statements of comprehensive income rather than as a reduction of expenses incurred. Because the Company is the primary obligor, has supplier discretion, and bears the credit risk for such expenses, the Company records reimbursement revenue for such out-of-pocket expenses. Reimbursement revenue is recognized over time based upon the measure of progress to completion.

Disaggregation of Revenue.    The Company disaggregates its revenue from contracts with customers by its multiple platforms, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors.  The following table provides a reconciliation of the Company’s revenue recognized under Topic 606 to the Company’s consolidated revenues:

Revenue Category	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Debt placement origination fees	$	65,508	$	54,871
Investment advisory fees		61,432		47,523
Equity placement origination fees		16,667		14,081
Loan sales		359		592
Capital markets services revenue recognized under Topic 606		143,966		117,067
Loan servicing and loan performance fees		9,400		8,391
Capital markets services revenue		153,366		125,458
Interest on mortgage notes receivable		4,589		5,244
Other(1)		1,227		916
Total revenue	$	159,182	$	131,618

11

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

(1)- Other revenues are recognized under Topic 606.

Firm and Office Profit Participation Plans and Executive Bonus Plan. The Company has a firm profit participation plan, office profit participation plans, and an executive bonus plan (the “Plans”) that each allow for incentive payments to be made, based on the achievement of various performance metrics, either in the form of cash or stock at the election of the Company’s board of directors.  The expense associated with the Plans is included within personnel expenses in the consolidated statements of comprehensive income. The expense recorded for these Plans is estimated during the year based on actual results at each interim reporting date and an estimate of future results for the remainder of the year.  Based on an accounting policy election and consistent with ASC Topic 718, Compensation - Stock Compensation, the expense associated with the estimated share-based component of the estimated incentive payout is recognized before the grant date of the share-based awards due to the fact that the terms of the Plans have been approved by the Company’s board of directors, the employees of the Company understand the requirements to earn the award, the number of shares is not determined before the grant date and, finally, if the performance metrics are not met during the performance year, the award is not earned and therefore forfeited.  Prior to the grant date, the share-based component expense is recorded as incentive compensation expense within personnel expenses in the Company’s consolidated statements of comprehensive income. Following the award, if any, of the related incentive payout, the share-based component expense is reclassified as stock compensation costs within personnel expenses and the share-based component of the accrued incentive compensation is reclassified as additional paid-in-capital upon the granting of the awards on the Company’s consolidated balance sheets. The Plans allow for payment to be made in both cash and share-based awards.  The cash portion of the awards will not be subject to time-based vesting conditions and will be expensed during the performance year.  The share-based portion of the awards is subject to a three-year time-based vesting schedule beginning on the first anniversary of the grant (which is made in the first calendar quarter of the subsequent year).  As a result, the total expense for the share-based portion of the awards is recorded over the period from the beginning of the performance year through the vesting date, or 50 months.

3. Stock Compensation

The stock compensation cost that has been charged against income for the three months ended March 31, 2019 and 2018 was $5.9 million and $5.8 million, respectively. At March 31, 2019, there was approximately $53.9 million of unrecognized compensation cost related to non-vested restricted stock units with a weighted average remaining contractual term of 2.7 years.  As of March 31, 2019, there were 1,951,716 restricted stock units outstanding, of which 1,783,355 have continued vesting requirements.  

During the three-month period ended March 31, 2019, no options were granted, vested, exercised or forfeited.

During the three-month period ended March 31, 2019, 755,823 new restricted stock units were granted, 1,053,742 restricted stock units vested of which 1,044,669 were converted to Class A common stock, and 51,006 restricted stock units were forfeited.

The fair value of vested restricted stock units was $11.4 million at March 31, 2019.

12

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

4. Property and Equipment

Property and equipment consist of the following:

	March 31,			December 31,
	2019			2018
	(in thousands)
Furniture and equipment	$	8,327		$	8,426
Computer equipment		1,759			1,759
Capitalized software costs		3,931			3,665
Leasehold improvements		23,297			21,065
Property and equipment, gross		37,314			34,915
Less accumulated depreciation and amortization		(18,536	)		(17,719	)
Property and equipment, net	$	18,778		$	17,196

At March 31, 2019 and December 31, 2018, the Company has recorded, within furniture and equipment, office equipment under finance leases of $1.1 million and $1.2 million, respectively, including accumulated amortization of $1.0 million and $1.0 million, respectively, which is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income.

5. Goodwill and Intangible Assets

The Company’s goodwill at March 31, 2019 is summarized as follows (in thousands):

Balance at December 31, 2018	$	8,512
Additions through acquisitions		—
Foreign currency translation		69
Balance at March 31, 2019	$	8,581

The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. No goodwill impairment test was required for the three-month period ended March 31, 2019. 

The Company’s intangible assets are summarized as follows:

	March 31, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
	(in thousands)
Intangible assets:
Mortgage servicing rights	$	120,198	$	(46,087	)	$	74,111	$	116,683	$	(43,039	)	$	73,644
Other		671		(469	)		202		940		(722	)	$	218
Total intangible assets	$	120,869	$	(46,556	)	$	74,313	$	117,623	$	(43,761	)	$	73,862

As of March 31, 2019 and December 31, 2018, the Company serviced $82.9 billion and $81.2 billion, respectively, of commercial loans. The Company earned $9.4 million and $8.4 million in servicing fees for the three months ended March 31, 2019 and 2018, respectively. These revenues are recorded within capital markets services revenues in the consolidated statements of comprehensive income.

The total commercial loan servicing portfolio includes loans for which there are no corresponding mortgage servicing rights recorded on the balance sheet, as these servicing rights were assumed prior to the Company’s adoption of ASC Topic 860, Transfers and Servicing (“ASC 860”) on January 1, 2007 and involved no initial consideration paid by the Company. As of March 31, 2019 and December 31, 2018 the Company has recorded mortgage servicing rights of $74.1 million and $73.6 million on $82.1 billion and $80.3 billion, respectively, of the total loans serviced.

13

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

The Company stratifies its servicing portfolio based on the type of loan, including Freddie Mac, commercial mortgage backed securities (“CMBS”), life company loansand limited-service life company loans.

Changes in the carrying value of mortgage servicing rights for the three months ended March 31, 2019 and 2018, were as follows (dollars in thousands):

Category	December 31, 2018		Capitalized		Amortized			March 31, 2019
Freddie Mac	$	57,747	$	4,509	$	(3,329	)	$	58,927
CMBS		11,314		53		(752	)		10,615
Life company		4,097		786		(749	)		4,134
Life company – limited		486		46		(97	)		435
Total	$	73,644	$	5,394	$	(4,927	)	$	74,111
Category	December 31, 2017		Capitalized		Amortized			March 31, 2018
Freddie Mac	$	40,468	$	6,284	$	(2,621	)	$	44,131
CMBS		13,514		297		(903	)		12,908
Life company		3,833		548		(665	)		3,716
Life company – limited		668		90		(106	)		652
Total	$	58,483	$	7,219	$	(4,295	)	$	61,407

Amounts capitalized represent mortgage servicing rights retained upon the sale of originated loans to Federal Home Loan Mortgage Corporation (“Freddie Mac”) and mortgage servicing rights acquired without the exchange of initial consideration. The Company recorded mortgage servicing rights retained upon the sale of originated loans to Freddie Mac of $4.5 million and $6.3 million on $0.7 billion and $1.3 billion of loans during the three months ended March 31, 2019 and 2018, respectively. The Company recorded mortgage servicing rights acquired without the exchange of initial consideration on the CMBS and Life company tranches of $0.9 million and $0.9 million on $2.6 billion and $2.9 billion of loans, respectively, during the three months ended March 31, 2019 and 2018, respectively. The Company also received securitization compensation in relation to the securitization of certain Freddie Mac mortgage servicing rights in the three months ended March 31, 2019 and 2018 of $2.9 million and $4.9 million, respectively.  The securitization compensation is recorded within interest and other income, net in the consolidated statements of comprehensive income.  

Amortization expense related to intangible assets was $4.9 million and $4.4 million during the three months ended March 31, 2019 and 2018, respectively and is recorded in depreciation and amortization in the consolidated statements of comprehensive income.

Estimated amortization expense for the remainder of 2019 and the following four years is as follows (dollars in thousands):

Remainder of 2019	$	11,695
2020		13,632
2021		11,630
2022		9,913
2023		8,817

The weighted-average life of the mortgage servicing rights intangible asset was 6.6 years at March 31, 2019.

6. Fair Value Measurement

ASC Topic 820, Fair Value Measurement establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into the following three levels: Level 1 inputs which are quoted market prices in active markets for identical assets or liabilities; Level 2 inputs which are observable market-based inputs or unobservable inputs corroborated by market data for the asset or liability; and Level 3 inputs which are unobservable inputs based on the Company’s own assumptions that are not corroborated by market data. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

14

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

In the normal course of business, the Company enters into contractual commitments to originate (purchase) and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into a sale commitment with Freddie Mac simultaneously with the rate lock commitment with the borrower. The terms of the contract with Freddie Mac and the rate lock with the borrower are matched in substantially all respects to eliminate interest rate risk.  Both the rate lock commitments to borrowers and the forward sale contracts to Freddie Mac are undesignated derivatives with level 2 inputs and, accordingly, are marked to fair value through earnings. The impact on the Company’s financial position and earnings resulting from loan commitments is not significant. The Company elected the fair value option for all mortgage notes receivable originated after January 1, 2016 to eliminate the impact of the variability in interest rate movements on the value of the mortgage notes receivable.

The following tables set forth the Company’s financial assets that were accounted for at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Recurring fair value measurements

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	966,694	$	—	$	966,694	$	—
Total recurring fair value measurements	$	966,694	$	—	$	966,694	$	—

			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	351,194	$	—	$	351,194	$	—
Total recurring fair value measurements	$	351,194	$	—	$	351,194	$	—

The valuation of mortgage notes receivable is calculated based on already locked in interest rates.  These assets are classified as Level 2 in the fair value hierarchy as all inputs are reasonably observable.  

The following table sets forth the Company’s financial assets that were accounted for at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Nonrecurring fair value measurements:

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	74,111	$	—	$	—	$	92,490
Total nonrecurring fair value measurements	$	74,111	$	—	$	—	$	92,490
			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	73,644	$	—	$	—	$	91,787
Total nonrecurring fair value measurements	$	73,644	$	—	$	—	$	91,787

15

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

In accordance with GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. These assets may include mortgage servicing rights. The mortgage servicing rights are recorded at fair value upon initial recording and were not remeasured at fair value as of March 31, 2019 because the Company continues to utilize the amortization method under ASC 860 and the fair value of the mortgage servicing rights exceeds the carrying value atMarch 31, 2019.

Mortgage servicing rights do not trade in an active, open market with readily-available observable prices. Since observable inputs do not exist to determine the market value for the mortgage servicing rights, such as quoted market prices or prices based on sales or purchases of similar assets, the Company determines the fair value of the mortgage servicing rights by estimating the present value of future cash flows associated with the servicing of the loans. Management makes certain assumptions and judgments in estimating the fair value of servicing rights, including the cost of servicing, prepayment rates (including risk of default), an inflation rate, the expected life of the cash flows and the discount rate. The significant assumptions utilized to value servicing rights as of March 31, 2019 and December 31, 2018 are as follows:

	March 31,	December 31,
	2019	2018
Expected life of cash flows	3 years to 10 years	3 years to 10 years
Discount rate (1)	10% to 16%	10% to 16%
Prepayment rate	0% to 8%	0% to 8%
Inflation rate	2%	2%
Cost of service per loan	$1,920 to $4,803	$1,920 to $4,743

⁽¹⁾ Reflects the time value of money and the risk of future cash flows related to the possible cancellation of servicing contracts, transferability restrictions on certain servicing contracts, concentration in the life company portfolio and large loan risk.

The above assumptions are subject to change based on management’s judgments and estimates of future changes in the risks related to future cash flows and interest rates. Changes in these factors would cause a corresponding increase or decrease in the prepayment rates and discount rates used in the Company’s valuation model.

The Company’s financial instruments also include cash and cash equivalents, restricted cash, securities held to maturity and warehouse lines of credit. The cash and cash equivalents and restricted cash balances include accounts with maturities of less than three months and therefore, the carrying amount approximates fair value due to the short-term maturities of these instruments. The cash and cash equivalents and restricted cash accounts are classified as Level 1 within the fair value hierarchy.  The Company’s $25.0 million investment in securities held to maturity are classified as level 2 within the fair value hierarchy and carried at amortized cost. The securities are required to be redeemed upon the completion of the three-year term of the Risk Transfer Agreement, as defined in Note 7, and will be redeemed for $25.0 million.  The warehouse line of credit is a short-term facility with variable interest rates and therefore, fair value approximates carrying value. The warehouse line of credit is classified as Level 2 within the fair value hierarchy.

7. Securities Held-to-Maturity

On July 2, 2018, the Company invested $25.0 million in mandatorily redeemable preferred stock of M&T Realty Capital Corporation (“M&T-RCC”) in connection with a risk transfer agreement entered into between the Company and M&T-RCC (the “Risk Transfer Agreement”), which is expected to enable the Company to increase the Company’s share of Fannie Mae’s Delegated Underwriting and Servicing (“DUS®”) business. Through the Risk Transfer Agreement, the Company sources multifamily property loans to M&T-RCC, which funds the loans through its Fannie Mae DUS® loan platform.  

In connection with the Risk Transfer Agreement, the Company indemnifies M&T-RCC for their credit recourse obligations associated with loans originated under the Risk Transfer Agreement.  In addition to the $25.0 million investment, the Company deposits a portion of the original principal balance for each loan originated under the Risk Transfer Agreement to serve as collateral for any potential future indemnification obligations.  As of March 31, 2019, collateral deposits totaling $3.7 million has been recorded within other noncurrent assets.  For additional information on the Company’s indemnification obligation under the Risk Transfer Agreement see Note 16.

16

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

8. Warehouse Line of Credit

HFF LP maintains two uncommitted warehouse revolving lines of credit for the purpose of funding Freddie Mac mortgage loans that it originates under the Freddie Mac Program. The Company is a party to an uncommitted $600 million financing arrangement with PNC Bank, N.A. (“PNC”). The PNC arrangement was amended during the first quarter of 2018 to increase the maximum capacity from $600 million to $1.0 billion.   The Company is also party to an uncommitted $150 million financing arrangement with The Huntington National Bank (“Huntington”). The Huntington arrangement includes an uncommitted amount of $150 million, which can be increased to $175 million three times in a one-year period for 45 calendar days.

Each funding is separately approved on a transaction-by-transaction basis and is collateralized by a loan and mortgage on a multifamily property that is ultimately purchased by Freddie Mac. The PNC and Huntington financing arrangements are only for the purpose of supporting the Company’s participation in the Freddie Mac Program and cannot be used for any other purpose. As of March 31, 2019 and December 31, 2018, HFF LP had $961.3 million and $348.4 million, respectively, outstanding on the warehouse lines of credit. Interest on the warehouse lines of credit is at the 30-day LIBOR rate (2.49% and 2.50% at March 31, 2019 and December 31, 2018, respectively) plus a spread. HFF LP is also paid interest on the mortgage note receivable secured by a multifamily loan at the rate in the Freddie Mac note.

9. Lease Commitments

The Company has various operating and financing leases for various corporate offices and office equipment. These leases have initial terms of three to eleven years.  Certain of the Company’s leases have i) options to extend the leases for up to 6 years, ii) options to terminate the lease and iii.) options whereby the term may be reduced by two to eight years upon prior notice and payment of a termination fee by the Company.

The components of lease expense were as follows:

	March 31, 2019
	(in thousands)
Operating lease costs	$	2,541
Finance lease costs:
Amortization of right-of-use assets		33
Interest on lease liabilities		1
Total finance lease costs	$	34

Supplemental cash flow information related to leases was as follows:

	March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	3,056
Operating cash flows used by finance leases		1
Financing cash flows used by finance leases		33

17

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

During the three-month period ended March 31, 2019, there were no right-of-use assets obtained in exchange for lease obligations.

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
	(in thousands)
Operating leases
Operating lease right-of-use assets	$	34,970
Current portion of operating lease liabilities		9,397
Noncurrent operating lease liabilities		37,436
Total operating lease liabilities		46,833
Finance leases
Property and equipment, at cost		1,089
Accumulated depreciation		(970	)
Property and equipment, net		119
Current portion of long-term debt		79
Long-term debt, less current portion		52
Total finance lease liabilities		131
Weighted average remaining lease term
Operating leases	5.8 years
Finance leases	2.2 years
Weighted average discount rate
Operating leases		3.7	%
Finance leases		2.2	%

Maturities of lease liabilities were as follows:

	Operating leases			Finance leases
	(in thousands)
Remainder of 2019	$	8,067		$	74
2020		10,279			51
2021		9,450			9
2022		7,545			7
2023		4,692			2
Thereafter		11,745			—
Total lease payments	$	51,778		$	143
Less imputed interest		(4,945	)		(12	)
Total	$	46,833		$	131

Total rental expense charged to operations was $3.5 million and $3.2 million during the three months ended March 31, 2019 and 2018, respectively, and is recorded within occupancy expense in the consolidated statements of comprehensive income.  

The Company subleases certain office space to subtenants, which subleases may be canceled at any time. The rental income received from these subleases is included as a reduction of occupancy expenses in the accompanying consolidated statements of comprehensive income and is not material to the Company’s consolidated financial position.

18

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

10. Servicing

The Company services commercial real estate loans for lenders. The unpaid principal balance of the servicing portfolio totaled $82.9 billion and $81.2 billion at March 31, 2019 and December 31, 2018, respectively.

11. Legal Proceedings

The Company is party to various litigation matters, in most cases involving ordinary course and routine claims incidental to its business. The Company cannot estimate with certainty its ultimate legal and financial liability with respect to any pending matters. In accordance with ASC Topic 450, Contingencies, a reserve for estimated losses is recorded when the amount is probable and can be reasonably estimated. However, the Company does not believe, based on examination of such pending matters, that a material loss related to these matters is reasonably possible.

12. Income Taxes

Income tax expense includes current and deferred taxes as follows (dollars in thousands):

	Current		Deferred			Total
Three Months Ended March 31, 2019:
Federal	$	—	$	4,391		$	4,391
State		165		649			814
Foreign		—		51			51
	$	165	$	5,091		$	5,256
	Current		Deferred			Total
Three Months Ended March 31, 2018:
Federal	$	—	$	1,390		$	1,390
State		139		(380	)		(241	)
Foreign		—		(344	)		(344	)
	$	139	$	666		$	805

The reconciliation between the income tax computed by applying the U.S. federal statutory rate and the effective tax rate on net income is as follows for the three months ended March 31, 2019 and 2018 (dollars in thousands):

	March 31,
	2019						2018
Income tax expense / (benefit)				Rate						Rate
Taxes computed at federal rate	$	6,944			21.0	%	$	3,753			21.0	%
State and local taxes, net of federal tax benefit		1,769			5.4	%		870			4.9	%
Rate differential on non-US income		(4	)		(0.0	)%		(1	)		0.0	%
Effect of windfalls related to equity compensation		(3,814	)		(11.5	)%		(4,535	)		(25.4	)%
Meals and entertainment		375			1.1	%		321			1.8	%
Other		(14	)		(0.1	)%		397			2.2	%
Income tax expense	$	5,256			15.9	%	$	805			4.5	%

13. Stockholders’ Equity

The Company is authorized to issue 175,000,000 shares of Class A common stock, par value $0.01 per share. Each share of Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders of Class A common stock vote together as a single class on all matters presented to the stockholders for their vote or approval. The Company had issued 39,857,514 and 39,143,253 shares of Class A common stock as of March 31, 2019 and December 31, 2018, respectively.

19

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

On January31, 2019, the Company’s board of directors declared a special cash dividend of $1.75 per share of Class A common stock to stockholders of record on February 11, 2019. The aggregate dividend payment was paid on February 27, 2019 and totaled approximately $68.7million based on the number of shares of Class A common stock then outstanding. Additionally, 79,324 restricted stock units (dividend equivalent units) were granted for those unvested and vested but not issued restricted stock units as of the record date of February 11, 2019. These dividend equivalent units follow the same vesting terms as the underlying restricted stock units.

On January 26, 2018, the Company’s board of directors declared a special cash dividend of $1.75 per share of Class A common stock to stockholders of record on February 9, 2018. The aggregate dividend payment was paid on February 21, 2018 and totaled approximately $67.8 million based on the number of shares of Class A common stock then outstanding. Additionally, 79,387 restricted stock units (dividend equivalent units) were granted for those unvested and vested but not issued restricted stock units as of the record date of February 9, 2018.  These dividend equivalent units follow the same vesting terms as the underlying restricted stock units.

14. Earnings Per Share

The Company’s net income and weighted average shares outstanding for the three months ended March 31, 2019 and 2018 consist of the following:

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Net income	$	27,810	$	17,068
Weighted Average Shares Outstanding:
Basic		39,680,505		39,041,492
Diluted		40,309,251		40,201,900

The calculations of basic and diluted earnings per share amounts for the three months ended March 31, 2019 and 2018 are described and presented below.

Basic Earnings per Share

Numerator — net income for the three months ended March 31, 2019 and 2018, respectively.

Denominator — the weighted average shares of unrestricted Class A common stock for the three months ended March 31, 2019 and 2018, including 239,375 and 218,702 restricted stock units that have vested and whose issuance is no longer contingent as of March 31, 2019 and 2018, respectively.

Diluted Earnings per Share

Numerator — net income for the three months ended March 31, 2019 and 2018 as in the basic earnings per share calculation described above.

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HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

Denominator — the weighted average shares of unrestricted Class A common stock for the three months ended March 31, 2019and 2018, including 239,375and218,702restricted stock units that have vested and whose issuance is no longer contingent as of March 31, 2019and 2018, respectively, plus the dilutive effect of the unvested restricted stock units,restricted stock and stock options.

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Basic Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Weighted average number of shares of Class A common stock outstanding		39,680,505		39,041,492
Basic earnings per share of Class A common stock	$	0.70	$	0.44
Diluted Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Basic weighted average number of shares of Class A common stock		39,680,505		39,041,492
Add—dilutive effect of:
Unvested restricted stock units		618,627		1,143,646
Stock options		10,119		16,762
Weighted average common shares outstanding — diluted		40,309,251		40,201,900
Diluted earnings per share of Class A common stock	$	0.69	$	0.42

15. Related Party Transactions

As a result of the Company’s initial public offering, the Company entered into a tax receivable agreement with HFF Holdings that provides for the payment by the Company to HFF Holdings of 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of the increase in tax basis of the assets owned by HFF LP and HFF Securities and as a result of certain other tax benefits arising from entering into the tax receivable agreement and making payments under that agreement. As members of HFF Holdings, each of Mark Gibson, the Company’s chief executive officer, Jody Thornton, the Company’s president and member of the Company’s board of directors and a capital markets advisor of the Operating Partnerships, John Fowler, a current director emeritus of the Company’s board of directors and a capital markets advisor of the Operating Partnerships, and Matthew D. Lawton, Gerard T. Sansosti, Michael J. Tepedino and Manuel A. de Zarraga, each an Executive Managing Director and a capital markets advisor of the Operating Partnerships, is entitled to participate in such payments, in each case on a pro rata basis based upon such person’s ownership of interests in each series of tax receivable payments created by the initial public offering or subsequent exchange of Operating Partnership units. The Company will retain the remaining 15% of cash savings, if any, in income tax that it realizes. For purposes of the tax receivable agreement, cash savings in income tax is computed by comparing the Company’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the assets of HFF LP and HFF Securities allocable to the Company as a result of the initial sale and later exchanges and had the Company not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the initial public offering and will continue until all such tax benefits have been utilized or have expired. See Note 16 for the amount recorded in relation to this agreement.

16. Commitments and Contingencies

Tax Receivable Agreement

The Company is obligated, pursuant to its tax receivable agreement with HFF Holdings, to pay to HFF Holdings 85% of the amount of cash savings in U.S. federal, state and local income tax that the Company actually realizes as a result of the increases in tax basis under Section 754 and as a result of certain other tax benefits arising from the Company entering into the tax receivable agreement and making payments under that agreement. We have estimated that future payments that will be made to HFF Holdings will be $50.3 million, of which, approximately $8.3 million is anticipated to be paid in 2019.

21

HFF, Inc.

Notes to Consolidated Financial Statements (Unaudited) - (Continued)

Risk Transfer Agreement

In connection with the Risk Transfer Agreement, the Company will indemnify M&T-RCC’s loan loss exposure for each loan originated under the Risk Transfer Agreement. The Company’s loss exposure is capped at 33.33% of the unpaid principal balance in excess of the collateral securing such loan.  As of March 31, 2019, the Company’s maximum quantifiable loss exposure associated with the Company’s indemnification obligation is $123.8 million on $371.5 million of unpaid principal balances.  The maximum quantifiable liability is not representative of the actual loss the Company may incur as the Company would only be liable for this amount in the event that all of the loans for which the Company indemnifies M&T-RCC were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.  There were no actual losses incurred under this arrangement during the three months ended March 31, 2019.

For loans that have been sold through the Risk Transfer Agreement, the Company records an indemnification accrual equal to the fair value of the guarantee obligations undertaken upon M&T-RCC’s sale of the loan. Subsequently, this accrual is amortized over the estimated life of the loan and recorded as an increase in capital markets services revenues within the consolidated statements of comprehensive income. The Company records a corresponding asset related to loan performance fee rights which will also be amortized over the estimated life of the loan. As of March 31, 2019, the guarantee obligations recorded within other noncurrent liabilities and corresponding asset recorded within other noncurrent assets were approximately $0.6 million.

17.  Subsequent Events

The Company has evaluated subsequent events through the date these financial statements were issued and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations

The following discussion summarizes the financial position of the Company and its subsidiaries as of March 31, 2019, and the results of our operations for the three months ended March 31, 2019, and should be read in conjunction with (i) the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) the consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the year ended December 31, 2018.

Overview

Our Business

We are, based on transaction volume, one of the leading providers of commercial real estate and capital markets services to both the consumers and providers of capital in the commercial real estate industry and one of the largest full-service commercial real estate financial intermediaries in the country. We operate out of 26 offices with approximately 1,080 associates including approximately 405 capital markets advisors.

Substantially all of our revenues are in the form of capital markets services fees collected from our clients, usually negotiated on a transaction-by-transaction basis. We also earn fees from commercial loan servicing activities. We believe that our multiple product offerings and platform services, diverse client mix, expertise in a wide range of property types and national platform have the potential to create a diversified revenue stream within the commercial real estate sector.

We operate in one reportable segment, the commercial real estate financial intermediary segment, and offer debt placement, investment advisory, equity placements, investment banking and advisory services, loan sales and loan sale advisory services, commercial loan servicing and capital markets advice.

Our business may be significantly affected by factors outside of our control, particularly including:

• Economic and commercial real estate market downturns. Our business is dependent on international and domestic economic conditions and the demand for commercial real estate and related services in the markets in which we operate.  A slow-down, a significant downturn and/or recession in either the global economy and/or the domestic economy, including but not limited to even a regional economic downturn, could adversely affect our business. A general decline in acquisition and disposition activity, as well as a general decline in commercial real estate investment activity, can lead to a reduction in fees and commissions for arranging such transactions, as well as in fees and commissions for arranging financing for acquirers and property owners that are seeking to recapitalize their existing properties. Such a general decline can also lead to a significant reduction in our loan servicing activities, due to increased delinquencies and defaults and lack of additional loans that we would have otherwise added to our loan servicing portfolio. Additionally, evolving global regulatory and compliance trends, including changes to the UK regulatory framework resulting from the UK’s exit from the European Union, may adversely affect our business and the economic and commercial real estate markets in which we do business.

• Global and domestic credit and liquidity issues. Global and domestic credit and liquidity issues have in the recent past led to an economic downturn, including a commercial real estate market downturn. This downturn in turn led to a decrease in transaction activity and lower values.  Restrictions on the availability of capital, both debt and/or equity, created significant reductions, and could in the future cause, further reductions of the liquidity in and the flow of capital to the commercial real estate markets. These restrictions also caused, and could in the future cause, commercial real estate prices to decrease due to the reduced amount of equity capital and debt financing available which can lead to a reduction in our revenues.

• Decreased investment allocation to commercial real estate class. Allocations to commercial real estate as an asset class for investment portfolio diversification may decrease for a number of reasons beyond our control, including but not limited to poor performance of the asset class relative to other asset classes or the superior performance of other asset classes when compared with the performance of the commercial real estate asset class. In addition, while commercial real estate is now viewed as an accepted and valid class for portfolio diversification, if this perception changes, there could be a significant reduction in the amount of debt and equity capital available in the commercial real estate sector which could therefore, result in decreased transactional volume.

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• Fluctuations in interest rates. Significant fluctuations in interest rates as well as steady and protracted movements of interest rates in one direction (increases or decreases) could adversely affect the operation and income of commercial real estate properties as well as the demand from investors for commercial real estate investments. Both of these events could adversely affect investor demand and the supply of capital for debt and equity investments in commercial real estate. In particular, increased interest rates may cause prices to decrease due to the increased costs of obtaining financing and could lead to decreases in purchase and sale activities, thereby reducing the amounts of investment advisory and loan originations and related servicing fees. If our debt placement and investment advisory origination and servicing businesses are negatively impacted, it is likely that our other lines of business would also suffer due to the relationship among our various capital markets services.

The factors discussed above have adversely affected and continue to be a risk to our business, as evidenced by the effects of the significant disruptions during 2007 through 2010 to the global capital and credit markets, and in particular the domestic capital markets. The global and domestic credit and liquidity issues and reductions in debt and equity allocations to commercial real estate reduced, and could in the future reduce, the number of acquisitions, dispositions and loan originations, as well as the respective number of transactions, which could in turn adversely affect our capital markets services revenues including our servicing revenue. While conditions have generally improved, global and domestic credit and liquidity issues, economic recessions or slowdowns and other global and domestic macro events beyond our control, could have a significant adverse effect on our capital markets services revenues (including, but not limited to, our servicing revenues). The significant balance sheet issues of many CMBS lenders, banks, life insurance companies, mortgage REITS and debt funds, captive finance companies and other financial institutions have adversely affected, and could again in the future adversely affect, the flow of commercial mortgage debt to the U.S. capital markets, and, in turn, could potentially adversely affect all of our capital markets services platforms and resulting revenues.

Other factors that may adversely affect our business are discussed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q.

On March 18, 2019, the Company entered into the Merger Agreement with Parent, Merger Sub and Merger LLC. The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub will merge with and into the Company, with the Company as the surviving corporation, and (ii) following the completion of the Merger, the surviving corporation from the Merger will merge with and into Merger LLC, with Merger LLC surviving the Subsequent Merger and continuing as a wholly owned subsidiary of Parent.  See Note 1 to the Company’s consolidated financial statements for further information regarding the Merger Agreement.

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Results of operations for the three months ended March 31, 2019and 2018

Following is a discussion of our results of operations for the three months ended March 31, 2019 and 2018. The table included in the period comparisons below provides summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results.  For a description of the key financial measures and indicators included in our consolidated financial statements, refer to the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Financial Measures and Indicators” in our Annual Report on Form 10-K for the year ended December 31, 2018.

	Three Months Ended March 31,
	2019						2018						Total			Total
				% of						% of			Dollar			Percentage
	Dollars			Revenue			Dollars			Revenue			Change			Change
	(in thousands, unless percentages)
Revenues
Capital markets services revenue	$	153,366			96.3	%	$	125,458			95.3	%	$	27,908			22.2	%
Interest on mortgage notes receivable		4,589			2.9	%		5,244			4.0	%		(655	)		(12.5	)%
Other		1,227			0.8	%		916			0.7	%		311			34.0	%
Total revenues		159,182			100.0	%		131,618			100.0	%		27,564			20.9	%
Operating expenses
Cost of services		90,271			56.7	%		78,644			59.8	%		11,627			14.8	%
Personnel		20,289			12.7	%		22,064			16.8	%		(1,775	)		(8.0	)%
Occupancy		4,160			2.6	%		3,813			2.9	%		347			9.1	%
Travel and entertainment		5,918			3.7	%		6,382			4.8	%		(464	)		(7.3	)%
Supplies, research and printing		2,316			1.5	%		2,191			1.7	%		125			5.7	%
Other		17,372			10.9	%		15,817			12.0	%		1,555			9.8	%
Total operating expenses		140,326			88.2	%		128,911			97.9	%		11,415			8.9	%
Operating income		18,856			11.8	%		2,707			2.1	%		16,149			596.6	%
Interest and other income, net		14,211			8.9	%		15,171			11.5	%		(960	)		(6.3	)%
Interest expense		(1	)		(0.0	)%		(5	)		(0.0	)%		4			(80.0	)%
(Increase) decrease in payable under the    tax receivable agreement		—			0.0	%		—			0.0	%		—			0.0	%
Income before income taxes		33,066			20.8	%		17,873			13.6	%		15,193			85.0	%
Income tax expense		5,256			3.3	%		805			0.6	%		4,451			552.9	%
Net income	$	27,810			17.5	%	$	17,068			13.0	%	$	10,742			62.9	%
Adjusted EBITDA (1)	$	37,386			23.5	%	$	20,706			15.7	%	$	16,680			80.6	%

(1) The Company defines Adjusted EBITDA as net income before (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) stock-based compensation expense, which is a non-cash charge, (v) income recognized on the initial recording of mortgage servicing rights that are acquired with no initial consideration and the inherent value of servicing rights, which are non-cash income amounts, and (vi) the increase (decrease) in payable under the tax receivable agreement, which represents changes in a liability recorded on the Company’s consolidated balance sheet determined by the ongoing remeasurement of related deferred tax assets and, therefore, can be income or expense in the Company’s consolidated statement of comprehensive income in any individual period. The Company uses Adjusted EBITDA in its business operations to, among other things, evaluate the performance of its business, develop budgets and measure its performance against those budgets.  The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate its overall operating performance.  However, Adjusted EBITDA has material limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. The Company finds Adjusted EBITDA as a useful tool to assist in evaluating performance because it eliminates items related to capital structure and taxes, including the Company’s tax receivable agreement. Note that the Company classifies the interest expense on its warehouse lines of credit as an operating expense and, accordingly, it is not eliminated from net income in determining Adjusted EBITDA. Some of the items that the Company has eliminated from net income in determining Adjusted EBITDA are significant to the Company’s business. For example, (i) interest expense is a necessary element of the Company’s costs and ability to generate revenue because it incurs interest expense related to any outstanding indebtedness, (ii) payment of income taxes is a necessary element of the Company’s costs, and (iii) depreciation and amortization are necessary elements of the Company’s costs.

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Any measure that eliminates components of the Company’s capital structure and costs associated with the Company’s operations has material limitations as a performance measure. In light of the foregoing limitations, the Company does not rely solely on Adjusted EBITDA as a performance measure and also considers its GAAP results. Adjusted EBITDA is not a measurement of the Company’s financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.

Set forth below is a reconciliation of consolidated net income to Adjusted EBITDA for the Company for the three months ended March 31, 2019 and 2018:

Adjusted EBITDA for the Company is calculated as follows:
(dollars in thousands)
	Three Months Ended March 31,
	2019			2018
Net income	$	27,810		$	17,068
Add:
Interest expense		1			5
Income tax expense		5,256			805
Depreciation and amortization		6,127			5,481
Stock-based compensation (a)		5,850			5,752
Initial recording of mortgage servicing rights		(7,658	)		(8,405	)
Increase (decrease) in payable under the tax receivable agreement		—			—
Adjusted EBITDA	$	37,386		$	20,706

(a) Amounts do not reflect expense associated with the stock component of estimated incentive payouts under the Company’s firm profit participation plan, office profit participation plans and executive bonus plan that are anticipated to be paid in respect of the applicable year. Such expense is recorded as incentive compensation expense within personnel expenses in the Company’s consolidated statements of comprehensive income during the year to which the expense relates. Following the award, if any, of the related incentive payout, the stock component expense is reclassified as stock compensation costs within personnel expenses. See Note 2 to the Company’s consolidated financial statements for further information regarding the Company’s accounting policies relating to its firm profit participation plan, office profit participation plans and executive bonus plan. See Note 3 to the Company’s consolidated financial statements for further information regarding the Company’s accounting policies relating to its stock compensation.

Revenues. Our total revenues were $159.2 million for the three months ended March 31, 2019 compared to $131.6 million for the same period in 2018, an increase of $27.6 million, or 20.9%. Revenues increasedprimarily due to a 44.4% increase in total production volume as compared to the three months ended March 31, 2018.  

• The revenues we generated from capital markets services for the three months ended March 31, 2019 increased approximately $27.9 million, or 22.2%, to $153.4 million from $125.5 million for the same period in 2018. The increase is attributable to a 44.4% increase in the total production volume and an increase in the number of transactions, partially offset by a reduction in the average basis points per transaction during the three months ended March 31, 2019 compared to the three months ended March 31, 2018.  

• The revenues derived from interest on mortgage notes receivable were $4.6 million for the three months ended March 31, 2019 compared to $5.2 million for the same period in 2018, a decrease of approximately $0.7 million. Revenues decreased primarily as a result of a reduction in the average principal balance per loan associated with loan originations in the three months ended March 31, 2019 compared to the three months ended March 31, 2018 in connection with the Freddie Mac Program.

• The other revenues we earned, which include expense reimbursements from clients related to out-of-pocket costs incurred and vary on a transaction-by-transaction basis, were approximately $1.2 million for the three months ended March 31, 2019, an increase of $0.3 million compared to the prior year period.

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Total Operating Expenses. Our total operating expenses were $140.3 million for the three months ended March 31, 2019 compared to $128.9 million for the same period in 2018, anincrease of $11.4 million, or approximately8.9%. Expenses increased primarily due to higher costs of services associated with additional commission expenses on increased revenues.

• Cost of services for the three months ended March 31, 2019 increased $11.6 million, or 14.8%, to $90.3 million from $78.6 million for the same period in 2018. The increase is primarily the result of additional commission and other compensation-related expenses associated with the growth in capital markets services revenue and higher salary and fringe benefit costs from increased headcount. Cost of services as a percentage of capital markets services revenues was approximately 58.9% and 62.7% for the three months ended March 31, 2019 and 2018, respectively.

• Personnel expenses that are not directly attributable to providing services to our clients decreased approximately $1.8 million, or 8.0%, to $20.3 million for the three months ended March 31, 2019 from $22.1 million for the same period in 2018. The decrease is primarily related to the $4.2 million expense during the three months ended March 31, 2018 related to the one-time additional compensation award. This reduction was partially offset by increased salaries, fringe benefits and incentive compensation costs. Personnel expenses are impacted quarterly by the adjustments made to accrue for the estimated expense associated with the Plans. The Plans allow for payments in the form of both cash and share-based awards based on the decision of the Company’s board of directors.  The stock compensation cost included in personnel expenses was $5.9 million and $5.8 million for the three months ended March 31, 2019 and 2018, respectively.  At March 31, 2019, there was approximately $53.9 million of unrecognized compensation cost related to share-based awards.  The weighted average remaining contractual term of the unvested restricted stock units is 2.7 years as of March 31, 2019.  The weighted average remaining contractual term of the vested options is 1.0 year as of March 31, 2019.

• Occupancy expenses were $4.2 million during three months ended March 31, 2019 compared to $3.8 million during three months ended March 31, 2018 and travel and entertainment expenses were $5.9 million for the three months ended March 31, 2019 compared to $6.4 million for the three months ended March 31, 2018, respectively.

• Other expenses, including costs for insurance, professional fees, depreciation and amortization, interest on our warehouse line of credit and other operating expenses, were $17.4 million in the three months ended March 31, 2019, an increase of $1.6 million, or 9.8% versus $15.8 million in the three months ended March 31, 2018. This increase relates to third-party professional fees associated with the proposed merger with Jones Lang LaSalle, Incorporated.

Net Income. Our net income for the three months ended March 31, 2019 was $27.8 million, an increase of approximately $10.7 million versus $17.1 million for the same period in 2018. This increase is primarily attributable to the $15.2 million increase in income before income taxes for the three months ended March 31, 2019 compared to the prior period.

Interest and other income, net for the three months ended March 31, 2019 was $14.2 million, a decrease of $1.0 million as compared to $15.2 million for the same period in 2018 primarily due to decrease in securitization compensation and the initial valuation of mortgage servicing rights which were partially offset by increases in interest and other related income.

• Income tax expense was approximately $5.3 million for the three months ended March 31, 2019, as compared to $0.8 million in the three months ended March 31, 2018. The $4.5 million increase relates primarily to the increase in income before income taxes as well as $0.7 million reduction in the benefit related to the windfall associated with equity compensation.  During the three months ended March 31, 2019, the Company recorded a current income tax expense of $0.2 million and deferred income tax expense of $5.1million.

Financial Condition

Total assets increased by $589.7 million to $1.4 billion at March 31, 2019 from $858.1 million at December 31, 2018 primarily due to an increase in mortgage notes receivable of $615.5million associated with an increase in the principal balance of loans pending sale to Freddie Mac at March 31, 2019, compared to December 31, 2018 as well as $35.0 million related to right-of-use assets associated with the adoption of ASC Topic 842, Leases.  Partially offsetting the increases was a reduction in cash and cash equivalents and restricted cash of $66.8 million primarily related to a dividend payment of $68.7 million and annual incentive compensation distributions, which were offset by cash flows from operations.

Total liabilities increased by $634.8 million to $1.1 billion at March 31, 2019 from $507.5 million at December 31, 2018. The growth was attributable to an increase in amounts outstanding under the warehouse lines of credit of $612.9 million due to an increase in the principal balance outstanding related to our Freddie Mac business at March 31, 2019, compared to December 31, 2018. The

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Company also recorded a net increase related to lease obligations of $35.0 million related to the adoption of ASC Topic 842, Leases which was somewhat offset by a reduction of $17.9 million in accrued compensation and related taxes.

Cash Flows

Our historical cash flows are primarily related to the timing of receipt of transaction fees, the timing of payments under the tax receivable agreement and payment of commissions and bonuses to employees.

First Three Months of 2019

Cash and cash equivalents and restricted cash decreased $66.8 million in the three months ended March 31, 2019. Net cash of $23.1 million was provided by operating activities for the three months ended March 31, 2019 compared to net cash used in operating activities of $1.9 million in the three months ended March 31, 2018. The increase in cash flows from operating activities was primarily attributable to increased income before income taxes over the prior year period. Investing activities used $6.6 million of cash resulting from a $3.8 million payment related to the Company’s investment in the Kensington joint venture arrangement and capital expenditures related to property and equipment. Financing activities used $83.3 million principally related to a $68.7 million dividend payment that we made to holders of our Class A common stock on February 27, 2019. Additionally, $14.5 million was used to purchase shares of Class A common stock in connection with the minimum employee statutory tax withholdings.

First Three Months of 2018

Cash and cash equivalents and restricted cash decreased $84.0 million in the three months ended March 31, 2018. Net cash of $1.9 million was used in operating activities compared to net cash provided by operating activities of $13.1 million in the three-month period ended March 31, 2017. The reduction in cash flows from operating activities was primarily related to reduced net income in the current year period as well as additional payments related to accrued compensation and related taxes and other accrued liabilities. Investing activities used $0.5 million of cash resulting from investments in property and equipment. Financing activities used $81.9 million principally related to a $67.8 million dividend payment that we made to holders of our Class A common stock on February 21, 2018. Additionally, $14.1 million was used to purchase shares of Class A common stock in connection with the minimum employee statutory tax withholdings.

Liquidity and Capital Resources

Our current assets typically have consisted primarily of cash and cash equivalents and accounts receivable in relation to earned transaction fees. At March 31, 2019, our cash and cash equivalents of approximately $235.2 million were invested or held in a mix of money market funds and bank demand deposit accounts at three financial institutions. Our liabilities have typically consisted of accounts payable and accrued compensation. We regularly monitor our liquidity position, including cash level, credit lines, interest and payments on debt, capital expenditures and other matters relating to liquidity and compliance with regulatory net capital requirements.  

During the three months ended March 31, 2019, we generated approximately $23.1 million of cash from operations. Our short-term liquidity needs are typically related to compensation expenses and other operating expenses such as occupancy, supplies, marketing, professional fees and travel and entertainment. For the three months ended March 31, 2019, we incurred approximately $140.3 million in total operating expenses. A large portion of our operating expenses are variable, highly correlated to our revenue streams and dependent on the collection of transaction fees. During the three months ended March 31, 2019, approximately 57.0% of our operating expenses were considered variable expenses. Our cash flow generated from operations historically has been sufficient to enable us to meet our objectives. However, if the economy deteriorates in the future, we may be unable to generate enough cash flow from operations to meet our operating needs and therefore we could use all or substantially all of our existing cash reserves on hand to support our operations.  We currently believe that cash flows from operating activities and our existing cash balance will provide adequate liquidity and are sufficient to meet our working capital needs for the foreseeable future.

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Our tax receivable agreement with HFF Holdings entered into in connection with our initial public offering provides for the payment by us to HFF Holdings of 85% of the amount of cash savings in U.S. federal, state and local income tax that we actually realize as a result of the increases in tax basis and as a result of certain other tax benefits arising from our entering into the tax receivable agreement and making payments under that agreement.We have estimated that future payments that will be made to HFF Holdings will be $50.3 million, of which approximately $8.3 million is anticipated to be paid in 2019.

Our liquidity needs related to our long-term obligations are primarily related to our facility leases.  For the three months ended March 31, 2019, we incurred approximately $4.2 million in occupancy expenses.

On July 2, 2018, the Company entered into a Risk Transfer Agreement with M&T-RCC. Through this agreement the Company sources certain loans to M&T-RCC who then funds such loans through M&T RCC’s Fannie Mae DUS® platform. We are required to share the risk of loss on loans sold through M&T-RCC’s Fannie Mae DUS® platform under the terms of the Risk Transfer Agreement.  For each loan originated under the Risk Transfer Agreement, we deposit a portion of the original principal balance to serve as collateral for future loan losses. Our loss exposure is capped at 33.33% of the unpaid principal balance in excess of the collateral securing such loan. As of March 31, 2019, the Company’s maximum quantifiable loss exposure associated with our indemnification obligation was $123.8million.  The maximum quantifiable liability is not representative of the actual loss we may incur as we would only be liable for this amount in the event that all of the loans that we indemnify for M&T-RCC were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

We are a party to an uncommitted $600 million financing arrangement with PNC that has a maximum capacity of $1.0 billion. We also have an uncommitted $150 million financing arrangement with Huntington that can be increased to $175 million three times in a one-year period for 45 calendar days. Pursuant to these arrangements, PNC or Huntington funds the multifamily Freddie Mac loan closings in accordance with the Freddie Mac Program on a transaction-by-transaction basis, with each loan being separately collateralized by a loan and mortgage on a multifamily property that is ultimately purchased by Freddie Mac. The PNC and Huntington financing arrangements are only for the purpose of supporting our participation in the Freddie Mac Program and cannot be used for any other purpose. The PNC arrangement was amended during the first quarter of 2018 to increase the maximum capacity from $600 million to $1.0 billion. As of March 31, 2019, we had outstanding borrowings of $961.3 million under the PNC/Huntington arrangements. Non-cash activity totaling $612.9 million increased these financing arrangements during the three months ended March 31, 2019. Although we believe that our current financing arrangements with PNC and Huntington are sufficient to meet our current needs in connection with our participation in the Freddie Mac Program, in the event we are not able to secure financing for our Freddie Mac loan closings, we will cease originating such Freddie Mac loans until we have available financing.

Critical Accounting Policies

We prepare our financial statements in accordance with U.S. generally accepted accounting principles. In applying many of these accounting principles, we need to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and judgments, however, are often subjective and our actual results may change negatively based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe the following critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates and/or judgments. See the notes to our consolidated financial statements for a summary of our significant accounting policies.

Goodwill.    Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Goodwill is required to be tested for impairment at least annually. The Company performs its annual impairment test as of October 1^st or more frequently when indicators of impairment are present. The goodwill impairment test involves comparing the fair value of a reporting unit to its carrying value, including goodwill. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The Company uses a combination of a discounted cash flow model (“DCF model”) and a market approach to determine the current fair values of the reporting units. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including capital market information and market share, sales volume and pricing, costs of services, working capital changes and discount rates. The fair value of goodwill is considered a level 3 asset within the fair value hierarchy.

29

Intangible Assets. Intangible assets include mortgage servicing rights under agreements with third-party lenders, non-competition agreements and customer relationships.  Servicing rights are recorded at the lower of cost or market. Mortgage servicing rights do not trade in an active, open market with readily available observable prices. Since there is no ready market value for the mortgage servicing rights, such as quoted market prices or prices based on sales or purchases of similar assets, we determine the fair value of the mortgage servicing rights by estimating the present value of future cash flows associated with servicing the loans. Management makes certain assumptions and judgments in estimating the fair value of servicing rights. The estimate is based on a number of assumptions, including the benefits of servicing (contractual servicing fees and interest on escrow and float balances), the cost of servicing, prepayment rates (including risk of default), an inflation rate, the expected life of the cash flows and the discount rate. Management estimates a market participant’s cost of servicing by analyzing the limited market activity and considering our own internal servicing costs. Management estimates the discount rate by considering the various risks involved in the future cash flows of the underlying loans which include the cancellation of servicing contracts, concentration in the life company portfolio and the incremental risk related to large loans. Management estimates the prepayment levels of the underlying mortgages by analyzing recent historical experience. Many of the commercial loans being serviced have financial penalties for prepayment or early payoff before the stated maturity date. As a result, we have consistently experienced a low level of loan runoff. The estimated value of the servicing rights is impacted by changes in these assumptions. As of March 31, 2019, the fair value and net book valueof the servicing rights were $92.5 millionand $74.1 million, respectively. The most sensitive assumptions in estimating the fair value of the mortgage servicing rights are the level of prepayments, discount rate and cost of servicing. If the assumed level of prepayments increased 88%, the discount rate increased 57% or if there is a 16% increase in the cost of servicing at the stratum level, the estimated fair value of the servicing rights may result in the recorded mortgage servicing rights being potentially impaired and would require management to measure the amount of the potential impairment charge. The effect of a variation in each of these assumptions on the estimated fair value of the servicing rights is calculated independently without changing any other assumption. Servicing rights are amortized in proportion to and over the period of estimated servicing income which results in an accelerated level of amortization. We evaluate intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Income Taxes.  The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and for tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the tax rate change. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Our effective tax rate is sensitive to several factors including changes in the mix of our geographic profitability. We evaluate our estimated tax rate on a quarterly basis to reflect changes in: (i) our geographic mix of income, (ii) legislative actions on statutory tax rates, and (iii) tax planning for jurisdictions affected by double taxation. We continually seek to develop and implement potential strategies and/or actions that would reduce our overall effective tax rate.

The net deferred tax asset of $35.9 million at March 31, 2019 is comprised mainly of a $47.1 million deferred tax asset related to the Section 754 of the Internal Revenue Code (“Section 754”) election tax basis step up.  The net deferred tax asset related to the Section 754 election tax basis step up represents annual pre-tax deductions on the Section 754 basis step up and payments under the tax receivable agreement of approximately $38.5 million in 2019, then increasing to $46.0 million in 2021 and then decreasing over the next eight years to approximately $0.1 million by 2029.  In order to realize the anticipated pre-tax benefit of approximately $38.5 million in 2019, the Company needs to generate approximately $418 million in revenue, assuming a constant cost structure.  In the event that the Company cannot realize the annual pre-tax benefit each year, the shortfall becomes a net operating loss that can be carried forward indefinitely to offset future taxable income.  If it is more likely than not that the Company would not be able to generate a sufficient level of taxable income through the carryforward period, a valuation allowance would be recorded as a charge to income tax expense and a proportional reduction would be made in the payable under the tax receivable agreement which would be recorded as income in the consolidated statements of comprehensive income. The trend in revenue growth over the next few years and through the amortization and carryforward periods is a key factor in assessing the realizability of the deferred tax assets.

Firm and Office Profit Participation Plans and Executive Bonus Plan.The Company’s firm and office profit participation plans and executive bonus plan provide for payments in cash and share-based awards if certain performance targets are achieved during the year. The expense recorded for these plans is estimated during the year based on actual results at each interim reporting date and an estimate of future results for the remainder of the year. The plans allow for payments to be made in both cash and share-based awards, the composition of which is determined in the first calendar quarter of the subsequent year. Cash and share-based awards issued under these plans are subject to vesting conditions over the subsequent year, such that the total expense measured for

30

these plans is recorded over the period from the beginning of the performance year through the vesting date. Based on an accounting policy election, the expense associated with the share-based component of the estimated incentive payout is recognized before the grant date of the stock due to the fact that the terms of the profit participation plans have been approved by the Company’s board of directors, the employees of the Company understand the requirements to earn the award, the number of shares is not determined before the grant date and, finally, if the performance metrics are not met during the performance year, the award is not earned and therefore forfeited. Prior to the grant date, the share-based component expense is recorded as incentive compensation within personnel expenses in the Company’s consolidated statements of comprehensive income. Following the award, if any, of the related incentive payout, the stock component expense is reclassified as stock compensation costs within personnel expenses. See Note 2 to the Company’s consolidated financial statements for further information regarding the Company’s accounting policies relating to its firm and office profit participation bonus plans and executive bonus plan.

Certain Information Concerning Off-Balance Sheet Arrangements

We do not currently invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support. Other than the risk-sharing obligations under the Risk Transfer Agreement disclosed previously in this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements or engage in any leasing activities that expose us to any liability that is not reflected in our consolidated financial statements.

Seasonality

Our capital markets services revenue has historically been seasonal, which can affect an investor’s ability to compare our financial condition and results of operation on a quarter-by-quarter basis. This seasonality has caused our revenue, operating income, net income and cash flows from operating activities to be lower in the first half of the year and higher in the second half of the year. The typical concentration of earnings and cash flows in the last half of the year has historically been due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. However, disruptions, write-offs and credit losses in the global and domestic capital markets, liquidity issues facing all global capital markets, and in particular, U.S. commercial real estate markets, this historical pattern of seasonality may or may not continue.  

Effect of Inflation and Deflation

Inflation or deflation, or both, could significantly affect our compensation costs, particularly those not directly tied to our capital markets advisors’ compensation, due to factors such as availability of capital and/or increased costs of capital. The rise of inflation could also significantly and adversely affect certain expenses, such as debt service costs, information technology and occupancy costs. To the extent that inflation or deflation results in rising interest rates and has other effects upon the commercial real estate markets in which we operate and, to a lesser extent, the securities markets, it may affect our financial position and results of operations by reducing the demand for commercial real estate and related services which could have a material adverse effect on our financial condition. See Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

For information regarding Recent Accounting Pronouncements, see Note 1 of the notes to consolidated financial statements, included in this Quarterly Report on Form 10-Q.

31

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Due to the nature of our business and the manner in which we conduct our operations, in particular the fact that our financial instruments that are exposed to concentrations of credit risk consist primarily of short-term cash deposits and investments, we believe we do not face any material interest rate risk, equity price risk or other market risk.

Foreign Currency Exchange Rate Risk

We may be subject to exposures to changes in foreign currency exchange rates. Our risk management objective is to reduce our exposure to the effects of changes in exchange rates and we may manage our exposure to changes in foreign currency exchange rates by entering into foreign currency forward contracts. We did not engage in foreign currency hedging transactions during the three months ended March 31, 2019 and 2018.

Item 4. Controls and Procedures

Management’s Quarterly Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31, 2019, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized and reported within the time periods specified in rules and forms.

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Changes in Internal Controls

There were no changes in our internal control over financial reporting that occurred during the three-month period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

32

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are party to various litigation matters, in most cases involving normal ordinary course and routine claims incidental to our business. We cannot estimate with certainty our ultimate legal and financial liability with respect to such pending matters.  In accordance with ASC Topic 450, Contingencies, a reserve for estimated losses is recorded when the amount is probable and can be reasonably estimated.  However, we believe, based on our examination of such pending matters, that our ultimate liability for such matters will not have a material adverse effect on our business or financial condition.

Item 1A. Risk Factors.

There have been no material changes to our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2018, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

33

Item 6. Exhibits.

A. Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger dated as of March 18, 2019, by and among Jones Lang LaSalle Incorporated, JLL CM, Inc., JLL CMG, LLC, and HFF, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No. 001-33280) filed with the Commission on March 20, 2019).
10.1	Amended and Restated Employment Agreement, dated as of March 18, 2019, by and between Greg Conley and HFF, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-33280) filed with the Commission on March 22, 2019).
10.2	Amended and Restated Employment Agreement, dated as of March 18, 2019, by and between Nancy Goodson and HFF, Inc. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 001-33280) filed with the Commission on March 22, 2019).
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

34

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HFF, INC.
Dated: May 7, 2019	By:	/s/ Mark D. Gibson
		Mark D. Gibson
		Chief Executive Officer,
		Director andExecutive Managing Director
		(Principal Executive Officer)
Dated: May 7, 2019	By:	/s/ Gregory R. Conley
		Gregory R. Conley
		Chief Financial Officer
		(Principal Financial andAccounting Officer)

35

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Mark D. Gibson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HFF, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 7, 2019	By:	/s/ Mark D. Gibson
		Mark D. Gibson
		Chief Executive Officer,
		Director andExecutive Managing Director
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Gregory R. Conley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HFF, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 7, 2019	By:	/s/ Gregory R. Conley
		Gregory R. Conley
		Chief Financial Officer
		(Principal Financial andAccounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of HFF, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Gibson, Chief Executive Officer of the Company, and Gregory R. Conley, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 7, 2019	By:	/s/ Mark D. Gibson
		Mark D. Gibson
		Chief Executive Officer, Director and
		Executive Managing Director
		(Principal Executive Officer)

Dated: May 7, 2019	By:	/s/ Gregory R. Conley
		Gregory R. Conley
		Chief Financial Officer
		(Principal Financial andAccounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	HF
Entity Registrant Name	HFF, Inc.
Entity Central Index Key	0001380509
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Class A Shares Outstanding		39,823,827

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 235,212	$ 305,555
Restricted cash	5,234	1,723
Accounts receivable	10,283	8,150
Mortgage notes receivable	966,694	351,194
Prepaid taxes	1,240	671
Prepaid expenses and other current assets	18,787	13,021
Total current assets	1,237,450	680,314
Property and equipment, net	18,778	17,196
Operating lease right-of-use asset	34,970
Deferred tax asset, net	35,863	41,124
Goodwill	8,581	8,512
Intangible assets, net	74,313	73,862
Securities - held to maturity	25,000	25,000
Other noncurrent assets	12,820	12,045
Total assets	1,447,775	858,053
Current liabilities:
Current portion of long-term debt	79	3,898
Current portion of operating lease liabilities	9,397
Warehouse line of credit	961,252	348,378
Accrued compensation and related taxes	49,705	67,653
Accounts payable	4,359	3,204
Payable under tax receivable agreement	8,313	8,313
Other current liabilities	29,094	21,968
Total current liabilities	1,062,199	453,414
Deferred rent credit		11,825
Payable under the tax receivable agreement, less current portion	41,977	41,977
Long-term debt, less current portion	52	66
Noncurrent operating lease liabilities	37,436
Other noncurrent liabilities	608	225
Total liabilities	1,142,272	507,507
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 175,000,000 authorized; 39,857,514 and 39,143,253 shares issued, respectively; 39,823,827 and 39,116,745 shares outstanding, respectively	399	391
Treasury stock, 33,687 and 26,508 shares at cost, respectively	(1,501)	(1,220)
Additional paid-in-capital	159,229	159,636
Accumulated other comprehensive loss	(728)	(743)
Retained earnings	148,104	192,482
Total equity	305,503	350,546
Total liabilities and stockholders’ equity	$ 1,447,775	$ 858,053

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	39,857,514	39,143,253
Common stock, shares outstanding	39,823,827	39,116,745
Treasury Stock, Shares	33,687	26,508

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues
Revenues	$ 159,182	$ 131,618
Expenses
Cost of services	90,271	78,644
Personnel	20,289	22,064
Occupancy	4,160	3,813
Travel and entertainment	5,918	6,382
Supplies, research, and printing	2,316	2,191
Insurance	692	689
Professional fees	3,239	1,670
Depreciation and amortization	6,127	5,481
Interest on warehouse line of credit	3,911	4,211
Other operating	3,403	3,766
Total expenses	140,326	128,911
Operating income	18,856	2,707
Interest and other income, net	14,211	15,171
Interest expense	(1)	(5)
(Increase) decrease in payable under the tax receivable agreement	0	0
Income before income taxes	33,066	17,873
Income tax expense	5,256	805
Net income	27,810	17,068
Other comprehensive income:
Foreign currency translation adjustments	15	495
Comprehensive income	$ 27,825	$ 17,563
Earnings per share - Basic and Diluted
Earnings per share available to HFF, Inc. common stockholders - Basic	$ 0.70	$ 0.44
Earnings per share available to HFF, Inc. common stockholders - Diluted	$ 0.69	$ 0.42
Capital Markets Services [Member]
Revenues
Revenues	$ 153,366	$ 125,458
Interest on Mortgage Notes Receivable [Member]
Revenues
Revenues	4,589	5,244
Other [Member]
Revenues
Revenues	$ 1,227	$ 916

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid in Capital [Member]	Accumulated Other Comprehensive (Loss)/Income [Member]	Retained Earnings [Member]
Beginning balance at Dec. 31, 2017	$ 286,467	$ 387	$ (4,971)	$ 144,304	$ 171	$ 146,576
Beginning balance, shares at Dec. 31, 2017		38,579,544	163,154
Cumulative effect of adoption of new accounting standard	1,304					1,304
Stock compensation and other, net	10,188			10,188
Issuance of Class A common stock, net		$ 4	$ 17,273	(17,277)
Issuance of Class A common stock, net, shares		822,207	(423,501)
Repurchase of Class A common stock	(14,101)		$ (14,101)
Repurchase of Class A common stock, shares		(298,931)	298,931
Foreign currency translation adjustment	495				495
Dividends paid	(67,772)			3,663		(71,435)
Net income	17,068					17,068
Ending balance at Mar. 31, 2018	233,649	$ 391	$ (1,799)	140,878	666	93,513
Ending balance, shares at Mar. 31, 2018		39,102,820	38,584
Beginning balance at Dec. 31, 2018	350,546	$ 391	$ (1,220)	159,636	(743)	192,482
Beginning balance, shares at Dec. 31, 2018		39,116,745	26,508
Stock compensation and other, net	10,365			10,365
Issuance of Class A common stock, net		$ 8	$ 14,231	(14,239)
Issuance of Class A common stock, net, shares		1,044,669	(330,408)
Repurchase of Class A common stock	(14,512)		$ (14,512)
Repurchase of Class A common stock, shares		(337,587)	337,587
Foreign currency translation adjustment	15				15
Dividends paid	(68,721)			3,467		(72,188)
Net income	27,810					27,810
Ending balance at Mar. 31, 2019	$ 305,503	$ 399	$ (1,501)	$ 159,229	$ (728)	$ 148,104
Ending balance, shares at Mar. 31, 2019		39,823,827	33,687

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net income	$ 27,810	$ 17,068
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation	5,850	5,752
Deferred taxes	5,091	666
Increase (decrease) in payable under the tax receivable agreement	0	0
Depreciation	1,183	1,100
Amortization	4,944	4,381
Gain on sale and initial recording of mortgage servicing rights	(7,112)	(8,573)
Mortgage service rights assumed	(885)	(935)
Other	(370)
Increase (decrease) in cash from changes in:
Accounts receivable	(2,133)	(1,960)
Mortgage notes receivable	(612,874)	(508,586)
Net borrowings on warehouse line of credit	612,874	508,586
Prepaid taxes, prepaid expenses and other current assets	(5,781)	914
Other noncurrent assets	(538)	1,159
Accrued compensation and related taxes	(13,263)	(15,167)
Accounts payable	1,155	(1,740)
Other current liabilities	7,126	(4,279)
Deferred rent and other noncurrent liabilities		(309)
Net cash provided by operating activities	23,077	(1,923)
Investing activities
Purchases of property and equipment	(2,788)	(490)
Purchase of securities and other investments	(3,800)
Net cash used in investing activities	(6,588)	(490)
Financing activities
Payments on long-term debt	(33)	(62)
Dividends paid	(68,721)	(67,772)
Treasury stock	(14,512)	(14,101)
Net cash used in financing activities	(83,266)	(81,935)
Effects of exchange rate changes on cash and cash equivalents and restricted cash	(55)	374
Net decrease in cash and cash equivalents and restricted cash	(66,832)	(83,974)
Cash and cash equivalents and restricted cash, beginning of period	307,278	276,802
Cash and cash equivalents and restricted cash, end of period	$ 240,446	$ 192,828

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Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

1. Organization and Basis of Presentation

Organization

HFF, Inc., a Delaware corporation (the “Company”), through its wholly-owned subsidiaries, Holliday Fenoglio Fowler, L.P., a Texas limited partnership (“HFF LP”), HFF Securities L.P., a Delaware limited partnership and registered broker-dealer (“HFF Securities” and together with HFF LP, the “Operating Partnerships”), HFF Real Estate Limited and HFF Securities Limited, in the United Kingdom, is a commercial real estate financial intermediary providing commercial real estate and capital markets services including debt placement, investment advisory, equity placements, investment banking and advisory services, loan sales and loan sale advisory services, commercial loan servicing, and capital markets advice and maintains offices in 25 cities in the United States and one office in London, United Kingdom. The Company’s operations are impacted by the availability of equity and debt as well as credit and liquidity in the domestic and global capital markets especially in the commercial real estate sector. Significant disruptions or changes in domestic and global capital market flows, as well as credit and liquidity issues in the global and domestic capital markets, regardless of their duration, could adversely affect the supply and demand for capital from investors for commercial real estate investments which could have a significant impact on all of the Company’s capital market services revenues.

Initial Public Offering and Reorganization

The Company completed its initial public offering (“IPO”) and the Company’s Class A Common Stock began trading on the New York Stock Exchange under the symbol “HF” in the first quarter of 2007. The proceeds of the initial public offering, including the exercise of the underwriter’s option to purchase additional shares, were used to purchase from HFF Holdings LLC, a Delaware limited liability company (“HFF Holdings”), all of the shares of Holliday GP Corp. (“Holliday GP”) and purchase from HFF Holdings partnership units of the Operating Partnerships (including partnership units in the Operating Partnerships held by Holliday GP). HFF Holdings used a portion of its proceeds to repay all outstanding indebtedness under HFF LP’s credit agreement. Accordingly, the Company did not retain any of the proceeds from the initial public offering.

In addition to cash received for its sale of all of the shares of Holliday GP and approximately 45% of partnership units of each of the Operating Partnerships (including partnership units in the Operating Partnerships held by Holliday GP), HFF Holdings also received, through the issuance of one share of HFF, Inc.’s Class B common stock to HFF Holdings, an exchange right that permitted, subject to certain restrictions, HFF Holdings to exchange interests in the Operating Partnerships for shares of (i) the Company’s Class A common stock (the “Exchange Right”) and (ii) rights under a tax receivable agreement between the Company and HFF Holdings (the “TRA”). See Notes 16 and 17 for further discussion of the tax receivable agreement.

As a result of the reorganization in connection with the IPO, the Company became a holding company through a series of transactions pursuant to a sale and purchase agreement. As a result of the IPO and reorganization, the Company’s sole assets were partnership interests in Operating Partnerships (that are held through its wholly-owned subsidiary HFF Partnership Holdings, LLC, a Delaware limited liability company (“Partnership Holdings”) and all of the shares of Holliday GP, the sole general partner of each of the Operating Partnerships. The transactions that occurred in connection with the IPO and reorganization are referred to as the “Reorganization Transactions.”

The Reorganization Transactions were treated, for financial reporting purposes, as a reorganization of entities under common control. As of August 31, 2012, HFF Holdings had utilized its Exchange Right to exchange all of its remaining interests in the Operating Partnerships and therefore the Company, through its wholly-owned subsidiaries, became and continues to be the sole equity holder of the Operating Partnerships.

Proposed Merger with Jones Lang LaSalle Incorporated

On March 18, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Jones Lang LaSalle Incorporated, a Maryland corporation (“Parent”), JLL CM, Inc., a Delaware corporation and wholly owned subsidiary of JLL (“Merger Sub”), JLL CMG, LLC, a Delaware limited liability company and wholly owned subsidiary of JLL (“Merger LLC”), and the Company. The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub will merge with and into the Company, with the Company as the surviving corporation (the “Merger”), and (ii) following the completion of the Merger, the surviving corporation from the Merger will merge with and into Merger LLC (the “Subsequent Merger”), with Merger LLC surviving the Subsequent Merger and continuing as a wholly owned subsidiary of Parent.

The Company’s Board of Directors (the “Board”) has, by unanimous vote, approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, (the “Effective Time”), each share of Class A common stock of the Company, par value $0.01 per share (“Company Shares”), issued and outstanding immediately prior to the Effective Time (other than shares held by the Company, Parent or any of their respective subsidiaries and shares held by any holder of Company Shares who is entitled to demand and properly demands appraisal of such shares under Delaware law) will convert into (i) $24.63 per share in cash and (ii) 0.1505 of a share of common stock of Parent, par value $0.01 per share (“Parent Common Stock”). No fractional shares of Parent Common Stock will be issued in the Merger, and holders of Company Shares will receive cash in lieu of any fractional shares of Parent Common Stock.

The closing of the Merger is subject to certain conditions, including, among others, (i) the adoption of the Merger Agreement by the holders of at least a majority of the outstanding Company Shares entitled to vote thereon, (ii) the approval for listing on the New York Stock Exchange of the shares of Parent Common Stock issuable to the Company’s stockholders pursuant to the Merger Agreement, (iii) the expiration or earlier termination of the waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and regulatory approval by FINRA, the U.K. Financial Conduct Authority, the Federal Home Loan Mortgage Corporation and certain state regulatory authorities, (iv) no court order or other legal restraint or prohibition preventing the consummation of the Merger or the Subsequent Merger, (v) the effectiveness of a registration statement on Form S-4 to be filed with the Securities and Exchange Commission by Parent in connection with the issuance of shares of Parent Company Stock in the Merger, (vi) in the case of each party’s obligation to effect the Merger, the absence of a material adverse effect with respect to the other party since the date of the Merger Agreement and (vii) subject to materiality exceptions, the accuracy of the representations and warranties made by Parent, Merger Sub and Merger LLC, on the one hand, and the Company, on the other hand, and compliance by Parent, Merger Sub, Merger LLC and the Company in all material respects with their respective obligations under the Merger Agreement. Effective April 15, 2019, the early termination of the Hart-Scott-Rodino waiting period was granted by the Federal Trade Commission.

The Merger Agreement contains specified termination rights for both the Company and Parent. The Company must pay Parent a termination fee of $54,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) following a failure by the Company to obtain the requisite stockholder approval if the Company enters into a transaction with respect to a Company Competing Proposal (as defined in the Merger Agreement) within 12 months of such termination, (ii) if Parent terminates the Merger Agreement following a change of recommendation, (iii) if the Company terminates the Merger Agreement to enter into a Company Superior Proposal (as defined in the Merger Agreement) or (iv) if the Company has committed a material breach of the restrictions regarding dealing with third parties. Furthermore, Parent must pay the Company a termination fee of $75,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) as a result of a judgment or other legal prohibition or restraint arising under the antitrust laws, and solely in such case, as of the date of such termination, all of the conditions other than antitrust-related conditions have been satisfied or waived other than those conditions that by their nature are only capable of being satisfied at the closing and (ii) if, upon reaching the 9-month anniversary of the Merger Agreement (which may be extended by up to 6 months under certain circumstances), the Company or Parent terminates the Merger Agreement and all of the conditions other than approval under the antitrust laws have been satisfied or waived at such time, other than conditions that by their nature would be satisfied if the closing and the closing date had occurred on the date of such termination.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the terms and conditions of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on March 20, 2019.

Basis of Presentation

The accompanying consolidated financial statements of the Company include the accounts of HFF LP, HFF Securities, HFF Real Estate Limited and HFF Securities Limited, as well as the Company’s additional wholly-owned subsidiaries, Holliday GP, Partnership Holdings and HFF InvestCo LLC. All significant intercompany accounts and transactions have been eliminated.

Recent Accounting Pronouncements

In February 2016, the FASB issued guidance on the accounting for leases.  This guidance requires that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability.  The Company adopted the new standard on January 1, 2019 on a modified retrospective basis and did not restate comparative periods. Upon adoption, the Company elected to utilize the package of practical expedients permitted under the transition guidance, which allows the Company to carryforward (i) the historical lease classification, (ii) its assessment on whether a contract is or contains a lease and (iii) previously capitalized initial direct costs for any leases that exist prior to adoption of the new standard. The Company will also elect to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of comprehensive income on a straight-line basis over the lease term. Upon adoption, approximately $37.0 million was recognized as a right-of-use asset and approximately $49.4 million was recorded as a lease liability on our consolidated statement of financial position as of January 1, 2019. The new standard also requires expanded disclosure regarding the amounts, timing and uncertainties of cash flows related to a company’s lease portfolio. Refer to Note 9 for additional information on the adoption of the lease standard.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company is currently evaluating this standard to determine the impact of adoption on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07 “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, to simplify the accounting for share–based payments granted to nonemployees by aligning the accounting with the requirements for employee share–based compensation.The Company adopted the new standard on January 1, 2019 and the adoption did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for the Fair Value Measurement. The update eliminates the disclosure requirements associated with (a) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (b) policies related to the timing and transfers between levels of the fair value hierarchy and (c) the valuation processes for Level 3 fair value measurements. ASU 2018-13 will require disclosures related to the range and weighted averages used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for the Company on January 1, 2020 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements or disclosures.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

These interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Therefore, actual results could differ from those estimates. Furthermore, operating results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for the year ending December 31, 2019.

Revenue Recognition. Substantially all of the Company’s revenues are derived from capital markets services. These capital markets services revenues are in the form of fees collected from the Company’s clients, usually negotiated on a transaction-by-transaction basis, which includes origination fees, investment advisory fees earned for brokering sales of commercial real estate, loan sales and loan servicing fees. The Company also earns interest on mortgage notes receivable during the period between the origination of the loan and the subsequent sale to Freddie Mac in connection with the Company’s participation in the Freddie Mac Program.  

Total Revenues:

Capital markets services revenues.    The Company earns its capital markets services revenue through the following activities and sources:

• Origination fees.    Origination fees are earned through the placement of debt and equity or structured financing for commercial real estate transactions. Fees earned by the Securities Subsidiaries for discretionary and non-discretionary equity capital raises and other debt referral transactions are also included within origination fees in the Company’s consolidated statements of comprehensive income.

• Investment advisory fees.    The Company earns investment advisory fees by acting as a broker for commercial real estate owners seeking to sell a property or multiple properties or an interest in a property or multiple properties and by providing investment banking advisory services through the Securities Subsidiaries.

• Loan sales.    The Company generates loan sales fees through assisting its clients in their efforts to sell all or portions of commercial real estate debt notes.

The Company’s contracts are generally negotiated on a transaction-by-transaction basis with a success-based fee awarded upon the satisfaction of the origination, sale, referral, placement or equity raise.  The Company’s agreements generally include such success-based fees for services that are performed over time under one performance obligation. The variable consideration associated with the successful outcome remains constrained until the completion of the transaction, generally at the closing of the applicable financing or funding of the transaction.  Once the constraint is lifted, revenue is recognized as the Company’s fee agreements do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the transaction closes.  The substantial majority of the Company’s transactions are completed within one year and the Company has utilized the practical expedients within Topic 606 related to financing components and costs of obtaining a contract due to the short-term nature of the contracts.

• Loan servicing fees and loan performance fees.    The Company generates loan servicing fees through the provision of collection, remittance, recordkeeping, reporting and other related loan servicing functions, activities and services for either lenders or borrowers on mortgages placed with third-party lenders. The Company also generates loan performance fees associated with indemnification obligations related to the Risk Transfer Agreement. Revenue is recognized as the Company fulfills its stand ready obligation to satisfy such indemnification obligations.

The revenues associated with loan servicing fees are accounted for in accordance with Topic 860, Transfers and Servicing, whereby the Company recognizes loan servicing revenues at the time services are rendered, provided the loans are current and the debt service payments are made by the borrowers.

Interest on mortgage notes receivable.    The Company recognizes interest income on the accrual basis during the holding period based on the contract interest rate in the loan that is to be purchased by Freddie Mac in connection with the Company’s participation in the Freddie Mac Multifamily Approved Seller/Servicer for Conventional and Senior Housing Loans program (“Freddie Mac Program”), provided that the debt service is paid by the borrower.

Other.     Certain of the Company’s fee agreements provide for reimbursement of transaction-related costs which the Company recognizes as other revenue. Reimbursements received from clients for out-of-pocket expenses are characterized as revenue in the consolidated statements of comprehensive income rather than as a reduction of expenses incurred. Because the Company is the primary obligor, has supplier discretion, and bears the credit risk for such expenses, the Company records reimbursement revenue for such out-of-pocket expenses. Reimbursement revenue is recognized over time based upon the measure of progress to completion.

Disaggregation of Revenue.    The Company disaggregates its revenue from contracts with customers by its multiple platforms, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors.  The following table provides a reconciliation of the Company’s revenue recognized under Topic 606 to the Company’s consolidated revenues:

Revenue Category	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Debt placement origination fees	$	65,508	$	54,871
Investment advisory fees		61,432		47,523
Equity placement origination fees		16,667		14,081
Loan sales		359		592
Capital markets services revenue recognized under Topic 606		143,966		117,067
Loan servicing and loan performance fees		9,400		8,391
Capital markets services revenue		153,366		125,458
Interest on mortgage notes receivable		4,589		5,244
Other(1)		1,227		916
Total revenue	$	159,182	$	131,618

(1)- Other revenues are recognized under Topic 606.

Firm and Office Profit Participation Plans and Executive Bonus Plan. The Company has a firm profit participation plan, office profit participation plans, and an executive bonus plan (the “Plans”) that each allow for incentive payments to be made, based on the achievement of various performance metrics, either in the form of cash or stock at the election of the Company’s board of directors.  The expense associated with the Plans is included within personnel expenses in the consolidated statements of comprehensive income. The expense recorded for these Plans is estimated during the year based on actual results at each interim reporting date and an estimate of future results for the remainder of the year.  Based on an accounting policy election and consistent with ASC Topic 718, Compensation - Stock Compensation, the expense associated with the estimated share-based component of the estimated incentive payout is recognized before the grant date of the share-based awards due to the fact that the terms of the Plans have been approved by the Company’s board of directors, the employees of the Company understand the requirements to earn the award, the number of shares is not determined before the grant date and, finally, if the performance metrics are not met during the performance year, the award is not earned and therefore forfeited.  Prior to the grant date, the share-based component expense is recorded as incentive compensation expense within personnel expenses in the Company’s consolidated statements of comprehensive income. Following the award, if any, of the related incentive payout, the share-based component expense is reclassified as stock compensation costs within personnel expenses and the share-based component of the accrued incentive compensation is reclassified as additional paid-in-capital upon the granting of the awards on the Company’s consolidated balance sheets. The Plans allow for payment to be made in both cash and share-based awards.  The cash portion of the awards will not be subject to time-based vesting conditions and will be expensed during the performance year.  The share-based portion of the awards is subject to a three-year time-based vesting schedule beginning on the first anniversary of the grant (which is made in the first calendar quarter of the subsequent year).  As a result, the total expense for the share-based portion of the awards is recorded over the period from the beginning of the performance year through the vesting date, or 50 months.

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Stock Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Compensation

3. Stock Compensation

The stock compensation cost that has been charged against income for the three months ended March 31, 2019 and 2018 was $5.9 million and $5.8 million, respectively. At March 31, 2019, there was approximately $53.9 million of unrecognized compensation cost related to non-vested restricted stock units with a weighted average remaining contractual term of 2.7 years.  As of March 31, 2019, there were 1,951,716 restricted stock units outstanding, of which 1,783,355 have continued vesting requirements.  

During the three-month period ended March 31, 2019, no options were granted, vested, exercised or forfeited.

During the three-month period ended March 31, 2019, 755,823 new restricted stock units were granted, 1,053,742 restricted stock units vested of which 1,044,669 were converted to Class A common stock, and 51,006 restricted stock units were forfeited.

The fair value of vested restricted stock units was $11.4 million at March 31, 2019.

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Property and Equipment

3 Months Ended

Mar. 31, 2019

Property Plant And Equipment [Abstract]

Property and Equipment

4. Property and Equipment

Property and equipment consist of the following:

	March 31,			December 31,
	2019			2018
	(in thousands)
Furniture and equipment	$	8,327		$	8,426
Computer equipment		1,759			1,759
Capitalized software costs		3,931			3,665
Leasehold improvements		23,297			21,065
Property and equipment, gross		37,314			34,915
Less accumulated depreciation and amortization		(18,536	)		(17,719	)
Property and equipment, net	$	18,778		$	17,196

At March 31, 2019 and December 31, 2018, the Company has recorded, within furniture and equipment, office equipment under finance leases of $1.1 million and $1.2 million, respectively, including accumulated amortization of $1.0 million and $1.0 million, respectively, which is included within depreciation and amortization expense in the accompanying consolidated statements of comprehensive income.

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

5. Goodwill and Intangible Assets

The Company’s goodwill at March 31, 2019 is summarized as follows (in thousands):

Balance at December 31, 2018	$	8,512
Additions through acquisitions		—
Foreign currency translation		69
Balance at March 31, 2019	$	8,581

The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. No goodwill impairment test was required for the three-month period ended March 31, 2019. 

The Company’s intangible assets are summarized as follows:

	March 31, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
	(in thousands)
Intangible assets:
Mortgage servicing rights	$	120,198	$	(46,087	)	$	74,111	$	116,683	$	(43,039	)	$	73,644
Other		671		(469	)		202		940		(722	)	$	218
Total intangible assets	$	120,869	$	(46,556	)	$	74,313	$	117,623	$	(43,761	)	$	73,862

As of March 31, 2019 and December 31, 2018, the Company serviced $82.9 billion and $81.2 billion, respectively, of commercial loans. The Company earned $9.4 million and $8.4 million in servicing fees for the three months ended March 31, 2019 and 2018, respectively. These revenues are recorded within capital markets services revenues in the consolidated statements of comprehensive income.

The total commercial loan servicing portfolio includes loans for which there are no corresponding mortgage servicing rights recorded on the balance sheet, as these servicing rights were assumed prior to the Company’s adoption of ASC Topic 860, Transfers and Servicing (“ASC 860”) on January 1, 2007 and involved no initial consideration paid by the Company. As of March 31, 2019 and December 31, 2018 the Company has recorded mortgage servicing rights of $74.1 million and $73.6 million on $82.1 billion and $80.3 billion, respectively, of the total loans serviced.

The Company stratifies its servicing portfolio based on the type of loan, including Freddie Mac, commercial mortgage backed securities (“CMBS”), life company loans and limited-service life company loans.

Changes in the carrying value of mortgage servicing rights for the three months ended March 31, 2019 and 2018, were as follows (dollars in thousands):

Category	December 31, 2018		Capitalized		Amortized			March 31, 2019
Freddie Mac	$	57,747	$	4,509	$	(3,329	)	$	58,927
CMBS		11,314		53		(752	)		10,615
Life company		4,097		786		(749	)		4,134
Life company – limited		486		46		(97	)		435
Total	$	73,644	$	5,394	$	(4,927	)	$	74,111
Category	December 31, 2017		Capitalized		Amortized			March 31, 2018
Freddie Mac	$	40,468	$	6,284	$	(2,621	)	$	44,131
CMBS		13,514		297		(903	)		12,908
Life company		3,833		548		(665	)		3,716
Life company – limited		668		90		(106	)		652
Total	$	58,483	$	7,219	$	(4,295	)	$	61,407

Amounts capitalized represent mortgage servicing rights retained upon the sale of originated loans to Federal Home Loan Mortgage Corporation (“Freddie Mac”) and mortgage servicing rights acquired without the exchange of initial consideration. The Company recorded mortgage servicing rights retained upon the sale of originated loans to Freddie Mac of $4.5 million and $6.3 million on $0.7 billion and $1.3 billion of loans during the three months ended March 31, 2019 and 2018, respectively. The Company recorded mortgage servicing rights acquired without the exchange of initial consideration on the CMBS and Life company tranches of $0.9 million and $0.9 million on $2.6 billion and $2.9 billion of loans, respectively, during the three months ended March 31, 2019 and 2018, respectively. The Company also received securitization compensation in relation to the securitization of certain Freddie Mac mortgage servicing rights in the three months ended March 31, 2019 and 2018 of $2.9 million and $4.9 million, respectively.  The securitization compensation is recorded within interest and other income, net in the consolidated statements of comprehensive income.  

Amortization expense related to intangible assets was $4.9 million and $4.4 million during the three months ended March 31, 2019 and 2018, respectively and is recorded in depreciation and amortization in the consolidated statements of comprehensive income.

Estimated amortization expense for the remainder of 2019 and the following four years is as follows (dollars in thousands):

Remainder of 2019	$	11,695
2020		13,632
2021		11,630
2022		9,913
2023		8,817

The weighted-average life of the mortgage servicing rights intangible asset was 6.6 years at March 31, 2019.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurement

6. Fair Value Measurement

ASC Topic 820, Fair Value Measurement establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into the following three levels: Level 1 inputs which are quoted market prices in active markets for identical assets or liabilities; Level 2 inputs which are observable market-based inputs or unobservable inputs corroborated by market data for the asset or liability; and Level 3 inputs which are unobservable inputs based on the Company’s own assumptions that are not corroborated by market data. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

In the normal course of business, the Company enters into contractual commitments to originate (purchase) and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into a sale commitment with Freddie Mac simultaneously with the rate lock commitment with the borrower. The terms of the contract with Freddie Mac and the rate lock with the borrower are matched in substantially all respects to eliminate interest rate risk.  Both the rate lock commitments to borrowers and the forward sale contracts to Freddie Mac are undesignated derivatives with level 2 inputs and, accordingly, are marked to fair value through earnings. The impact on the Company’s financial position and earnings resulting from loan commitments is not significant. The Company elected the fair value option for all mortgage notes receivable originated after January 1, 2016 to eliminate the impact of the variability in interest rate movements on the value of the mortgage notes receivable.

The following tables set forth the Company’s financial assets that were accounted for at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Recurring fair value measurements

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	966,694	$	—	$	966,694	$	—
Total recurring fair value measurements	$	966,694	$	—	$	966,694	$	—

			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	351,194	$	—	$	351,194	$	—
Total recurring fair value measurements	$	351,194	$	—	$	351,194	$	—

The valuation of mortgage notes receivable is calculated based on already locked in interest rates.  These assets are classified as Level 2 in the fair value hierarchy as all inputs are reasonably observable.  

The following table sets forth the Company’s financial assets that were accounted for at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Nonrecurring fair value measurements:

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	74,111	$	—	$	—	$	92,490
Total nonrecurring fair value measurements	$	74,111	$	—	$	—	$	92,490
			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	73,644	$	—	$	—	$	91,787
Total nonrecurring fair value measurements	$	73,644	$	—	$	—	$	91,787

In accordance with GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. These assets may include mortgage servicing rights. The mortgage servicing rights are recorded at fair value upon initial recording and were not remeasured at fair value as of March 31, 2019 because the Company continues to utilize the amortization method under ASC 860 and the fair value of the mortgage servicing rights exceeds the carrying value at March 31, 2019.

Mortgage servicing rights do not trade in an active, open market with readily-available observable prices. Since observable inputs do not exist to determine the market value for the mortgage servicing rights, such as quoted market prices or prices based on sales or purchases of similar assets, the Company determines the fair value of the mortgage servicing rights by estimating the present value of future cash flows associated with the servicing of the loans. Management makes certain assumptions and judgments in estimating the fair value of servicing rights, including the cost of servicing, prepayment rates (including risk of default), an inflation rate, the expected life of the cash flows and the discount rate. The significant assumptions utilized to value servicing rights as of March 31, 2019 and December 31, 2018 are as follows:

	March 31,	December 31,
	2019	2018
Expected life of cash flows	3 years to 10 years	3 years to 10 years
Discount rate (1)	10% to 16%	10% to 16%
Prepayment rate	0% to 8%	0% to 8%
Inflation rate	2%	2%
Cost of service per loan	$1,920 to $4,803	$1,920 to $4,743

⁽¹⁾ Reflects the time value of money and the risk of future cash flows related to the possible cancellation of servicing contracts, transferability restrictions on certain servicing contracts, concentration in the life company portfolio and large loan risk.

The above assumptions are subject to change based on management’s judgments and estimates of future changes in the risks related to future cash flows and interest rates. Changes in these factors would cause a corresponding increase or decrease in the prepayment rates and discount rates used in the Company’s valuation model.

The Company’s financial instruments also include cash and cash equivalents, restricted cash, securities held to maturity and warehouse lines of credit. The cash and cash equivalents and restricted cash balances include accounts with maturities of less than three months and therefore, the carrying amount approximates fair value due to the short-term maturities of these instruments. The cash and cash equivalents and restricted cash accounts are classified as Level 1 within the fair value hierarchy.  The Company’s $25.0 million investment in securities held to maturity are classified as level 2 within the fair value hierarchy and carried at amortized cost. The securities are required to be redeemed upon the completion of the three-year term of the Risk Transfer Agreement, as defined in Note 7, and will be redeemed for $25.0 million.  The warehouse line of credit is a short-term facility with variable interest rates and therefore, fair value approximates carrying value. The warehouse line of credit is classified as Level 2 within the fair value hierarchy.

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Securities Held-to-Maturity

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Securities Held-to-Maturity

7. Securities Held-to-Maturity

On July 2, 2018, the Company invested $25.0 million in mandatorily redeemable preferred stock of M&T Realty Capital Corporation (“M&T-RCC”) in connection with a risk transfer agreement entered into between the Company and M&T-RCC (the “Risk Transfer Agreement”), which is expected to enable the Company to increase the Company’s share of Fannie Mae’s Delegated Underwriting and Servicing (“DUS®”) business. Through the Risk Transfer Agreement, the Company sources multifamily property loans to M&T-RCC, which funds the loans through its Fannie Mae DUS® loan platform.  

In connection with the Risk Transfer Agreement, the Company indemnifies M&T-RCC for their credit recourse obligations associated with loans originated under the Risk Transfer Agreement.  In addition to the $25.0 million investment, the Company deposits a portion of the original principal balance for each loan originated under the Risk Transfer Agreement to serve as collateral for any potential future indemnification obligations.  As of March 31, 2019, collateral deposits totaling $3.7 million has been recorded within other noncurrent assets.  For additional information on the Company’s indemnification obligation under the Risk Transfer Agreement see Note 16.

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Warehouse Line of Credit

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Warehouse Line of Credit

8. Warehouse Line of Credit

HFF LP maintains two uncommitted warehouse revolving lines of credit for the purpose of funding Freddie Mac mortgage loans that it originates under the Freddie Mac Program. The Company is a party to an uncommitted $600 million financing arrangement with PNC Bank, N.A. (“PNC”). The PNC arrangement was amended during the first quarter of 2018 to increase the maximum capacity from $600 million to $1.0 billion.   The Company is also party to an uncommitted $150 million financing arrangement with The Huntington National Bank (“Huntington”). The Huntington arrangement includes an uncommitted amount of $150 million, which can be increased to $175 million three times in a one-year period for 45 calendar days.

Each funding is separately approved on a transaction-by-transaction basis and is collateralized by a loan and mortgage on a multifamily property that is ultimately purchased by Freddie Mac. The PNC and Huntington financing arrangements are only for the purpose of supporting the Company’s participation in the Freddie Mac Program and cannot be used for any other purpose. As of March 31, 2019 and December 31, 2018, HFF LP had $961.3 million and $348.4 million, respectively, outstanding on the warehouse lines of credit. Interest on the warehouse lines of credit is at the 30-day LIBOR rate (2.49% and 2.50% at March 31, 2019 and December 31, 2018, respectively) plus a spread. HFF LP is also paid interest on the mortgage note receivable secured by a multifamily loan at the rate in the Freddie Mac note.

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Lease Commitments

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Lease Commitments

9. Lease Commitments

The Company has various operating and financing leases for various corporate offices and office equipment. These leases have initial terms of three to eleven years. Certain of the Company’s leases have i) options to extend the leases for up to 6 years, ii) options to terminate the lease and iii.) options whereby the term may be reduced by two to eight years upon prior notice and payment of a termination fee by the Company.

The components of lease expense were as follows:

	March 31, 2019
	(in thousands)
Operating lease costs	$	2,541
Finance lease costs:
Amortization of right-of-use assets		33
Interest on lease liabilities		1
Total finance lease costs	$	34

Supplemental cash flow information related to leases was as follows:

	March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	3,056
Operating cash flows used by finance leases		1
Financing cash flows used by finance leases		33

During the three-month period ended March 31, 2019, there were no right-of-use assets obtained in exchange for lease obligations.

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
	(in thousands)
Operating leases
Operating lease right-of-use assets	$	34,970
Current portion of operating lease liabilities		9,397
Noncurrent operating lease liabilities		37,436
Total operating lease liabilities		46,833
Finance leases
Property and equipment, at cost		1,089
Accumulated depreciation		(970	)
Property and equipment, net		119
Current portion of long-term debt		79
Long-term debt, less current portion		52
Total finance lease liabilities		131
Weighted average remaining lease term
Operating leases	5.8 years
Finance leases	2.2 years
Weighted average discount rate
Operating leases		3.7	%
Finance leases		2.2	%

Maturities of lease liabilities were as follows:

	Operating leases			Finance leases
	(in thousands)
Remainder of 2019	$	8,067		$	74
2020		10,279			51
2021		9,450			9
2022		7,545			7
2023		4,692			2
Thereafter		11,745			—
Total lease payments	$	51,778		$	143
Less imputed interest		(4,945	)		(12	)
Total	$	46,833		$	131

Total rental expense charged to operations was $3.5 million and $3.2 million during the three months ended March 31, 2019 and 2018, respectively, and is recorded within occupancy expense in the consolidated statements of comprehensive income.  

The Company subleases certain office space to subtenants, which subleases may be canceled at any time. The rental income received from these subleases is included as a reduction of occupancy expenses in the accompanying consolidated statements of comprehensive income and is not material to the Company’s consolidated financial position.

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Servicing

3 Months Ended

Mar. 31, 2019

Transfers And Servicing [Abstract]

Servicing

10. Servicing

The Company services commercial real estate loans for lenders. The unpaid principal balance of the servicing portfolio totaled $82.9 billion and $81.2 billion at March 31, 2019 and December 31, 2018, respectively.

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Legal Proceedings

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Legal Proceedings

11. Legal Proceedings

The Company is party to various litigation matters, in most cases involving ordinary course and routine claims incidental to its business. The Company cannot estimate with certainty its ultimate legal and financial liability with respect to any pending matters. In accordance with ASC Topic 450, Contingencies, a reserve for estimated losses is recorded when the amount is probable and can be reasonably estimated. However, the Company does not believe, based on examination of such pending matters, that a material loss related to these matters is reasonably possible.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Income tax expense includes current and deferred taxes as follows (dollars in thousands):

	Current		Deferred			Total
Three Months Ended March 31, 2019:
Federal	$	—	$	4,391		$	4,391
State		165		649			814
Foreign		—		51			51
	$	165	$	5,091		$	5,256
	Current		Deferred			Total
Three Months Ended March 31, 2018:
Federal	$	—	$	1,390		$	1,390
State		139		(380	)		(241	)
Foreign		—		(344	)		(344	)
	$	139	$	666		$	805

The reconciliation between the income tax computed by applying the U.S. federal statutory rate and the effective tax rate on net income is as follows for the three months ended March 31, 2019 and 2018 (dollars in thousands):

	March 31,
	2019						2018
Income tax expense / (benefit)				Rate						Rate
Taxes computed at federal rate	$	6,944			21.0	%	$	3,753			21.0	%
State and local taxes, net of federal tax benefit		1,769			5.4	%		870			4.9	%
Rate differential on non-US income		(4	)		(0.0	)%		(1	)		0.0	%
Effect of windfalls related to equity compensation		(3,814	)		(11.5	)%		(4,535	)		(25.4	)%
Meals and entertainment		375			1.1	%		321			1.8	%
Other		(14	)		(0.1	)%		397			2.2	%
Income tax expense	$	5,256			15.9	%	$	805			4.5	%

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Stockholders' Equity

3 Months Ended

Mar. 31, 2019

Stockholders Equity Note [Abstract]

Stockholders' Equity

13. Stockholders’ Equity

The Company is authorized to issue 175,000,000 shares of Class A common stock, par value $0.01 per share. Each share of Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders of Class A common stock vote together as a single class on all matters presented to the stockholders for their vote or approval. The Company had issued 39,857,514 and 39,143,253 shares of Class A common stock as of March 31, 2019 and December 31, 2018, respectively.

On January 31, 2019, the Company’s board of directors declared a special cash dividend of $1.75 per share of Class A common stock to stockholders of record on February 11, 2019. The aggregate dividend payment was paid on February 27, 2019 and totaled approximately $68.7 million based on the number of shares of Class A common stock then outstanding. Additionally, 79,324 restricted stock units (dividend equivalent units) were granted for those unvested and vested but not issued restricted stock units as of the record date of February 11, 2019. These dividend equivalent units follow the same vesting terms as the underlying restricted stock units.

On January 26, 2018, the Company’s board of directors declared a special cash dividend of $1.75 per share of Class A common stock to stockholders of record on February 9, 2018. The aggregate dividend payment was paid on February 21, 2018 and totaled approximately $67.8 million based on the number of shares of Class A common stock then outstanding. Additionally, 79,387 restricted stock units (dividend equivalent units) were granted for those unvested and vested but not issued restricted stock units as of the record date of February 9, 2018.  These dividend equivalent units follow the same vesting terms as the underlying restricted stock units.

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Earnings Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

14. Earnings Per Share

The Company’s net income and weighted average shares outstanding for the three months ended March 31, 2019 and 2018 consist of the following:

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Net income	$	27,810	$	17,068
Weighted Average Shares Outstanding:
Basic		39,680,505		39,041,492
Diluted		40,309,251		40,201,900

The calculations of basic and diluted earnings per share amounts for the three months ended March 31, 2019 and 2018 are described and presented below.

Basic Earnings per Share

Numerator — net income for the three months ended March 31, 2019 and 2018, respectively.

Denominator — the weighted average shares of unrestricted Class A common stock for the three months ended March 31, 2019 and 2018, including 239,375 and 218,702 restricted stock units that have vested and whose issuance is no longer contingent as of March 31, 2019 and 2018, respectively.

Diluted Earnings per Share

Numerator — net income for the three months ended March 31, 2019 and 2018 as in the basic earnings per share calculation described above.

Denominator — the weighted average shares of unrestricted Class A common stock for the three months ended March 31, 2019 and 2018, including 239,375 and 218,702 restricted stock units that have vested and whose issuance is no longer contingent as of March 31, 2019 and 2018, respectively, plus the dilutive effect of the unvested restricted stock units, restricted stock and stock options.

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Basic Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Weighted average number of shares of Class A common stock outstanding		39,680,505		39,041,492
Basic earnings per share of Class A common stock	$	0.70	$	0.44
Diluted Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Basic weighted average number of shares of Class A common stock		39,680,505		39,041,492
Add—dilutive effect of:
Unvested restricted stock units		618,627		1,143,646
Stock options		10,119		16,762
Weighted average common shares outstanding — diluted		40,309,251		40,201,900
Diluted earnings per share of Class A common stock	$	0.69	$	0.42

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

15. Related Party Transactions

As a result of the Company’s initial public offering, the Company entered into a tax receivable agreement with HFF Holdings that provides for the payment by the Company to HFF Holdings of 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of the increase in tax basis of the assets owned by HFF LP and HFF Securities and as a result of certain other tax benefits arising from entering into the tax receivable agreement and making payments under that agreement. As members of HFF Holdings, each of Mark Gibson, the Company’s chief executive officer, Jody Thornton, the Company’s president and member of the Company’s board of directors and a capital markets advisor of the Operating Partnerships, John Fowler, a current director emeritus of the Company’s board of directors and a capital markets advisor of the Operating Partnerships, and Matthew D. Lawton, Gerard T. Sansosti, Michael J. Tepedino and Manuel A. de Zarraga, each an Executive Managing Director and a capital markets advisor of the Operating Partnerships, is entitled to participate in such payments, in each case on a pro rata basis based upon such person’s ownership of interests in each series of tax receivable payments created by the initial public offering or subsequent exchange of Operating Partnership units. The Company will retain the remaining 15% of cash savings, if any, in income tax that it realizes. For purposes of the tax receivable agreement, cash savings in income tax is computed by comparing the Company’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the assets of HFF LP and HFF Securities allocable to the Company as a result of the initial sale and later exchanges and had the Company not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the initial public offering and will continue until all such tax benefits have been utilized or have expired. See Note 16 for the amount recorded in relation to this agreement.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

16. Commitments and Contingencies

Tax Receivable Agreement

The Company is obligated, pursuant to its tax receivable agreement with HFF Holdings, to pay to HFF Holdings 85% of the amount of cash savings in U.S. federal, state and local income tax that the Company actually realizes as a result of the increases in tax basis under Section 754 and as a result of certain other tax benefits arising from the Company entering into the tax receivable agreement and making payments under that agreement. We have estimated that future payments that will be made to HFF Holdings will be $50.3 million, of which, approximately $8.3 million is anticipated to be paid in 2019.

Risk Transfer Agreement

In connection with the Risk Transfer Agreement, the Company will indemnify M&T-RCC’s loan loss exposure for each loan originated under the Risk Transfer Agreement. The Company’s loss exposure is capped at 33.33% of the unpaid principal balance in excess of the collateral securing such loan.  As of March 31, 2019, the Company’s maximum quantifiable loss exposure associated with the Company’s indemnification obligation is $123.8 million on $371.5 million of unpaid principal balances.  The maximum quantifiable liability is not representative of the actual loss the Company may incur as the Company would only be liable for this amount in the event that all of the loans for which the Company indemnifies M&T-RCC were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.  There were no actual losses incurred under this arrangement during the three months ended March 31, 2019.

For loans that have been sold through the Risk Transfer Agreement, the Company records an indemnification accrual equal to the fair value of the guarantee obligations undertaken upon M&T-RCC’s sale of the loan. Subsequently, this accrual is amortized over the estimated life of the loan and recorded as an increase in capital markets services revenues within the consolidated statements of comprehensive income. The Company records a corresponding asset related to loan performance fee rights which will also be amortized over the estimated life of the loan. As of March 31, 2019, the guarantee obligations recorded within other noncurrent liabilities and corresponding asset recorded within other noncurrent assets were approximately $0.6 million.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

17.  Subsequent Events

The Company has evaluated subsequent events through the date these financial statements were issued and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to consolidated financial statements.

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Organization and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements of the Company include the accounts of HFF LP, HFF Securities, HFF Real Estate Limited and HFF Securities Limited, as well as the Company’s additional wholly-owned subsidiaries, Holliday GP, Partnership Holdings and HFF InvestCo LLC. All significant intercompany accounts and transactions have been eliminated.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued guidance on the accounting for leases.  This guidance requires that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months, with the result being the recognition of a right of use asset and a lease liability.  The Company adopted the new standard on January 1, 2019 on a modified retrospective basis and did not restate comparative periods. Upon adoption, the Company elected to utilize the package of practical expedients permitted under the transition guidance, which allows the Company to carryforward (i) the historical lease classification, (ii) its assessment on whether a contract is or contains a lease and (iii) previously capitalized initial direct costs for any leases that exist prior to adoption of the new standard. The Company will also elect to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of comprehensive income on a straight-line basis over the lease term. Upon adoption, approximately $37.0 million was recognized as a right-of-use asset and approximately $49.4 million was recorded as a lease liability on our consolidated statement of financial position as of January 1, 2019. The new standard also requires expanded disclosure regarding the amounts, timing and uncertainties of cash flows related to a company’s lease portfolio. Refer to Note 9 for additional information on the adoption of the lease standard.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for annual and interim financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company is currently evaluating this standard to determine the impact of adoption on its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07 “Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting”, to simplify the accounting for share–based payments granted to nonemployees by aligning the accounting with the requirements for employee share–based compensation.The Company adopted the new standard on January 1, 2019 and the adoption did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for the Fair Value Measurement. The update eliminates the disclosure requirements associated with (a) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (b) policies related to the timing and transfers between levels of the fair value hierarchy and (c) the valuation processes for Level 3 fair value measurements. ASU 2018-13 will require disclosures related to the range and weighted averages used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for the Company on January 1, 2020 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements or disclosures.

Revenue Recognition

Revenue Recognition. Substantially all of the Company’s revenues are derived from capital markets services. These capital markets services revenues are in the form of fees collected from the Company’s clients, usually negotiated on a transaction-by-transaction basis, which includes origination fees, investment advisory fees earned for brokering sales of commercial real estate, loan sales and loan servicing fees. The Company also earns interest on mortgage notes receivable during the period between the origination of the loan and the subsequent sale to Freddie Mac in connection with the Company’s participation in the Freddie Mac Program.  

Total Revenues:

Capital markets services revenues.    The Company earns its capital markets services revenue through the following activities and sources:

• Origination fees.    Origination fees are earned through the placement of debt and equity or structured financing for commercial real estate transactions. Fees earned by the Securities Subsidiaries for discretionary and non-discretionary equity capital raises and other debt referral transactions are also included within origination fees in the Company’s consolidated statements of comprehensive income.

• Investment advisory fees.    The Company earns investment advisory fees by acting as a broker for commercial real estate owners seeking to sell a property or multiple properties or an interest in a property or multiple properties and by providing investment banking advisory services through the Securities Subsidiaries.

• Loan sales.    The Company generates loan sales fees through assisting its clients in their efforts to sell all or portions of commercial real estate debt notes.

The Company’s contracts are generally negotiated on a transaction-by-transaction basis with a success-based fee awarded upon the satisfaction of the origination, sale, referral, placement or equity raise.  The Company’s agreements generally include such success-based fees for services that are performed over time under one performance obligation. The variable consideration associated with the successful outcome remains constrained until the completion of the transaction, generally at the closing of the applicable financing or funding of the transaction.  Once the constraint is lifted, revenue is recognized as the Company’s fee agreements do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the transaction closes.  The substantial majority of the Company’s transactions are completed within one year and the Company has utilized the practical expedients within Topic 606 related to financing components and costs of obtaining a contract due to the short-term nature of the contracts.

• Loan servicing fees and loan performance fees.    The Company generates loan servicing fees through the provision of collection, remittance, recordkeeping, reporting and other related loan servicing functions, activities and services for either lenders or borrowers on mortgages placed with third-party lenders. The Company also generates loan performance fees associated with indemnification obligations related to the Risk Transfer Agreement. Revenue is recognized as the Company fulfills its stand ready obligation to satisfy such indemnification obligations.

The revenues associated with loan servicing fees are accounted for in accordance with Topic 860, Transfers and Servicing, whereby the Company recognizes loan servicing revenues at the time services are rendered, provided the loans are current and the debt service payments are made by the borrowers.

Interest on mortgage notes receivable.    The Company recognizes interest income on the accrual basis during the holding period based on the contract interest rate in the loan that is to be purchased by Freddie Mac in connection with the Company’s participation in the Freddie Mac Multifamily Approved Seller/Servicer for Conventional and Senior Housing Loans program (“Freddie Mac Program”), provided that the debt service is paid by the borrower.

Other.     Certain of the Company’s fee agreements provide for reimbursement of transaction-related costs which the Company recognizes as other revenue. Reimbursements received from clients for out-of-pocket expenses are characterized as revenue in the consolidated statements of comprehensive income rather than as a reduction of expenses incurred. Because the Company is the primary obligor, has supplier discretion, and bears the credit risk for such expenses, the Company records reimbursement revenue for such out-of-pocket expenses. Reimbursement revenue is recognized over time based upon the measure of progress to completion.

Disaggregation of Revenue.    The Company disaggregates its revenue from contracts with customers by its multiple platforms, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors.  The following table provides a reconciliation of the Company’s revenue recognized under Topic 606 to the Company’s consolidated revenues:

Revenue Category	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Debt placement origination fees	$	65,508	$	54,871
Investment advisory fees		61,432		47,523
Equity placement origination fees		16,667		14,081
Loan sales		359		592
Capital markets services revenue recognized under Topic 606		143,966		117,067
Loan servicing and loan performance fees		9,400		8,391
Capital markets services revenue		153,366		125,458
Interest on mortgage notes receivable		4,589		5,244
Other(1)		1,227		916
Total revenue	$	159,182	$	131,618

(1)- Other revenues are recognized under Topic 606.

Firm and Office Profit Participation Plans and Executive Bonus Plan

Firm and Office Profit Participation Plans and Executive Bonus Plan. The Company has a firm profit participation plan, office profit participation plans, and an executive bonus plan (the “Plans”) that each allow for incentive payments to be made, based on the achievement of various performance metrics, either in the form of cash or stock at the election of the Company’s board of directors.  The expense associated with the Plans is included within personnel expenses in the consolidated statements of comprehensive income. The expense recorded for these Plans is estimated during the year based on actual results at each interim reporting date and an estimate of future results for the remainder of the year.  Based on an accounting policy election and consistent with ASC Topic 718, Compensation - Stock Compensation, the expense associated with the estimated share-based component of the estimated incentive payout is recognized before the grant date of the share-based awards due to the fact that the terms of the Plans have been approved by the Company’s board of directors, the employees of the Company understand the requirements to earn the award, the number of shares is not determined before the grant date and, finally, if the performance metrics are not met during the performance year, the award is not earned and therefore forfeited.  Prior to the grant date, the share-based component expense is recorded as incentive compensation expense within personnel expenses in the Company’s consolidated statements of comprehensive income. Following the award, if any, of the related incentive payout, the share-based component expense is reclassified as stock compensation costs within personnel expenses and the share-based component of the accrued incentive compensation is reclassified as additional paid-in-capital upon the granting of the awards on the Company’s consolidated balance sheets. The Plans allow for payment to be made in both cash and share-based awards.  The cash portion of the awards will not be subject to time-based vesting conditions and will be expensed during the performance year.  The share-based portion of the awards is subject to a three-year time-based vesting schedule beginning on the first anniversary of the grant (which is made in the first calendar quarter of the subsequent year).  As a result, the total expense for the share-based portion of the awards is recorded over the period from the beginning of the performance year through the vesting date, or 50 months.

Fair Value Measurement

ASC Topic 820, Fair Value Measurement establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into the following three levels: Level 1 inputs which are quoted market prices in active markets for identical assets or liabilities; Level 2 inputs which are observable market-based inputs or unobservable inputs corroborated by market data for the asset or liability; and Level 3 inputs which are unobservable inputs based on the Company’s own assumptions that are not corroborated by market data. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Contingencies

The Company is party to various litigation matters, in most cases involving ordinary course and routine claims incidental to its business. The Company cannot estimate with certainty its ultimate legal and financial liability with respect to any pending matters. In accordance with ASC Topic 450, Contingencies, a reserve for estimated losses is recorded when the amount is probable and can be reasonably estimated. However, the Company does not believe, based on examination of such pending matters, that a material loss related to these matters is reasonably possible.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Reconciliation of Company's Revenue Recognized Under Topic 606

The following table provides a reconciliation of the Company’s revenue recognized under Topic 606 to the Company’s consolidated revenues:

Revenue Category	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Debt placement origination fees	$	65,508	$	54,871
Investment advisory fees		61,432		47,523
Equity placement origination fees		16,667		14,081
Loan sales		359		592
Capital markets services revenue recognized under Topic 606		143,966		117,067
Loan servicing and loan performance fees		9,400		8,391
Capital markets services revenue		153,366		125,458
Interest on mortgage notes receivable		4,589		5,244
Other(1)		1,227		916
Total revenue	$	159,182	$	131,618

(1)- Other revenues are recognized under Topic 606.

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2019

Property Plant And Equipment [Abstract]

Summary of Property and Equipment

Property and equipment consist of the following:

	March 31,			December 31,
	2019			2018
	(in thousands)
Furniture and equipment	$	8,327		$	8,426
Computer equipment		1,759			1,759
Capitalized software costs		3,931			3,665
Leasehold improvements		23,297			21,065
Property and equipment, gross		37,314			34,915
Less accumulated depreciation and amortization		(18,536	)		(17,719	)
Property and equipment, net	$	18,778		$	17,196

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Changes in Goodwill

The Company’s goodwill at March 31, 2019 is summarized as follows (in thousands):

Balance at December 31, 2018	$	8,512
Additions through acquisitions		—
Foreign currency translation		69
Balance at March 31, 2019	$	8,581

Summary of Intangible Assets

The Company’s intangible assets are summarized as follows:

	March 31, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
	(in thousands)
Intangible assets:
Mortgage servicing rights	$	120,198	$	(46,087	)	$	74,111	$	116,683	$	(43,039	)	$	73,644
Other		671		(469	)		202		940		(722	)	$	218
Total intangible assets	$	120,869	$	(46,556	)	$	74,313	$	117,623	$	(43,761	)	$	73,862

Changes in Carrying Value of Mortgage Servicing Rights

Changes in the carrying value of mortgage servicing rights for the three months ended March 31, 2019 and 2018, were as follows (dollars in thousands):

Category	December 31, 2018		Capitalized		Amortized			March 31, 2019
Freddie Mac	$	57,747	$	4,509	$	(3,329	)	$	58,927
CMBS		11,314		53		(752	)		10,615
Life company		4,097		786		(749	)		4,134
Life company – limited		486		46		(97	)		435
Total	$	73,644	$	5,394	$	(4,927	)	$	74,111
Category	December 31, 2017		Capitalized		Amortized			March 31, 2018
Freddie Mac	$	40,468	$	6,284	$	(2,621	)	$	44,131
CMBS		13,514		297		(903	)		12,908
Life company		3,833		548		(665	)		3,716
Life company – limited		668		90		(106	)		652
Total	$	58,483	$	7,219	$	(4,295	)	$	61,407

Summary of Estimated Amortization Expense

Estimated amortization expense for the remainder of 2019 and the following four years is as follows (dollars in thousands):

Remainder of 2019	$	11,695
2020		13,632
2021		11,630
2022		9,913
2023		8,817

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Financial Assets Accounted at Fair Value on Recurring Basis

The following tables set forth the Company’s financial assets that were accounted for at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Recurring fair value measurements

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	966,694	$	—	$	966,694	$	—
Total recurring fair value measurements	$	966,694	$	—	$	966,694	$	—

			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage notes receivable	$	351,194	$	—	$	351,194	$	—
Total recurring fair value measurements	$	351,194	$	—	$	351,194	$	—

Financial Assets Accounted at Fair Value on Nonrecurring Basis

The following table sets forth the Company’s financial assets that were accounted for at fair value on a nonrecurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

Nonrecurring fair value measurements:

			Fair Value Measurements Using:
March 31, 2019	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	74,111	$	—	$	—	$	92,490
Total nonrecurring fair value measurements	$	74,111	$	—	$	—	$	92,490
			Fair Value Measurements Using:
December 31, 2018	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mortgage servicing rights	$	73,644	$	—	$	—	$	91,787
Total nonrecurring fair value measurements	$	73,644	$	—	$	—	$	91,787

Significant Assumptions Utilized to Value Servicing Rights

The significant assumptions utilized to value servicing rights as of March 31, 2019 and December 31, 2018 are as follows:

	March 31,	December 31,
	2019	2018
Expected life of cash flows	3 years to 10 years	3 years to 10 years
Discount rate (1)	10% to 16%	10% to 16%
Prepayment rate	0% to 8%	0% to 8%
Inflation rate	2%	2%
Cost of service per loan	$1,920 to $4,803	$1,920 to $4,743

⁽¹⁾ Reflects the time value of money and the risk of future cash flows related to the possible cancellation of servicing contracts, transferability restrictions on certain servicing contracts, concentration in the life company portfolio and large loan risk.

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Lease Commitments (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows:

	March 31, 2019
	(in thousands)
Operating lease costs	$	2,541
Finance lease costs:
Amortization of right-of-use assets		33
Interest on lease liabilities		1
Total finance lease costs	$	34

Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows:

	March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	3,056
Operating cash flows used by finance leases		1
Financing cash flows used by finance leases		33

Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
	(in thousands)
Operating leases
Operating lease right-of-use assets	$	34,970
Current portion of operating lease liabilities		9,397
Noncurrent operating lease liabilities		37,436
Total operating lease liabilities		46,833
Finance leases
Property and equipment, at cost		1,089
Accumulated depreciation		(970	)
Property and equipment, net		119
Current portion of long-term debt		79
Long-term debt, less current portion		52
Total finance lease liabilities		131
Weighted average remaining lease term
Operating leases	5.8 years
Finance leases	2.2 years
Weighted average discount rate
Operating leases		3.7	%
Finance leases		2.2	%

Maturities of Lease Liabilities

Maturities of lease liabilities were as follows:

	Operating leases			Finance leases
	(in thousands)
Remainder of 2019	$	8,067		$	74
2020		10,279			51
2021		9,450			9
2022		7,545			7
2023		4,692			2
Thereafter		11,745			—
Total lease payments	$	51,778		$	143
Less imputed interest		(4,945	)		(12	)
Total	$	46,833		$	131

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense Including Current and Deferred Taxes

Income tax expense includes current and deferred taxes as follows (dollars in thousands):

	Current		Deferred			Total
Three Months Ended March 31, 2019:
Federal	$	—	$	4,391		$	4,391
State		165		649			814
Foreign		—		51			51
	$	165	$	5,091		$	5,256
	Current		Deferred			Total
Three Months Ended March 31, 2018:
Federal	$	—	$	1,390		$	1,390
State		139		(380	)		(241	)
Foreign		—		(344	)		(344	)
	$	139	$	666		$	805

Summary of Reconciliation Between Income Tax Computed by Applying U.S. Federal Statutory Rate and Effective Tax Rate on Net Income

The reconciliation between the income tax computed by applying the U.S. federal statutory rate and the effective tax rate on net income is as follows for the three months ended March 31, 2019 and 2018 (dollars in thousands):

	March 31,
	2019						2018
Income tax expense / (benefit)				Rate						Rate
Taxes computed at federal rate	$	6,944			21.0	%	$	3,753			21.0	%
State and local taxes, net of federal tax benefit		1,769			5.4	%		870			4.9	%
Rate differential on non-US income		(4	)		(0.0	)%		(1	)		0.0	%
Effect of windfalls related to equity compensation		(3,814	)		(11.5	)%		(4,535	)		(25.4	)%
Meals and entertainment		375			1.1	%		321			1.8	%
Other		(14	)		(0.1	)%		397			2.2	%
Income tax expense	$	5,256			15.9	%	$	805			4.5	%

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Summary of Net Income and Weighted Average Shares Outstanding

The Company’s net income and weighted average shares outstanding for the three months ended March 31, 2019 and 2018 consist of the following:

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Net income	$	27,810	$	17,068
Weighted Average Shares Outstanding:
Basic		39,680,505		39,041,492
Diluted		40,309,251		40,201,900

Summary of Calculations of Basic and Diluted Net Income per Share

	Three Months Ended March 31,
	2019		2018
	(in thousands, except per share data)
Basic Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Weighted average number of shares of Class A common stock outstanding		39,680,505		39,041,492
Basic earnings per share of Class A common stock	$	0.70	$	0.44
Diluted Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	27,810	$	17,068
Denominator:
Basic weighted average number of shares of Class A common stock		39,680,505		39,041,492
Add—dilutive effect of:
Unvested restricted stock units		618,627		1,143,646
Stock options		10,119		16,762
Weighted average common shares outstanding — diluted		40,309,251		40,201,900
Diluted earnings per share of Class A common stock	$	0.69	$	0.42

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Organization and Basis of Presentation - Additional Information (Detail)		3 Months Ended
	Mar. 18, 2019 USD ($) $ / shares	Mar. 31, 2019 USD ($) $ / shares Office shares	Jan. 01, 2019 USD ($)	Dec. 31, 2018 $ / shares shares
Class of Stock [Line Items]
Common stock, shares issued | shares		39,857,514		39,143,253
Common stock, par value | $ / shares		$ 0.01		$ 0.01
Operating lease right-of-use asset		$ 34,970,000
Lease liability		$ 46,833,000
Accounting Standards Update 2016-02 [Member]
Class of Stock [Line Items]
Operating lease term			12 months
Operating lease right-of-use asset			$ 37,000,000
Lease liability			$ 49,400,000
Maximum [Member]
Class of Stock [Line Items]
Operating lease term		11 years
Minimum [Member]
Class of Stock [Line Items]
Operating lease term		3 years
Class A Common Stock [Member]
Class of Stock [Line Items]
Common stock, par value | $ / shares		$ 0.01
Jones Lang LaSalle Incorporated [Member]
Class of Stock [Line Items]
Common stock, par value | $ / shares	$ 0.01
Stock conversion per share in cash | $ / shares	$ 24.63
Conversion of common stock	0.1505
Jones Lang LaSalle Incorporated [Member] | Termination Condition One [Member]
Class of Stock [Line Items]
Termination fee	$ 54,000,000
Termination period	12 months
Merger agreement termination description		The Company must pay Parent a termination fee of $54,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) following a failure by the Company to obtain the requisite stockholder approval if the Company enters into a transaction with respect to a Company Competing Proposal (as defined in the Merger Agreement) within 12 months of such termination, (ii) if Parent terminates the Merger Agreement following a change of recommendation, (iii) if the Company terminates the Merger Agreement to enter into a Company Superior Proposal (as defined in the Merger Agreement) or (iv) if the Company has committed a material breach of the restrictions regarding dealing with third parties.
Jones Lang LaSalle Incorporated [Member] | Termination Condition Three [Member]
Class of Stock [Line Items]
Termination fee	$ 75,000,000
Merger agreement termination description		Parent must pay the Company a termination fee of $75,000,000 if the Merger Agreement is terminated under certain specified circumstances, including (i) as a result of a judgment or other legal prohibition or restraint arising under the antitrust laws, and solely in such case, as of the date of such termination, all of the conditions other than antitrust-related conditions have been satisfied or waived other than those conditions that by their nature are only capable of being satisfied at the closing and (ii) if, upon reaching the 9-month anniversary of the Merger Agreement (which may be extended by up to 6 months under certain circumstances), the Company or Parent terminates the Merger Agreement and all of the conditions other than approval under the antitrust laws have been satisfied or waived at such time, other than conditions that by their nature would be satisfied if the closing and the closing date had occurred on the date of such termination.
Jones Lang LaSalle Incorporated [Member] | Termination Condition Three [Member] | Maximum [Member]
Class of Stock [Line Items]
Termination period	6 months
IPO [Member] | HFF Holdings [Member]
Class of Stock [Line Items]
Percentage of shares purchase from Partners		45.00%
Common stock, shares issued | shares		1
United States [Member]
Class of Stock [Line Items]
Number of offices | Office		25
London, United Kingdom [Member]
Class of Stock [Line Items]
Number of offices | Office		1

XML

Summary of Significant Accounting Policies - Summary of Reconciliation of Company's Revenue Recognized Under Topic 606 (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Capital Markets Services Revenue recognized under Topic 606	$ 143,966	$ 117,067
Loan servicing and loan performance fees	9,400	8,391
Revenues	159,182	131,618
Debt Placement Origination Fees [Member]
Disaggregation of Revenue [Line Items]
Capital Markets Services Revenue recognized under Topic 606	65,508	54,871
Investment Advisory Fees [Member]
Disaggregation of Revenue [Line Items]
Capital Markets Services Revenue recognized under Topic 606	61,432	47,523
Equity Placement Origination Fees [Member]
Disaggregation of Revenue [Line Items]
Capital Markets Services Revenue recognized under Topic 606	16,667	14,081
Loan Sales [Member]
Disaggregation of Revenue [Line Items]
Capital Markets Services Revenue recognized under Topic 606	359	592
Capital Markets Services [Member]
Disaggregation of Revenue [Line Items]
Revenues	153,366	125,458
Interest on Mortgage Notes Receivable [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,589	5,244
Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 1,227	$ 916

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Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019
Office and Firm Profit Participation Plans [Member]
Summary Of Significant Accounting Policies [Line Items]
Vesting period	50 months

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Stock Compensation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation cost	$ 5,850	$ 5,752
Unrecognized compensation cost related to non-vested restricted stock units	$ 53,900
Weighted average contractual term	2 years 8 months 12 days
Restricted stock units outstanding	1,951,716
Number of stock units with continued vesting requirements	1,783,355
Options, Granted	0
Options, Vested	0
Options, Forfeited	0
Options, Exercised	0
Restricted stock units, Granted	755,823
Restricted stock units vested	1,053,742
Restricted stock units outstanding, Converted to common stock	1,044,669
Restricted stock units, forfeited	51,006
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted stock units	$ 11,400

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Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 37,314	$ 34,915
Less accumulated depreciation and amortization	(18,536)	(17,719)
Property and equipment, net	18,778	17,196
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	8,327	8,426
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,759	1,759
Capitalized Software Costs [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,931	3,665
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 23,297	$ 21,065

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Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Accumulated amortization	$ 33
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Finance leased office equipment recorded in furniture and equipment	1,100	$ 1,200
Accumulated amortization	$ 1,000	$ 1,000

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Goodwill and Intangible Assets - Schedule of Changes in Goodwill (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning Balance	$ 8,512
Additions through acquisitions	0
Foreign currency translation	69
Ending Balance	$ 8,581

XML

Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Total intangible assets Gross Carrying Amount	$ 120,869	$ 117,623
Total intangible assets Accumulated Amortization	(46,556)	(43,761)
Total intangible assets Accumulated Amortization	74,313	73,862
Mortgage Servicing Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets Gross Carrying Amount	120,198	116,683
Total intangible assets Accumulated Amortization	(46,087)	(43,039)
Total intangible assets Accumulated Amortization	74,111	73,644
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets Gross Carrying Amount	671	940
Total intangible assets Accumulated Amortization	(469)	(722)
Total intangible assets Accumulated Amortization	$ 202	$ 218

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)		3 Months Ended
	Jan. 01, 2007	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Commercial loans serviced by the Company		$ 82,900,000,000		$ 81,200,000,000
Servicing fees earned		9,400,000	$ 8,400,000
Mortgage servicing rights		74,313,000		73,862,000
Loan served for mortgage servicing rights		82,100,000,000		80,300,000,000
Initial consideration paid	$ 0
Amortization expenses		$ 4,944,000	4,381,000
Weighted-average life of mortgage servicing rights		6 years 7 months 6 days
Freddie Mac [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage servicing rights retained upon sale		$ 4,500,000	6,300,000
Originated loans, net		700,000,000	1,300,000,000
CMBS [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage servicing rights acquired without exchange of initial consideration		900,000	900,000
Life Company Tranches [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage servicing rights acquired without exchange of initial consideration		2,600,000,000	2,900,000,000
Interest and Other Income, Net [Member] | Freddie Mac [Member]
Finite-Lived Intangible Assets [Line Items]
Securitization compensation received		2,900,000	$ 4,900,000
Mortgage Servicing Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage servicing rights		$ 74,111,000		$ 73,644,000

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Goodwill and Intangible Assets - Changes in Carrying Value of Mortgage Servicing Rights (Detail) - Mortgage Servicing Rights [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Opening Balance	$ 73,644	$ 58,483
Capitalized	5,394	7,219
Amortized	(4,927)	(4,295)
Closing Balance	74,111	61,407
Freddie Mac [Member]
Finite-Lived Intangible Assets [Line Items]
Opening Balance	57,747	40,468
Capitalized	4,509	6,284
Amortized	(3,329)	(2,621)
Closing Balance	58,927	44,131
CMBS [Member]
Finite-Lived Intangible Assets [Line Items]
Opening Balance	11,314	13,514
Capitalized	53	297
Amortized	(752)	(903)
Closing Balance	10,615	12,908
Life Company [Member]
Finite-Lived Intangible Assets [Line Items]
Opening Balance	4,097	3,833
Capitalized	786	548
Amortized	(749)	(665)
Closing Balance	4,134	3,716
Life Company - Limited [Member]
Finite-Lived Intangible Assets [Line Items]
Opening Balance	486	668
Capitalized	46	90
Amortized	(97)	(106)
Closing Balance	$ 435	$ 652

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Goodwill and Intangible Assets - Summary of Estimated Amortization Expense (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Finite Lived Intangible Assets Future Amortization Expense Current And Five Succeeding Fiscal Years [Abstract]
Remainder of 2019	$ 11,695
2020	13,632
2021	11,630
2022	9,913
2023	$ 8,817

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Fair Value Measurement - Financial Assets Accounted at Fair Value on Recurring Basis (Detail) - Recurring Fair Value Measurements [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage notes receivable	$ 966,694	$ 351,194
Recurring fair value measurements	966,694	351,194
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage notes receivable	966,694	351,194
Recurring fair value measurements	$ 966,694	$ 351,194

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Fair Value Measurement - Financial Assets Accounted at Fair Value on Nonrecurring Basis (Detail) - Nonrecurring Fair Value Measurements [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	$ 74,111	$ 73,644
Nonrecurring fair value measurements	74,111	73,644
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	92,490	91,787
Nonrecurring fair value measurements	$ 92,490	$ 91,787

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Fair Value Measurement - Significant Assumptions Utilized to Value Servicing Rights (Detail)	Mar. 31, 2019 USD ($) Year	Dec. 31, 2018 USD ($) Year
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cost of service per loan	$ 82,900,000,000	$ 81,200,000,000
Mortgage Servicing Rights [Member] | Inflation Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate	0.02	0.02
Mortgage Servicing Rights [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cost of service per loan	$ 1,920	$ 1,920
Mortgage Servicing Rights [Member] | Minimum [Member] | Expected Life of Cash Flows [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate | Year	3	3
Mortgage Servicing Rights [Member] | Minimum [Member] | Discount Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate	0.10	0.10
Mortgage Servicing Rights [Member] | Minimum [Member] | Prepayment Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate	0.00	0.00
Mortgage Servicing Rights [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cost of service per loan	$ 4,803	$ 4,743
Mortgage Servicing Rights [Member] | Maximum [Member] | Expected Life of Cash Flows [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate | Year	10	10
Mortgage Servicing Rights [Member] | Maximum [Member] | Discount Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate	0.16	0.16
Mortgage Servicing Rights [Member] | Maximum [Member] | Prepayment Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing right rate	0.08	0.08

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Fair Value Measurement - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Risk Transfer Agreement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment redemption value	$ 25.0
Agreement term	3 years
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in securities held to maturity	$ 25.0

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Securities Held-to-Maturity - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2019	Jul. 02, 2018
Other Noncurrent Assets [Member]
Marketable Securities [Line Items]
Collateral deposits	$ 3.7
M&T Realty Capital Corporation [Member]
Marketable Securities [Line Items]
Risk transfer joint venture investment in redeemable preferred stock		$ 25.0

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Warehouse Line of Credit - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 USD ($) Warehouse_Line_of_Credit	Dec. 31, 2018 USD ($)	Mar. 31, 2018 USD ($)
Line of Credit Facility [Line Items]
Number of warehouse line of credit facilities | Warehouse_Line_of_Credit	2
Warehouse line of credit outstanding amount	$ 961,300,000	$ 348,400,000
Line of credit interest rate at the end of the period	2.49%	2.50%
LIBOR rate duration period	30-day
Line of credit interest rate description	Interest on the warehouse lines of credit is at the 30-day LIBOR rate (2.49% and 2.50% at March 31, 2019 and December 31, 2018, respectively) plus a spread. HFF LP is also paid interest on the mortgage note receivable secured by a multifamily loan at the rate in the Freddie Mac note.
PNC Bank, N.A. [Member]
Line of Credit Facility [Line Items]
Uncommitted financing arrangement	$ 600,000,000
Maximum capacity	$ 1,000,000,000		$ 600,000,000
Description of uncommitted amount	The PNC arrangement was amended during the first quarter of 2018 to increase the maximum capacity from $600 million to $1.0 billion.
Huntington Bank [Member] | Temporary Increase To Line Of Credit [Member]
Line of Credit Facility [Line Items]
Uncommitted financing arrangement	$ 150,000,000
Maximum uncommitted financing arrangement	$ 175,000,000
Frequency of temporary increases | Warehouse_Line_of_Credit	3
Maximum uncommitted financing arrangement expiration period	45 days

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Lease Commitments - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Lessee Lease Description [Line Items]
Operating lease, right-of-use assets obtained in exchange for lease obligations	$ 0
Finance lease, right-of-use assets obtained in exchange for lease obligations	0
Total rental expense	$ 3,500,000	$ 3,200,000
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases, initial term	3 years
Financing leases, initial term	3 years
Option to reduced operating and financing leases terms	2 years
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases, initial term	11 years
Financing leases, initial term	11 years
Operating leases, options to extend leases term	6 years
Financing leases, options to extend leases term	6 years
Option to reduced operating and financing leases terms	8 years

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Lease Commitments - Components of Lease Expense (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating lease costs	$ 2,541
Finance lease costs:
Amortization of right-of-use assets	33
Interest on lease liabilities	1
Total finance lease costs	$ 34

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Lease Commitments - Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$ 3,056
Operating cash flows used by finance leases	1
Financing cash flows used by finance leases	$ 33

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Lease Commitments - Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Operating leases
Operating lease right-of-use asset	$ 34,970
Current portion of operating lease liabilities	9,397
Noncurrent operating lease liabilities	37,436
Total operating lease liabilities	46,833
Finance leases
Property and equipment, at cost	1,089
Accumulated depreciation	(970)
Property and equipment, net	119
Current portion of long-term debt	79	$ 3,898
Long-term debt, less current portion	52	$ 66
Total finance lease liabilities	$ 131
Weighted average remaining lease term
Operating leases	5 years 9 months 18 days
Finance leases	2 years 2 months 12 days
Weighted average discount rate
Operating leases	3.70%
Finance leases	2.20%

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Lease Commitments - Maturities of Lease Liabilities (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating leases, Remainder of 2019	$ 8,067
Operating leases, 2020	10,279
Operating leases, 2021	9,450
Operating leases, 2022	7,545
Operating leases, 2023	4,692
Operating leases, Thereafter	11,745
Operating leases, Total lease payments	51,778
Operating leases, Less imputed interest	(4,945)
Operating leases, Total	46,833
Finance leases, Remainder of 2019	74
Finance leases, 2020	51
Finance leases, 2021	9
Finance leases, 2022	7
Finance leases, 2023	2
Finance leases, Total lease payments	143
Finance leases, Less imputed interest	(12)
Finance leases, Total	$ 131

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Servicing - Additional Information (Detail) - USD ($) $ in Billions	Mar. 31, 2019	Dec. 31, 2018
Transfers And Servicing [Abstract]
Unpaid principal balance of servicing portfolio of commercial real estate loan	$ 82.9	$ 81.2

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Income Taxes - Summary of Income Tax Expense Including Current and Deferred Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Current Federal Tax	$ 0	$ 0
State Current Tax	165	139
Foreign Current Tax	0	0
Federal and State Current Total	165	139
Federal Deferred Tax	4,391	1,390
State Deferred Tax	649	(380)
Foreign Deferred tax	51	(344)
Federal and State Deferred Total	5,091	666
Federal Current and Deferred Total	4,391	1,390
State Current and Deferred Total	814	(241)
Foreign Current and Deferred Total	51	(344)
Income tax expense	$ 5,256	$ 805

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Income Taxes - Summary of Reconciliation Between Income Tax Computed by Applying U.S. Federal Statutory Rate and Effective Tax Rate on Net Income (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Taxes computed at federal rate	$ 6,944	$ 3,753
State and local taxes, net of federal tax benefit	1,769	870
Rate differential on non-US income	(4)	(1)
Effect of windfalls related to equity compensation	(3,814)	(4,535)
Meals and entertainment	375	321
Other	(14)	397
Income tax expense	$ 5,256	$ 805
Taxes computed at federal rate, Percentage	21.00%	21.00%
State and local taxes, net of federal tax benefit, Percentage	5.40%	4.90%
Rate differential on non-US income, Percentage	0.00%	0.00%
Effect of windfalls related to equity compensation	(11.50%)	(25.40%)
Meals and entertainment, Percentage	1.10%	1.80%
Other, Percentage	(0.10%)	2.20%
Income tax expense, Total Percentage	15.90%	4.50%

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Stockholders Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands							3 Months Ended
	Feb. 27, 2019	Feb. 11, 2019	Jan. 31, 2019	Feb. 21, 2018	Feb. 09, 2018	Jan. 26, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Class of Stock [Line Items]
Common stock, shares authorized							175,000,000		175,000,000
Common stock, par value							$ 0.01		$ 0.01
Voting rights per common stock							one
Common stock, shares issued							39,857,514		39,143,253
Special cash dividend			$ 1.75			$ 1.75
Dividends payable, date of record			Feb. 11, 2019			Feb. 09, 2018
Dividends payable, declaration date			Jan. 31, 2019			Jan. 26, 2018
Dividends payable, payment date			Feb. 27, 2019			Feb. 21, 2018
Aggregate dividend paid	$ 68,700			$ 67,800			$ 68,721	$ 67,772
Restricted Stock Units [Member]
Class of Stock [Line Items]
Restricted stock granted for unvested and vested but not issued		79,324			79,387

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Earnings Per Share - Summary of Net Income and Weighted Average Shares Outstanding (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net income	$ 27,810	$ 17,068
Weighted Average Shares Outstanding:
Basic	39,680,505	39,041,492
Diluted	40,309,251	40,201,900

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Restricted stock units included in weighted average shares	239,375	218,702

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Earnings Per Share - Summary of Calculations of Basic and Diluted Net Income per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Basic Earnings Per Share of Class A Common Stock, Numerator:
Net income	$ 27,810	$ 17,068
Basic Earnings Per Share of Class A Common Stock, Denominator:
Basic weighted average number of shares of Class A common stock	39,680,505	39,041,492
Basic earnings per share of Class A common stock	$ 0.70	$ 0.44
Diluted Earnings Per Share of Class A Common Stock, Numerator:
Net income	$ 27,810	$ 17,068
Diluted Earnings Per Share of Class A Common Stock, Denominator:
Basic weighted average number of shares of Class A common stock	39,680,505	39,041,492
Add—dilutive effect of:
Weighted average common shares outstanding — diluted	40,309,251	40,201,900
Diluted earnings per share of Class A common stock	$ 0.69	$ 0.42
Restricted Stock Units [Member]
Add—dilutive effect of:
Units or options	618,627	1,143,646
Stock Options [Member]
Add—dilutive effect of:
Units or options	10,119	16,762

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Related Party Transactions - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019
Related Party Transaction [Line Items]
Percentage of retained cash savings in income tax	15.00%
Tax Receivable Agreement [Member] | HFF Holdings [Member]
Related Party Transaction [Line Items]
Percentage of cash savings payable	85.00%

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2019
M&T Realty Capital Corporation [Member]
Summary Of Commitments And Contingent Liabilities [Line Items]
Loss exposure cap, percentage	33.33%
Quantifiable loss exposure associated with indemnification obligation	$ 123,800,000
Unpaid principal balances	371,500,000
Losses under arrangement	0
Guarantee obligations, noncurrent	600,000
Loan performance fee right, noncurrent	$ 600,000
HFF Holdings [Member] | Tax Receivable Agreement [Member]
Summary Of Commitments And Contingent Liabilities [Line Items]
Percentage of cash savings payable	85.00%
Payable under tax receivable agreement	$ 50,300,000
HFF Holdings [Member] | Tax Receivable Agreement [Member] | Scenario, Forecast [Member]
Summary Of Commitments And Contingent Liabilities [Line Items]
Payment to HFF holding		$ 8,300,000