As filed with the Securities and Exchange Commission on November 9, 2006.

Registration No. 333-          

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

 

 

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

HFF, Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

 

 

429 Fourth Avenue

Suite 200

Pittsburgh, PA 15219

(412) 281-8714

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

 

 

 

 

John H. Pelusi, Jr.

Chief Executive Officer

429 Fourth Avenue

Suite 200

Pittsburgh, PA 15219

(412) 281-8714

(Name, address including zip code, and telephone number,

including area code, of agent for service)

 

 

 

 

Copies to:

 

 

 

 

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this Registration Statement.

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

 

 

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED NOVEMBER 9, 2006

 

           Shares

 

 

Class A Common Stock

 

 

 

This is an initial public offering of Class A common stock of HFF, Inc.

 

All of the           shares of Class A common stock are being sold by HFF, Inc.

 

Prior to this offering, there has been no market for our Class A common stock. It is currently estimated that the initial public offering price per share will be between $     and $      per share.

 

We will apply to list our Class A common stock on the New York Stock Exchange under the symbol “HF.” See “Underwriting” for a discussion of the factors to be considered in determining the initial public offering price.

 

Investing in our Class A common stock involves significant risks. See “Risk Factors” beginning on page 13 to read about factors you should consider before buying shares of our Class A common stock.

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

 

 

 

To the extent that the underwriters sell more than           shares of our Class A common stock, the underwriters have the option to purchase up to an additional           shares of Class A common stock from HFF, Inc. at the public offering price less the underwriting discount.

 

 

 

 

The underwriters expect to deliver the shares of Class A common stock in New York, New York on          , 200 .

 

 

 

 

Prospectus dated          , 200 .

 

OUR MISSION AND VISION STATEMENT

 

Our goal is to always put the client’s interest ahead of the Firm and any individual within the Firm.

 

We will continue to strategically grow to achieve our objective of becoming the best and most dominant “one-stop” commercial real estate and capital markets intermediary offering the following:

 

 

We will hire and retain associates throughout the Firm who have the highest ethical standards with the best reputation in the industry. By doing this, we will preserve our culture of integrity, trust and respect which will promote and encourage teamwork, thus guaranteeing our clients have the “best team on the field” for each transaction. Simply stated, without the best people, we cannot be the best firm.

 

To ensure we achieve our goals and aspirations and provide outstanding results for our stockholders, we must maintain a flexible compensation and ownership package to appropriately recognize and reward our existing and future associates who profoundly contribute to our success through their value-added performance. The ability to reward extraordinary performance is essential in providing superior results for our clients while appropriately aligning our interests with our stockholders.

 

BASIS OF PRESENTATION

 

Unless we state otherwise, the terms “we,” “us,” “our,” “HFF,” and the “Company,” refer to HFF, Inc., a newly formed Delaware corporation, and its consolidated subsidiaries after giving effect to the reorganization transactions to be completed prior to the consummation of this offering as described in “Organizational Structure”; prior to the reorganization transactions, these terms refer to HFF Holdings (as such term is defined below) and its consolidated subsidiaries. Unless the context otherwise requires, references to (1) “HFF Holdings” refer solely to HFF Holdings LLC, a Delaware limited liability company that is currently 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. and (6) “Holdings Sub” refer to HFF LP Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of HFF Holdings. Our business operations are conducted by HFF LP and HFF Securities which are sometimes referred to in this prospectus as the “Operating Partnerships.” Unless we state otherwise, the information in this prospectus gives effect to the reorganization transactions described in “Organizational Structure.” The term “Predecessor” refers to HFF LP prior to its acquisition from Lend Lease by HFF Holdings on June 16, 2003. The term “‘Successor” refers to HFF Holdings after the date of such acquisition.

 

INDUSTRY AND MARKET DATA

 

In this prospectus, we rely on and refer to information and statistics regarding economic conditions and trends, our market and our market share in the sectors of that market in which we compete. In particular, we have obtained general industry information and statistics from Real Capital Analytics, Mortgage Bankers Association, Commercial Mortgage Alert, Kingsley Associates, Institutional Real Estate Inc., and Pension Real Estate Association. We believe that these sources of information and estimates are reliable and accurate, but we have not independently verified them.

 

Although some of the companies that compete in our markets are publicly held as of the date of this prospectus, many are not. Accordingly, no current publicly available information is available with respect to our relative market strength or competitive position. Our statements about our relative market strength and competitive position in this prospectus are based on our management’s belief, internal studies and our management’s knowledge of industry trends.

 

TRADEMARKS

 

We have proprietary rights to the trademarks HFF^® and HFFS^®. Other trademarks appearing in this prospectus are the property of their respective owners.

 

PROSPECTUS SUMMARY

	•	Debt placement;
	•	Investment sales;
	•	Structured finance;
	•	Private equity, investment banking and advisory services;
	•	Note sale and note sales advisory services; and
	•	Commercial loan servicing.

	•	People, Expertise and Culture.  We and our predecessor companies have been in the commercial real estate business for over 25 years, and our transaction professionals have significant expertise and long-standing relationships with our clients. The transaction history accumulated among our transaction professionals ensures a high degree of market knowledge on a macro level, intimate knowledge of local commercial real estate markets, long-term relationships with the most active investors, and a comprehensive understanding of capital markets products. In addition, our culture is governed by our commitment to high ethical standards, putting the client’s interest first and treating clients and our own associates fairly and with respect.
	•	Integrated Capital Markets Services Platform.  In the increasingly competitive commercial real estate and capital markets industry, we believe our key differentiator is our ability to analyze all commercial real estate product types and markets as well as our ability to provide clients with comprehensive analysis, advice and execution expertise on all types of debt and equity capital markets solutions.
	•	Independent Objective Advice.  Unlike many of our competitors, we do not currently offer services that could create potential conflicts of interest with our clients such as leasing or property management, nor do we currently engage in principal capital investing activities. This allows us to offer independent objective advice to our clients.
	•	Extensive Cross-Selling Opportunities.  As some participants in the commercial real estate market are frequently buyers, sellers, lenders and borrowers at various times, our relationships with these participants across all aspects of their business provides us with multiple revenue opportunities throughout the life cycle of their commercial real estate investments. In addition, we often provide more than one service in a particular transaction, such as in an investment sale or note sale assignment where we not only represent the seller of a commercial real estate investment but also represent the buyer in arranging acquisition financing.
	•	Broad and Deep Network of Relationships.  We have developed broad and deep-standing relationships with the users and providers of capital in the industry and have completed multiple transactions for many of the top institutional commercial real estate investors in the U.S. Importantly, our transaction professionals, analysts and closing specialists foster relationships with their respective counterparts within each client’s organization. This provides, in our opinion, a deeper relationship with our firm relative to our competitors.
	•	Proprietary Transaction Database.  We believe that the extensive volume of commercial real estate transactions that we advise on throughout the U.S. and across multiple property types and capital market service lines provides our transaction professionals with valuable, real-time market information. We maintain a proprietary database on over 4,800 clients as well as databases that track key terms and provisions of all closed and pending transactions for which we are involved as well as historic and current flows and the pricing of debt, structured finance, investment sales, note sales and equity transactions. We believe this information strengthens our competitive position by enhancing the advice we provide to clients and improving the probability of successfully closing a transaction.

	•	Expand Our Geographic Footprint.  We believe that opportunities exist to establish and increase our presence in several key domestic and, potentially, international markets. While our transaction professionals, located in 18 offices throughout the U.S., advised clients on transactions in 45 states (and the District of Columbia) and in more than 500 cities in 2005, there are a number of major metropolitan areas where we do not maintain an office, and we have no overseas offices. We expect to achieve future strategic geographic expansion through a combination of recruitment of key transaction professionals, organic growth and possible acquisitions of smaller local and regional firms across all services in both new and existing markets.

		However, in all cases our strategic growth will be focused on serving our clients’ interests and predicated on finding the most experienced professionals in the market who have the highest integrity, work ethic and reputation, while fitting into our culture and sharing our philosophy and the way we conduct our business.

	•	Increase Market Share Across Each of Our Services.  We have achieved significant growth in each of the services we provide through our integrated capital markets platform. We believe that we have the opportunity to continue to increase our market share in each of the various services we provide to our clients by penetrating deeper into our national, regional and local client relationships. We also intend to increase our market share by selectively hiring transaction professionals in our existing offices and in new locations, predicated on finding the most experienced professionals in the market who have the highest integrity, work ethic and reputation, while fitting into our culture and sharing our philosophy and the way we conduct our business.
	•	Continue to Capitalize on Cross-Selling Opportunities.  Participants in the commercial real estate market increasingly are buyers, sellers, lenders and borrowers at various times. We believe our relationships with all of these participants across all aspects of their businesses provide us with multiple revenue opportunities throughout the lifecycle of their commercial real estate investments. Our clients typically execute transactions throughout the U.S. utilizing the wide spectrum of our services. By maintaining close relationships with these clients, we intend to continue to generate significant repeat business across all of our business lines.

	•	General Economic Conditions and Commercial Real Estate Market Conditions.  Negative economic conditions, changes in interest rates, disruptions in capital markets, and declines in the demand for commercial real estate and related services in international or domestic markets or in significant markets in which we do business could have a material adverse effect on our business, results of operations and/or financial condition.
	•	Retention of Qualified and Experienced Transaction Professionals and Employees.  Our most important asset is our people, and our continued success is highly dependent upon the efforts of our transaction professionals and other important associates, including our analysts and production coordinators as well as our key servicing and company overhead support associates. Our transaction professionals generate a significant majority of our revenues. If any of these key transaction professionals or other important associates leave, or if we are unable to attract other qualified transaction professionals, our business, financial condition and results of operations may suffer.
	•	Preservation of Our Business Philosophy and Culture.  We are deeply committed to maintaining our business philosophy and culture. The effects of becoming a public company, including potential changes in our compensation structure, could adversely affect our culture.

(a)		HFF Holdings will hold its partnership units in the Operating Partnerships through its wholly-owned subsidiary, Holdings Sub.
(b)		HFF, Inc. will hold its partnership units in the Operating Partnerships through its direct and indirect wholly-owned subsidiaries, HoldCo LLC and Holliday GP. Holliday GP is the sole general partner of the Operating Partnerships.

 

The Offering

Class A common stock offered by us		shares
Common stock to be outstanding after the offering
Class A common stock		shares (or           shares if HFF Holdings exchanges all of its partnership units in the Operating Partnerships for newly-issued shares of Class A common stock)
Class B common stock		1 share
Option to purchase additional shares		If the underwriters sell more shares than the total number set forth above, the underwriters have an option to buy up to an additional           shares from us to cover such sales. They may exercise that option for 30 days.
Use of proceeds		We estimate that our net proceeds from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $           million, or approximately $      million if the underwriters exercise in full their option to purchase additional shares. We will use these proceeds, as well as any proceeds received from the exercise of the underwriters’ option to purchase additional shares, to purchase from HFF Holdings all of the shares of Holliday GP and partnership units representing     % of each of the Operating Partnerships, or partnership units representing     % of each of the Operating Partnerships if the underwriters exercise in full their option to purchase additional shares. HFF Holdings will use $           million of the sale proceeds to repay all outstanding borrowings under HFF LP’s credit agreement. Accordingly, we will not retain any of the proceeds from this offering.
Voting rights		Each share of our Class A common stock will entitle its holder to one vote on all matters to be voted on by stockholders generally.
		HFF Holdings will be issued one share of our Class B common stock. Class B common stock has no economic rights but will entitle the holder to a number of votes that is determined pursuant to a formula that relates to the number of partnership units of each Operating Partnership held by such holder. As a result of this formula, HFF Holdings will have voting power in HFF, Inc. that is equal to the total number of shares of Class A common stock for which the partnership units that HFF Holdings holds in the Operating Partnerships as of the relevant record date for the HFF, Inc. stockholder action are exchangeable.
		See “Description of Capital Stock.”
		Holders of our Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law.
Dividends		We do not currently intend to pay a quarterly cash dividend. If we do declare a dividend in the future, the Class B common stock will not be entitled to dividend rights.
		HFF, Inc. will be a holding company and will have no material assets other than its ownership of partnership units in the Operating Partnerships. If we declare a dividend at some point in the future, we intend to cause the Operating Partnerships to make distributions to

		HFF, Inc. in an amount sufficient to cover any such dividends. If the Operating Partnerships make such distributions, HFF Holdings will be entitled to ratably receive equivalent distributions on its partnership units in the Operating Partnerships.
New York Stock Exchange symbol		HF
Risk factors		Please read “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Class A common stock.

	•	shares of Class A common stock issuable upon exercise of the underwriters’ option to purchase additional shares;
	•	shares of our Class A common stock that will underlie awards we expect to grant under our proposed stock incentive plan at the time of this offering. See “Management — Omnibus Incentive Compensation Plan;” and
	•	additional shares of our Class A common stock expected to be available for future grant under our proposed stock incentive plan after the consummation of this offering. See “Management — Omnibus Incentive Compensation Plan.”

																		Pro Forma(a)
										Nine Months												Nine Months
		Year Ended								Ended								Year Ended				Ended
		December 31,								September 30,								December 31,				September 30,
		2004				2005				2005				2006				2005				2006
										(unaudited)								(unaudited)				(unaudited)
		(In thousands, except per share data)
Statement of Income Data
Revenues
Capital markets services revenue		$	142,192			$	203,457			$	135,983			$	153,586
Interest on mortgage notes receivable			—				412				65				662
Other			1,499				1,979				1,251				2,289
Total revenues			143,691				205,848				137,299				156,537
Operating expenses
Cost of services			85,778				119,106				81,026				89,340
Personnel			9,107				14,369				8,874				10,460
Occupancy			5,047				5,357				4,034				4,629
Travel and entertainment			3,617				5,067				3,221				3,842
Supplies, research and printing			2,933				5,089				3,690				4,800
Insurance			1,500				2,470				1,883				2,265
Professional fees			871				1,201				1,012				1,979
Depreciation and amortization			2,506				2,735				1,988				2,039
Other operating			3,441				3,483				2,532				3,270
Interest on warehouse line of credit			—				409				60				676
Total operating expenses			114,800				159,286				108,320				123,300
Operating income			28,891				46,562				28,979				33,237
Interest and other income			317				1,267				675				1,394
Interest expense			(406	)			(271	)			(220