HFF Inc. (HF, Financial) filed Quarterly Report for the period ended 2009-03-31.
HFF INC. operates out of eighteen offices nationwide and is a leading provider of commercial real estate and capital market services to the U.S. commercial real estate industry. HFF offers clients a fully integrated national capital markets platform including debt placement investment sales structured finance private equity note sale and note sales advisory services and commercial loan servicing. HFF incorporates capital markets knowledge with local real estate knowledge to successfully complete any type of real estate transaction regardless of size or complexity. HFF consistently maintains the capital markets relationships critical to successfully accomplish the clients' specific capital needs in today's highly complex and rapidly shifting capital markets environment. HFF Inc. has a market cap of $54.6 million; its shares were traded at around $3.31 with a P/E ratio of 165.5 and P/S ratio of 0.4.
These increases were partially offset by a $4.3 million decrease in cash and cash equivalents, $1.3 million decrease in prepaid taxes and $0.6 million decrease in prepaids and other assets at March 31, 2009 as compared to December 31, 2008.
Cash and cash equivalents decreased $4.3 million in the three months ended March 31, 2009. Net cash of $4.1 million was used in operating activities, primarily resulting from a $4.9 million net loss and a $2.1 million decrease in accrued compensation and related taxes. This use of cash was partially offset by a decrease in prepaid taxes, prepaid expenses and other current assets of $1.9 million. Cash of $10,000 was used for investing in property and equipment. Financing activities used $0.2 million of cash primarily due to a purchase of treasury stock.
Cash and cash equivalents decreased $7.5 million in the three months ended March 31, 2008. Net cash of $7.3 million was used in operating activities, primarily resulting from a $7.3 million decrease in accrued compensation and related taxes, and increase of $2.1 million in prepaid taxes, prepaid expenses and other current assets and a net loss of $1.1 million. These uses of cash were slightly offset by a decrease in accounts receivable of $0.6 million and an increase in other accrued liabilities of $0.4 million. Cash of $0.1 million was used for investing in property and equipment and entering into a non-compete agreement. Financing activities used $16,000 of cash.
Our tax receivable agreement with HFF Holdings entered into in connection with our initial public offering that provides for the payment by us to HFF Holdings of 85% of the amount of cash savings, if any, 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 the payments that will be made to HFF Holdings will be $108.3 million. Our liquidity needs related to our long term obligations are primarily related to our facility leases. Additionally, for the three months ended March 31, 2009, we incurred approximately $1.8 million in occupancy expenses and approximately $6,000 in interest expense.
In October 2007, as a result of increases in the volume of the Freddie Mac loans that HFF LP originates as part of its participation in Freddie Macs Program Plus Seller Servicer program and recently imposed borrowing limits under the financing arrangement with Red Capital of $150.0 million, we began pursuing alternative financing arrangements to potentially supplement or replace our existing financing arrangement with Red Capital. On October 30, 2007, we entered into an amendment to the Amended Credit Agreement to clarify that the $40.0 million line of credit under the Amended Credit Agreement is available to us for purposes of originating such Freddie Mac loans. In addition, in November 2007, we obtained an uncommitted $50.0 million financing arrangement from The Huntington National Bank to supplement our Red Capital financing arrangement. The Red Capital and Huntington National Bank financing arrangements are only for the purpose of supporting our participation in Freddie Macs Program Plus Seller Servicer program, and cannot be used for any other purpose. As of March 31, 2009, we had outstanding borrowings of $117.8 million under the Red Capital/Huntington National Bank arrangements and a corresponding amount of mortgage notes receivable. Although we believe that our current financing arrangements with Red Capital and The Huntington National Bank and our lines of credit under the Amended Credit Agreement are sufficient to meet our current needs in connection with our participation in Freddie Macs Program Plus Seller Servicer 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.
Read the The complete ReportHF is in the portfolios of Chuck Akre of Akre Capital Management, LLC.
HFF INC. operates out of eighteen offices nationwide and is a leading provider of commercial real estate and capital market services to the U.S. commercial real estate industry. HFF offers clients a fully integrated national capital markets platform including debt placement investment sales structured finance private equity note sale and note sales advisory services and commercial loan servicing. HFF incorporates capital markets knowledge with local real estate knowledge to successfully complete any type of real estate transaction regardless of size or complexity. HFF consistently maintains the capital markets relationships critical to successfully accomplish the clients' specific capital needs in today's highly complex and rapidly shifting capital markets environment. HFF Inc. has a market cap of $54.6 million; its shares were traded at around $3.31 with a P/E ratio of 165.5 and P/S ratio of 0.4.
Highlight of Business Operations:
Net Loss. Our net loss for the three months ended March 31, 2009 was $4.9 million, an increased loss of $3.8 million as compared to a net loss of $1.1 million for the same fiscal period in 2008. We attribute this increase in net loss to several factors, with the most significant cause being a decrease of revenues of $19.0 million related to the ongoing market conditions and the resulting increased operating loss. Factors slightly offsetting this decrease included:These increases were partially offset by a $4.3 million decrease in cash and cash equivalents, $1.3 million decrease in prepaid taxes and $0.6 million decrease in prepaids and other assets at March 31, 2009 as compared to December 31, 2008.
Cash and cash equivalents decreased $4.3 million in the three months ended March 31, 2009. Net cash of $4.1 million was used in operating activities, primarily resulting from a $4.9 million net loss and a $2.1 million decrease in accrued compensation and related taxes. This use of cash was partially offset by a decrease in prepaid taxes, prepaid expenses and other current assets of $1.9 million. Cash of $10,000 was used for investing in property and equipment. Financing activities used $0.2 million of cash primarily due to a purchase of treasury stock.
Cash and cash equivalents decreased $7.5 million in the three months ended March 31, 2008. Net cash of $7.3 million was used in operating activities, primarily resulting from a $7.3 million decrease in accrued compensation and related taxes, and increase of $2.1 million in prepaid taxes, prepaid expenses and other current assets and a net loss of $1.1 million. These uses of cash were slightly offset by a decrease in accounts receivable of $0.6 million and an increase in other accrued liabilities of $0.4 million. Cash of $0.1 million was used for investing in property and equipment and entering into a non-compete agreement. Financing activities used $16,000 of cash.
Our tax receivable agreement with HFF Holdings entered into in connection with our initial public offering that provides for the payment by us to HFF Holdings of 85% of the amount of cash savings, if any, 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 the payments that will be made to HFF Holdings will be $108.3 million. Our liquidity needs related to our long term obligations are primarily related to our facility leases. Additionally, for the three months ended March 31, 2009, we incurred approximately $1.8 million in occupancy expenses and approximately $6,000 in interest expense.
In October 2007, as a result of increases in the volume of the Freddie Mac loans that HFF LP originates as part of its participation in Freddie Macs Program Plus Seller Servicer program and recently imposed borrowing limits under the financing arrangement with Red Capital of $150.0 million, we began pursuing alternative financing arrangements to potentially supplement or replace our existing financing arrangement with Red Capital. On October 30, 2007, we entered into an amendment to the Amended Credit Agreement to clarify that the $40.0 million line of credit under the Amended Credit Agreement is available to us for purposes of originating such Freddie Mac loans. In addition, in November 2007, we obtained an uncommitted $50.0 million financing arrangement from The Huntington National Bank to supplement our Red Capital financing arrangement. The Red Capital and Huntington National Bank financing arrangements are only for the purpose of supporting our participation in Freddie Macs Program Plus Seller Servicer program, and cannot be used for any other purpose. As of March 31, 2009, we had outstanding borrowings of $117.8 million under the Red Capital/Huntington National Bank arrangements and a corresponding amount of mortgage notes receivable. Although we believe that our current financing arrangements with Red Capital and The Huntington National Bank and our lines of credit under the Amended Credit Agreement are sufficient to meet our current needs in connection with our participation in Freddie Macs Program Plus Seller Servicer 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.
Read the The complete ReportHF is in the portfolios of Chuck Akre of Akre Capital Management, LLC.
