HFF, Inc. (NYSE: HF) reported today its financial and production volume results for the third quarter of 2012. Based on transaction volume, HFF, Inc. (the Company), through its Operating Partnerships, Holliday Fenoglio Fowler, L.P. (HFF LP) and HFF Securities L.P. (HFF Securities and, collectively with HFF LP, the Operating Partnerships), is one of the leading and largest full-service commercial real estate financial intermediaries in the U.S. providing commercial real estate and capital markets services to both the users and providers of capital in the commercial real estate sector.
Third Quarter Results
The Company reported revenues of $69.0 million for the third quarter of 2012, an increase of $5.1 million, or approximately 8.0%, compared to the third quarter of 2011 revenues of $63.9 million. The Company generated operating income of $12.3 million for the third quarter of 2012, a decrease of $1.6 million, or approximately 11.5%, compared to $13.9 million for the third quarter of 2011. This decline in operating income is primarily attributable to increases in the Company’s compensation-related costs and expenses associated with, in part, the net growth in headcount of 71 new associates over the past twelve months, and increased operating, administrative and other costs related, in part, to the Company’s headcount growth, such as office expansion-related occupancy costs and travel and entertainment expenses. Operating income was also negatively affected by an increase in stock compensation expense primarily related to mark-to-market adjustments on outstanding liability-based stock awards which are revalued each quarter, as well as an increase in compensation expense directly tied to performance-based metrics achieved by certain transaction professionals recruited in 2010 and 2011.
Interest and other income, net, totaled $4.4 million in the third quarter of 2012, an increase of $1.4 million, or approximately 45.2%, compared to $3.0 million in the third quarter of 2011. This was primarily a result of increased income recognized on the Company’s initial recording of mortgage servicing rights.