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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-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 Rule12b-2 of the Exchange Act. (Check one):

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 Rule12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Class A common stock, par value $0.01 per share, of the registrant outstanding as of ~~April~~July 28, 2017 was ~~38,572,725~~38,576,172 shares.

This Quarterly Report on Form10-Q contains forward-looking statements, which 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 Form10-K and this Quarterly Report on Form10-Q. 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 Form10-Q. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

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”). Except where specifically noted, references in this Quarterly Report onForm 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.~~Transactions and the inclusion of the UK Subsidiaries.


	March 31, 2017			December 31, 2016			June 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	175,783		$	235,582		$	201,778		$	235,582
Accounts receivable		3,743			2,124			5,536			2,124
Mortgage notes receivable		844,426			290,933			760,096			290,933
Prepaid taxes		1,515			1,118			2,390			1,118
Prepaid expenses and other current assets		10,894			12,971			14,491			12,971

Total current assets, net		1,036,361			542,728			984,291			542,728
Property and equipment, net		15,508			15,837			15,703			15,837
Deferred tax asset, net		102,388			112,557			99,511			112,557
Goodwill		8,528			3,712			8,528			3,712
Intangible assets, net		41,114			36,714			45,127			36,614
Other noncurrent assets		7,377			5,111			10,408			5,211

Total Assets	$	1,211,276		$	716,659		$	1,163,568		$	716,659

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	448		$	448		$	334		$	448
Warehouse line of credit		841,626			290,980			757,311			290,980
Accrued compensation and related taxes		28,353			44,685			39,838			44,685
Accounts payable		1,314			2,065			1,308			2,065
Payable under tax receivable agreement		11,315			11,315			11,315			11,315
Other current liabilities		19,072			18,803			20,463			18,803

Total current liabilities		902,128			368,296			830,569			368,296
Deferred rent credit		11,355			11,485			10,936			11,485
Payable under the tax receivable agreement, less current portion		100,077			100,077			100,077			100,077
Long-term debt, less current portion		122			259			119			259

Total liabilities		1,013,682			480,117			941,701			480,117
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 175,000,000 authorized; 38,740,330 and 38,463,448 shares issued, respectively; 38,572,725 and 38,091,123 shares outstanding, respectively		387			385
Treasury stock, 167,605 and 372,325 shares at cost, respectively		(5,088	)		(11,477	)
Class A common stock, par value $0.01 per share, 175,000,000 authorized; 38,740,330 and 38,463,448 shares issued, respectively; 38,575,652 and 38,091,123 shares outstanding, respectively								387			385
Treasury stock, 164,678 and 372,325 shares at cost, respectively								(5,002	)		(11,477	)
Additionalpaid-in-capital		131,037			132,513			135,791			132,513
Accumulated other comprehensive loss		(2	)		—			(37	)		—
Retained earnings		71,260			115,121			90,728			115,121

Total equity		197,594			236,542			221,867			236,542

Total liabilities and stockholders’ equity	$	1,211,276		$	716,659		$	1,163,568		$	716,659


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
Revenues
Capital markets services revenue	$	132,713		$	113,670		$	133,715		$	113,868		$	266,428		$	227,538
Interest on mortgage notes receivable		4,999			3,264			2,717			2,912			7,716			6,176
Other		1,094			596			932			885			2,026			1,481

		138,806			117,530		137,364			117,665			276,170			235,195
Expenses
Cost of services		80,131			68,502			79,290			66,486			159,421			134,988
Personnel		14,332			13,579			15,290			14,403			29,622			27,982
Occupancy		4,215			3,353			4,157			3,377			8,372			6,730
Travel and entertainment		4,709			4,465			5,000			4,036			9,709			8,501
Supplies, research, and printing		1,768			1,796			2,028			2,095			3,796			3,891
Insurance		604			612			619			553			1,223			1,165
Professional fees		1,906			1,253			1,707			1,449			3,613			2,702
Depreciation and amortization		3,667			2,669			4,032			2,893			7,699			5,562
Interest on warehouse line of credit		3,538			1,911			2,118			1,766			5,656			3,677
Other operating		3,172			2,649			3,726			3,022			6,898			5,671

		118,042			100,789		117,967			100,080			236,009			200,869

Operating income		20,764			16,741			19,397			17,585			40,161			34,326

Interest and other income, net		10,794			6,317			13,042			8,739			23,836			15,056
Interest expense		(7	)		(13	)		(5	)		(11	)		(12	)		(24	)
(Increase) decrease in payable under the tax receivable agreement		—			—			—			—			—			—

Income before income taxes		31,551			23,045			32,434			26,313			63,985			49,358
Income tax expense		11,895			9,169			12,972			10,467			24,867			19,636

Net income	$	19,656		$	13,876		$	19,462		$	15,846		$	39,118		$	29,722

Earnings per share - Basic and Diluted
Income available to HFF, Inc. common stockholders - Basic	$	0.51		$	0.36
Income available to HFF, Inc. common stockholders - Diluted	$	0.50		$	0.36

Other comprehensive income:
Earnings per share—Basic and Diluted
Income available to HFF, Inc. common stockholders—Basic							$	0.50		$	0.41		$	1.01		$	0.78
Income available to HFF, Inc. common stockholders—Diluted							$	0.49		$	0.41		$	0.99		$	0.77
Other comprehensive loss:
Net income	$	19,656		$	13,876		$	19,462		$	15,846		$	39,118		$	29,722
Foreign currency translation adjustments		(2	)		—			(34	)		—			(37	)		—

Comprehensive income	$	19,654		$	13,876		$	19,428		$	15,846		$	39,081		$	29,722


	Common Stock					Treasury Stock						Additional Paid in Capital				Accumulated Other Comprehensive Income/(loss)				Retained Earnings			Total Equity				Common Stock								Treasury Stock								Additional				Accumulated Other
																																						Paid in				Comprehensive				Retained				Total
	Shares			Amount		Shares			Amount										Shares							Amount				Shares				Amount				Capital				Income (Loss)				Earnings				Equity
Stockholders’ equity, December 31, 2016		38,091,123		$	385		372,325		$	(11,477	)				$	132,513			$		—			$	115,121			$	236,542				38,091,123			$	385				372,325			$	(11,477	)		$	132,513			$	—		$	115,121		$	236,542
Stock compensation and other, net		—			—		—			—					7,822				—					(557	)			7,265				—				—				—				—				12,668				—			(557	)		12,111
Issuance of Class A common stock, net		675,151			2		(398,269	)		12,239			(12,241	)			—				—			—				678,078				2				(401,196	)			12,325				(12,327	)			—				—			—
Repurchase of Class A common stock		(193,549	)		—		193,549			(5,850	)			—				—				—			(5,850	)			(193,549	)			—				193,549				(5,850	)			—				—				—			(5,850	)
Other comprehensive (loss)		—			—		—			—			—				(2	)			—			(2	)			—				—				—				—				—				(37	)			—			(37	)
Dividends paid		—			—		—			—			2,943				—				(62,960	)		(60,017	)			—				—				—				—				2,937				—				(62,954	)		(60,017	)
Net income		—			—		—			—			—				—				19,656			19,656				—				—				—				—				—				—				39,118			39,118

Stockholders’ equity, March 31, 2017		38,572,725		$	387		167,605		$	(5,088	)	$	131,037			$	(2	)		$	71,260		$	197,594
Stockholders’ equity, June 30, 2017																												38,575,652			$	387				164,678			$	(5,002	)		$	135,791			$	(37	)		$	90,728		$	221,867


	Common Stock					Treasury Stock						Additional Paid in Capital				Retained Earnings				Total Equity				Common Stock								Treasury Stock								Additional
																																					Paid in				Retained				Total
	Shares			Amount		Shares			Amount										Shares						Amount				Shares				Amount				Capital				Earnings				Equity
Stockholders’ equity, December 31, 2015		37,854,312		$	383		497,055		$	(11,378	)			$	117,216			$	108,283				$	214,504				37,854,312			$	383				497,055			$	(11,378	)		$	117,216			$	108,283			$	214,504
Stock compensation and other, net		—			—		—			—				7,201				—					7,201				—				—				—				—				10,398				—				10,398
Incremental tax adjustment from share-based award activities		—			—		—			—			(591	)			—				(591	)			—				—				—				—				(588	)			—				(588	)
Issuance of Class A common stock, net		337,126			1		(226,235	)		2,618			(2,619	)			—				—				339,161				1				(228,270	)			2,656				(2,657	)			—				—
Repurchase of Class A common stock		(110,891	)		—		110,891			(2,946	)			—				—				(2,946	)			(110,891	)			—				110,891				(2,946	)			—				—				(2,946	)
Dividends paid		—			—		—			—			1,995				(70,357	)			(68,362	)			—				—				—				—				1,995				(70,357	)			(68,362	)
Net income		—			—		—			—			—				13,876				13,876				—				—				—				—				—				29,722				29,722

Stockholders’ equity, March 31, 2016		38,080,547		$	384		381,711		$	(11,706	)	$	123,202			$	51,802			$	163,682
Stockholders’ equity, June 30, 2016																									38,082,582			$	384				379,676			$	(11,668	)		$	126,364			$	67,648			$	182,728


	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating activities
Net income	$	19,656		$	13,876		$	39,118		$	29,722
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		3,906			2,839			8,752			6,036
Incremental tax adjustment from share-based award activities		—			591			—			588
Deferred taxes		10,169			8,361			12,959			9,817
Depreciation and amortization:
Property and equipment		1,001			764			2,102			1,559
Intangibles		2,665			1,905			5,597			4,003
Gain on sale or disposition of assets, net		(7,774	)		(4,343	)		(13,926	)		(8,330	)
Mortgage service rights assumed		(1,307	)		(1,398	)		(2,085	)		(2,582	)
Proceeds from sale of mortgage servicing rights		—			744			—			2,265
Increase (decrease) in cash from changes in:
Accounts receivable		(707	)		1,198			(2,500	)		611
Receivable from affiliates								—			4
Mortgage notes receivable		(550,646	)		(196,780	)		(466,331	)		168,763
Net borrowings on warehouse line of credit		550,646			196,780			466,331			(168,763	)
Prepaid taxes, prepaid expenses and other current assets		1,710			(2,289	)		(2,762	)		(3,140	)
Other noncurrent assets		(2,166	)		(60	)		(5,197	)		(358	)
Accrued compensation and related taxes		(12,973	)		(28,351	)		(1,488	)		(15,830	)
Accounts payable		(759	)		(1,414	)		(765	)		(1,336	)
Other current liabilities		(196	)		(10,807	)		1,282			(7,624	)
Deferred rent		(130	)		475			(549	)		706

Net cash provided by (used in) operating activities		13,095			(17,909	)
Net cash provided by operating activities								40,538			16,111
Investing activities
Purchases of property and equipment		(658	)		(414	)		(1,954	)		(1,166	)
Purchase of businesses		(6,230	)		—			(6,230	)		—

Net cash used in investing activities		(6,888	)		(414	)		(8,184	)		(1,166	)
Financing activities
Payments on long-term debt		(137	)		(145	)		(254	)		(278	)
Incremental tax adjustment from share-based award activities		—			(591	)		—			(588	)
Dividends paid		(60,017	)		(68,362	)		(60,017	)		(68,362	)
Treasury stock		(5,850	)		(2,946	)		(5,850	)		(2,946	)

Net cash used in financing activities		(66,004	)		(72,044	)		(66,121	)		(72,174	)

Net decrease in cash		(59,797	)		(90,367	)		(33,767	)		(57,229	)
Cash and cash equivalents, beginning of period		235,582			233,904			235,582			233,904
Effects of foreign currency translation on cash and cash equivalents		(2	)		—			(37	)		—

Cash and cash equivalents, end of period	$	175,783		$	143,537		$	201,778		$	176,675

HFF, Inc., a Delaware corporation (the “Company”), through its Operating Partnerships, 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, a company incorporated in England and Wales and HFF Securities Limited, a company incorporated in England and Wales (collectively, with HFF Real Estate Limited, the “UK Subsidiaries”), is a commercial real estate financial intermediary providing commercial real estate and capital markets services including debt placement, investment sales, 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 23 cities in the United States and effective January 17, 2017, one office in London, United Kingdom. The Company’s operations are impacted by the availability of equity and/or 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/or 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.

The Company was formed in November 2006 in connection with a proposed initial public offering of its Class A common stock. On November 9, 2006, the Company filed a registration statement on FormS-1 with the United States Securities and Exchange Commission (the “SEC”) relating to a proposed underwritten initial public offering of 14,300,000 shares of Class A common stock of the Company (the “Offering”). On January 30, 2007, the SEC declared the registration statement on FormS-1 effective and the Company priced 14,300,000 shares for the initial public offering at a price of $18.00 per share. On January 31, 2007, the Company’s common stock began trading on the New York Stock Exchange under the symbol “HF.”

In addition to cash received for its sale of all of the shares of Holliday GP and approximately 44.7% 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 the Company’s Class B common stock to HFF Holdings, an exchange right that permitted 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. Since all of the partnership units had been exchanged as of August 31, 2012, the Class B common stock was transferred to the Company and retired on August 31, 2012 in accordance with the Company’s certificate of incorporation. See Note 1215 for further discussion of the tax receivable agreement.

As a result of the reorganization, the Company became a holding company through a series of transactions pursuant to a sale and purchase agreement. Pursuant to the Offering and reorganization, the Company’s sole assets are, through its wholly-owned subsidiary HoldCo LLC, partnership interests of HFF LP and HFF Securities and all of the shares of Holliday GP.

The accompanying consolidated financial statements of the Company as of ~~March 31,~~June 30, 2017 and December 31, 2016 and for the three and six month periods ended ~~March 31,~~June 30, 2017 and ~~March 31,~~June 30, 2016, include the accounts of HFF LP, HFF Securities, the Company’s wholly-owned subsidiaries, Holliday GP and Partnership Holdings and effective January 17, 2017, HFF Securities Limited and HFF Real Estate Limited. All significant intercompany accounts and transactions have been eliminated. As the sole stockholder of Holliday GP (the sole general partner of the Operating Partnerships), HFF, Inc. operates and controls all of the business and affairs of the Operating Partnerships. As the indirect sole stockholder of the UK Subsidiaries, HFF, Inc. also operates and controls all of the business and affairs of the UK Subsidiaries. The Company consolidates the financial results of the Operating ~~Partnerships.~~Partnerships and the UK Subsidiaries.

In December 2016, the Financial Accounting Standards Board (“FASB”) issued ~~Update~~update2016-19 – “Technical Corrections and Improvements,” which covers a wide range of Topics in the Accounting Standards Codification (“ASC”). The amendments in this ~~Update~~update represent changes to clarify, correct errors, or make minor improvements to the ASC, making it easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments generally fall into one of the following categories: amendments related to differences between original guidance and the ASC, guidance clarification and reference corrections, simplification, or minor improvements. Most of the amendments in this ~~Update~~update do not require transition guidance and are effective upon issuance of this ~~Update.~~update.

In March 2016, the FASB issued changes to the accounting for equity compensation. This update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update also permits an entity to make an election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. This update was effective for the Company beginning in fiscal year 2017 and the Company made an election to change its accounting for forfeitures from the previously-required estimation method to recognizing forfeitures when they occur. The Company recognized $0.6 million as a reduction in retained earnings on January 1, 2017 as a result of eliminating the estimated forfeiture rate on unvested restricted stock units.

In February 2016, the FASB issued new guidance on the accounting for leases. This new guidance will require 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 new lease accounting requirements are effective for the Company’s 2019 fiscal year with a modified retrospective transition approach required, with early adoption permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.

In May 2014, the FASB issued ASUNo. 2014-09, “Revenue from Contracts with Customers,” which is required to be adopted by the Company in fiscal year 2018. This ASU supersedes the revenue recognition requirements in FASB ASC Topic 605,~~Revenue~~ “Revenue Recognition,,” and most industry-specific guidance. The standard implements a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method).

We are continuing the review of our contracts with customers to identify potential differences that could result from applying the new guidance. As we complete our overall assessment, we are also identifying any needed changes to our accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements. Based on our evaluation to date, we do not expect the adoption of this accounting guidance to have a significant impact on our consolidated financial ~~statements.~~

~~In February 2016, the FASB issued new guidance on the accounting for leases. This new guidance~~statements, however we expect revenue recognition disclosures will ~~require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than twelve months,~~include additional detail in accordance with the ~~result being the recognition of a right of use asset and a lease liability. The~~ new lease accounting requirements are effective for the Company’s 2019 fiscal year with a modified retrospective transition approach required, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.requirements.

In January 2017, ~~the~~ FASB issued ASUNo. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU eliminates Step 2 from the goodwill impairment test. This ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU2017-04 will have on our goodwill assessment process, but do not believe the adoption of ASU~~ASU~~ 2017-04 will have a material impact on our consolidated financial statements and related disclosures.

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 Form10-Q and Rule10-01 of RegulationS-X and should be read in conjunction with the Company’s Annual Report on Form10-K for the year ended December 31, 2016. Accordingly, significant accounting policies and disclosures normally provided have been omitted as such items are disclosed therein. 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 and six months ended ~~March 31,~~June 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017.

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 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 718, ~~Compensation -~~ 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 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 additionalpaid-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.

The stock compensation cost that has been charged against income for the three and six months ended ~~March 31,~~June 30, 2017 was ~~$3.9~~$4.8 million and $8.8 million, respectively, which is recorded in personnel expenses in the consolidated statements of income. The stock compensation cost that has been charged against income for the three and six months ended ~~March 31,~~June 30, 2016 was ~~$2.8 million.~~$3.2 million and $6.0 million, respectively. At ~~March 31,~~June 30, 2017, there was approximately ~~$45.8~~$41.7 million of unrecognized compensation cost related tonon-vested restricted stock units with a weighted average remaining contractual term of ~~2.8~~2.5 years. As of ~~March 31,~~June 30, 2017, there were ~~2,305,408~~2,409,724 restricted stock units outstanding, of which ~~2,106,372~~2,198,131 have continued vesting requirements.

During the three month period ended ~~March 31,~~June 30, 2017, no options were granted, vested, exercised or forfeited.

During the three month period ended ~~March 31,~~June 30, 2017, ~~821,166~~24,029 new restricted stock units were granted, ~~596,908 restricted stock units~~15,484 vested of which ~~591,818~~2,927 were converted to Class A common stock, and ~~4,832~~119 restricted stock units were forfeited.

The fair value of vested restricted stock units was ~~$5.5~~$7.4 million at ~~March 31,~~June 30, 2017.


	March 31, 2017			December 31, 2016			June 30, 2017			December 31, 2016
Furniture and equipment	$	7,763		$	7,667		$	7,945		$	7,667
Computer equipment		2,145			2,145			2,203			2,145
Capitalized software costs		2,189			2,043			2,434			2,043
Leasehold improvements		16,090			15,813			16,538			15,813

Subtotal		28,187			27,668			29,120			27,668
Less accumulated depreciation and amortization		(12,679	)		(11,831	)		(13,417	)		(11,831	)

	$	15,508		$	15,837		$	15,703		$	15,837

At ~~March 31,~~June 30, 2017 and December 31, 2016, the Company has recorded, within furniture and equipment, office equipment under capital leases of $1.8 million and $1.9 million, respectively, including accumulated amortization of $1.3 million and $1.2 million, respectively, which is included within depreciation and amortization expense in the accompanying consolidated statements of income. See Note 7 for discussion of the related capital lease obligations.

The Company’s intangible assets consist ~~primarily~~ of mortgage servicing rights and customer contracts and relationships. The customer contracts and relationships intangibles were part of the assets acquired in two business acquisitions that the Company completed in the first quarter of 2017. The acquisitions, which were not significant, were accounted for as business combinations using the acquisition method of accounting, which established a new basis of accounting for all assets acquired and liabilities assumed at fair value. The purchase price allocation was based on preliminary fair values of the assets acquired and liabilities assumed at the date of ~~the~~ acquisitions. The purchase price allocation will be finalized within twelve months from the acquisitions’ closing date.

The Company’s intangible assets are summarized as follows (dollars in thousands):


	March 31, 2017							December 31, 2016							June 30, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Amortizable intangible assets:
Mortgage servicing rights	$	68,935	$	(28,752	)	$	40,183	$	64,648	$	(28,034	)	$	36,614	$	74,235	$	(30,039	)	$	44,196	$	64,648	$	(28,034	)	$	36,614
Other		931		—			931		—		—			—		931		—			931		—		—			—

Total intangible assets	$	69,866	$	(28,752	)	$	41,114	$	64,648	$	(28,034	)	$	36,614	$	75,166	$	(30,039	)	$	45,127	$	64,648	$	(28,034	)	$	36,614

As of ~~March 31,~~June 30, 2017 and December 31, 2016, the Company serviced ~~$60.7~~$62.2 billion and $58.0 billion, respectively, of commercial loans. The Company earned ~~$6.7~~$6.9 million and $13.6 million in servicing fees and interest on float and escrow balances for the three and six month ~~period~~periods ending ~~March 31, 2017.~~June 30, 2017, respectively. The Company earned ~~$5.5~~$5.7 million and $11.2 million in servicing fees and interest on float and escrow balances for the three and six month ~~period~~periods ending ~~March 31,~~June 30, 2016. These revenues are recorded as capital markets services revenues in the consolidated statements of 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 860,Transfers and Servicing (“ASC 860”) on January 1, 2007 and involved no initial consideration paid by the Company. As of ~~March 31,~~June 30, 2017 and December 31, 2016 the Company has recorded mortgage servicing rights of ~~$40.2~~$44.2 million and $36.6 million on ~~$59.4~~$61.0 billion and $56.5 billion, respectively, of the total loans serviced.

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

Changes in the carrying value of mortgage servicing rights for the ~~three~~six month periods ended ~~March 31,~~June 30, 2017 and 2016, were as follows (dollars in thousands):


Category	12/31/16		Capitalized		Amortized			Sold / Transferred			3/31/17		12/31/16		Capitalized		Amortized			Sold / Transferred			6/30/17
Freddie Mac	$	16,234	$	4,927	$	(967	)	$	—		$	20,194	$	16,234	$	11,094	$	(2,161	)	$	—		$	25,167
CMBS		16,247		311		(1,048	)		—			15,510		16,247		441		(2,068	)		—			14,620
Life company		3,567		889		(563	)		—			3,893		3,567		1,458		(1,195	)		—			3,830
Life company – limited		566		107		(87	)		—			586		566		186		(173	)		—			579

Total	$	36,614	$	6,234	$	(2,665	)	$	—		$	40,183	$	36,614	$	13,179	$	(5,597	)	$	—		$	44,196


Category	12/31/15		Capitalized		Amortized			Sold / Transferred			3/31/16		12/31/15		Capitalized		Amortized			Sold / Transferred			6/30/16
Freddie Mac	$	7,074	$	2,446	$	(388	)	$	(801	)	$	8,331	$	7,074	$	6,219	$	(935	)	$	(2,450	)	$	9,908
CMBS		16,768		391		(1,008	)		602			16,753		16,768		629		(2,002	)		1,948			17,343
Life company		2,729		848		(441	)		—			3,136		2,729		1,689		(924	)		—			3,494
Life company – limited		351		159		(68	)		—			442		351		266		(142	)		—			475

Total	$	26,922	$	3,844	$	(1,905	)	$	(199	)	$	28,662	$	26,922	$	8,803	$	(4,003	)	$	(502	)	$	31,220

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 ~~$4.9~~$6.2 million and ~~$2.4~~$11.1 million on ~~$1.4~~$1.2 billion and ~~$0.9~~$2.6 billion of loans, respectively, during the three and six month periods ending ~~March 31,~~June 30, 2017, respectively, and $3.8 million and $6.2 million on $1.4 billion and $2.3 billion of loans, respectively, during the three and six month periods ending June 30, 2016, respectively. The Company recorded mortgage servicing rights acquired without the exchange of initial consideration on the CMBS and Life company tranches of ~~$1.3~~$0.8 million and ~~$1.4~~$2.1 million on ~~$3.5~~$2.3 billion and ~~$3.3~~$5.8 billion of loans, respectively, during the three and six month periods ending ~~March 31,~~June 30, 2017, respectively, and $1.2 million and $2.6 million on $3.3 billion and $6.6 billion of loans, respectively, during the three and six month periods ending June 30, 2016, respectively. During the ~~three~~six months ending ~~March 31,~~June 30, 2016, the Company sold the cashiering portion of certain Freddie Mac mortgage servicing rights. While the Company transferred the risks and rewards of ownership of the cashiering portion of the mortgage servicing rights, the Company continues to perform limited servicing activities on these securitized loans. Therefore, the remaining servicing rights were transferred to the CMBS servicing tranche. The net result of these transactions was that the Company ~~recording~~recorded a gain in the three and six months ending ~~March 31,~~June 30, 2016 of ~~$0.5~~$1.2 million and $1.8 million, respectively, within interest and other income, net in the consolidated statements of income. During the three and six months ending ~~March 31,~~June 30, 2017, the Company did not sell any of the servicing rights on Freddie Mac loans. The Company ~~also~~ received securitization compensation in relation to the ~~sale of the cashiering portion~~securitization of certain Freddie Mac ~~mortgage servicing rights~~loans in the three and six months ending ~~March 31,~~June 30, 2017 ~~and 2016~~ of ~~$1.5~~$3.6 million and ~~$1.2~~$5.1 million, respectively, and $1.7 million and $2.9 million during the three and six month periods ending June 30, 2016, respectively. The securitization compensation is recorded within interest and other income, net in the consolidated statements of income.

Amortization expense related to intangible assets was ~~$2.7~~$2.9 million and ~~$1.9~~$5.6 million during the three and six month periods ended ~~March 31,~~June 30, 2017 and $2.1 million and $4.0 million during the three and six month periods ending June 30, 2016, respectively, and is recorded in depreciation and amortization in the consolidated statements of income.

Estimated amortization expense for the next five years is as follows (dollars in thousands):


Remainder of 2017	$	7,242	$	5,270
2018		8,207		9,274
2019		6,163		7,163
2020		4,730		5,538
2021		4,143		4,836
2022		3,576		4,232

The weighted-average life of the mortgage servicing rights intangible asset was ~~6.6~~6.7 years at ~~March 31,~~June 30, 2017.

ASC Topic 820,Fair Value Measurement (“ASC 820”) establishes a valuation hierarchy for disclosure of the inputs to valuation 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 our 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 May 2011, the FASB issued an accounting pronouncement which amends the fair value measurement and disclosure requirements to achieve common disclosure requirements between GAAP and International Financial Reporting Standards. The accounting pronouncement requires certain disclosures about transfers between Level 1 and Level 2 of the fair value hierarchy, sensitivity of fair value measurements categorized within Level 3 of the fair value hierarchy, and categorization by level of items that are reported at cost but are required to be disclosed at fair value. The adoption of this pronouncement had no impact on the Company’s consolidated financial statements.

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 our 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,~~June 30, 2017 and December 31, 2016 (in thousands):


			March 31, 2017 Fair Value Measurements Using:								June 30, 2017 Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements
Mortgage notes receivable	$	844,426	$	—	$	844,426	$	—	$	760,096	$	—	$	760,096	$	—

Total recurring fair value measurements	$	844,426	$	—	$	844,426	$	—	$	760,096	$	—	$	760,096	$	—


			December 31, 2016 Fair Value Measurements Using:								December 31, 2016 Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring fair value measurements
Mortgage notes receivable	$	290,933	$	—	$	290,933	$	—	$	290,933	$	—	$	290,933	$	—

Total recurring fair value measurements	$	290,933	$	—	$	290,933	$	—	$	290,933	$	—	$	290,933	$	—

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.

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 notre-measured at fair value during the ~~first~~second quarter of 2017 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,~~June 30, 2017.

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,~~June 30, 2017 and December 31, 2016 (in thousands):


June 30, 2017	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	$	44,196	$	—	$	—	$	59,037

Total nonrecurring fair value measurements	$	44,196	$	—	$	—	$	59,037


December 31, 2016	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	$	36,615	$	—	$	—	$	49,970

Total nonrecurring fair value measurements	$	36,615	$	—	$	—	$	49,970

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, 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 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. The significant assumptions utilized to value servicing rights as of ~~March 31,~~June 30, 2017 and December 31, 2016 are as follows:

March 31, 2017

December 31, 2016

June 30, 2017

December 31, 2016

Expected life of cash flows

3 years to 9 years

3 years to 11 years

3 years to 9 years

3 years to 11 years

Discount rate (1)

10% to 16%

Prepayment rate

0% to 8%

Inflation rate

Cost of service per loan

$1,920 to $4,860

$1,920 to $4,997

1,920 to $4,802

1,920 to $4,997

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.

FASB ASC Topic 825,Financial Instruments also requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets. Our financial instruments, excluding those included in the preceding fair value tables above, are as follows:

Cash and Cash Equivalents: These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments; these are considered Level 1 fair values.

Warehouse line of credit: Due to the short-term nature and variable interest rates of this instrument, fair value approximates carrying value; these are considered Level 2 fair values.

Capital lease obligations consist of the following at ~~March 31,~~June 30, 2017 and December 31, 2016 (dollars in thousands):


	March 31, 2017		December 31, 2016		June 30, 2017		December 31, 2016
Capital lease obligations	$	570	$	707	$	453	$	707
Less current maturities		448		448		334		448

	$	122	$	259	$	119	$	259

Capital lease obligations consist primarily of office equipment leases that expire at various dates through November 2019. A summary of future minimum lease payments under capital leases at ~~March 31,~~June 30, 2017 is as follows (dollars in thousands):


Remainder of 2017	$	310	$	197
2018		216		216
2019		44		40

	$	570	$	453

HFF LP maintains two uncommitted warehouse revolving lines of credit for the purpose of funding the Freddie Mac mortgage loans that it originates as a Freddie Mac Multifamily Approved Seller/Servicer for Conventional and Senior Housing Loan provider (“Freddie Mac Program”). The Company is a party to an uncommitted $450 million financing arrangement with PNC Bank, N.A. (“PNC”) that can be increased to $550 million four times per year for a period of 45 calendar ~~days. The Company is also party to an uncommitted $125 million financing arrangement with The Huntington National Bank (“Huntington”) that can be increased to $150 million three times in aone-year~~ period for 30 business days. On September 30, 2016, HFF LP entered into an extended funding agreement with Freddie Mac whereby Freddie Mac could extend the Original Funding Date (as defined in the agreement) on any mortgage that HFF LP funded within the fourth quarter of 2016, to February 15, 2017. In connection with the extended funding agreement with Freddie Mac, PNC agreed to increase the financing arrangement to $2.0 billion through March 31, 2017. PNC also agreed todays and has a maximum capacity of $1.5 billion for the remainder of 2017. On January 1, 2018 the capacity under the PNC agreement will revert to $450 million. The Company is also party to an uncommitted $150 million financing arrangement with The Huntington National Bank (“Huntington”). The Huntington arrangement was amended in July 2017 to increase the uncommitted amount from $125 million to $150 million, which can be increased to $175 million three times in aone-year period for 45 calendar days and may be increased to $175 million from October 1, 2017 through February 15, 2018.

Each funding is separately approved on atransaction-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,~~June 30, 2017 and December 31, 2016, HFF LP had ~~$841.6~~$757.3 million and $291.0 million, respectively, outstanding on the warehouse lines of credit. Interest on the warehouse lines of credit is at the30-day LIBOR rate ~~(0.79%~~(1.06% and 0.62% at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively) plus a spread. HFF LP is also paid interest on its loan secured by a multifamily loan at the rate in the Freddie Mac note.

The Company leases various corporate offices (which leases sometime include parking spaces) and office equipment under noncancelable operating leases. These leases have initial terms of three to eleven years. Several of the leases have termination clauses whereby the term may be reduced by two to seven years upon prior notice and payment of a termination fee by the Company. Total rental expense charged to operations was ~~$3.6~~$3.3 million and $7.0 million, respectively, during the three and six month periods ending June 30, 2017 and $2.8 million and $5.6 million, respectively, during the three and six month periods ~~ending March 31, 2017 and~~ended June 30, 2016, ~~respectively,~~ and is recorded within occupancy expense in the consolidated statements of income.

Future minimum rental payments for the next five years under operating leases with noncancelable terms in excess of one year and without regard to early termination provisions are as follows (dollars in thousands):


Remainder of 2017	$	8,181	$	5,351
2018		10,417		10,515
2019		10,143		10,228
2020		9,430		9,438
2021		8,011		8,018
2022		5,890		5,890

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 income.

The Company also leases certain office equipment under capital leases that expire at various dates through 2019. See Note 4 and Note 7 above for further description of the assets and related obligations recorded under these capital leases at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

The Company services commercial real estate loans for lenders. The unpaid principal balance of the servicing portfolio totaled ~~$60.7~~$62.2 billion and $58.0 billion at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

In connection with its servicing activities, the Company holds funds in escrow for the benefit of mortgagors for hazard insurance, real estate taxes and other financing arrangements. At ~~March 31,~~June 30, 2017 and December 31, 2016, the funds held in escrow totaled ~~$182.1~~$193.7 million and $182.3 million, respectively. These funds, and the offsetting obligations, are not presented in the Company’s financial statements as they do not represent the assets and liabilities of the Company. Pursuant to the requirements of the various investors for which the Company services loans, the Company maintains bank accounts, holding escrow funds, which have balances in excess of the FDIC insurance limit. The fees earned on these escrow funds are reported in capital markets services revenue in the consolidated statements of income.

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 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.

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


	Current		Deferred		Total		Current		Deferred		Total
Three months ended March 31, 2017:
Six months ended June 30, 2017:
Federal	$	1,085	$	9,250	$	10,335	$	10,319	$	11,749	$	22,068
State		641		919		1,560		1,589		1,210		2,799

	$	1,726	$	10,169	$	11,895	$	11,908	$	12,959	$	24,867


	Current		Deferred		Total		Current		Deferred		Total
Three months ended March 31, 2016:
Six months ended June 30, 2016:
Federal	$	639	$	7,651	$	8,290	$	8,399	$	8,991	$	17,390
State		169		710		879		1,420		826		2,246

	$	808	$	8,361	$	9,169	$	9,819	$	9,817	$	19,636

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~~six months ended ~~March 31,~~June 30, 2017 and 2016 (dollars in thousands):


	March 31,											June 30,
	2017						2016					2017						2016
Income tax expense / (benefit)				Rate					Rate						Rate					Rate
Taxes computed at federal rate	$	11,043			35.0	%	$	8,065		35.0	%	$	22,395			35.0	%	$	17,275		35.0	%
State and local taxes, net of federal tax benefit		1,303			4.1	%		882		3.8	%		2,601			4.1	%		1,890		3.8	%
Rate differential onnon-US income		91			0.3	%		—		0.0	%		177			0.3	%		—		0.0	%
Stock-based compensation		(1,124	)		(3.6	)%		—		0.0	%
Effect of shortfalls (windfalls) related to equity compensation													(1,126	)		(1.8	)%		—		0.0	%
Meals and entertainment		346			1.1	%		218		1.0	%		758			1.2	%		464		0.9	%
Other		236			0.8	%		4		0.0	%		62			0.1	%		7		0.0	%

Income tax expense	$	11,895			37.7	%	$	9,169		39.8	%	$	24,867			38.9	%	$	19,636		39.8	%

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 38,740,330 and 38,463,448 shares of Class A common stock as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

On January 24, 2017, the Company’s board of directors declared a special cash dividend of $1.57 per share of Class A common stock to stockholders of record on February 9, 2017. The aggregate dividend payment was paid on February 21, 2017 and totaled approximately $60.0 million based on the number of shares of Class A common stock then outstanding. Additionally, 95,648 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, 2017. These dividend equivalent units follow the same vesting terms as the underlying restricted stock units.

On January 22, 2016, the board of directors declared a special cash dividend of $1.80 per share of Class A common stock to stockholders of record on February 8, 2016. The aggregate dividend payment was paid on February 19, 2016 and totaled approximately $68.4 million based on the number of shares of Class A common stock then outstanding. Holders of unvested, and vested but not issued, restricted stock units were granted, in the aggregate, 82,536 additional restricted stock units as of the record date of February 8, 2016. These units follow the same vesting terms as the underlying restricted stock units.

The Company’s net income and weighted average shares outstanding for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016 consist of the following (dollars in thousands):


	Three months ended March 31,				Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016		2017		2016
Net income	$	19,656	$	13,876	$	19,462	$	15,846	$	39,118	$	29,722
Weighted Average Shares Outstanding:
Basic		38,538,641		38,166,836		38,694,339		38,263,657		38,616,920		38,215,246
Diluted		39,166,361		38,373,929		39,487,689		38,961,753		39,327,455		38,667,842

The calculations of basic and diluted net income per share amounts for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016 are described and presented below.

Numerator— net income for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016, respectively.

Denominator— the weighted average shares of unrestricted Class A common stock for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016, including ~~199,036~~211,593 and ~~177,852~~189,385 restricted stock units that have vested and whose issuance is no longer contingent as of ~~March 31,~~June 30, 2017 and 2016, respectively.

Numerator— net income for the three and six month periods ended ~~March 31,~~June 30, 2017 and ~~2016 as in the basic net income per share calculation described above.~~2016.


	Three months ended March 31,				Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016		2017		2016
Basic Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	19,656	$	13,876	$	19,462	$	15,846	$	39,118	$	29,722
Denominator:
Weighted average number of shares of Class A common stock outstanding		38,538,641		38,166,836		38,694,339		38,263,657		38,616,920		38,215,246
Basic net income per share of Class A common stock	$	0.51	$	0.36	$	0.50	$	0.41	$	1.01	$	0.78
Diluted Earnings Per Share of Class A Common Stock
Numerator:
Net income	$	19,656	$	13,876	$	19,462	$	15,846	$	39,118	$	29,722
Denominator:
Basic weighted average number of shares of Class A common stock		38,538,641		38,166,836		38,694,339		38,263,657		38,616,920		38,215,246
Add—dilutive effect of:
Unvested restricted stock units		612,779		195,406		778,177		686,086		695,478		440,747
Stock options		14,941		11,687		15,173		12,010		15,057		11,849
Weighted average common shares outstanding — diluted		39,166,361		38,373,929		39,487,689		38,961,753		39,327,455		38,667,842
Diluted earnings per share of Class A common stock	$	0.50	$	0.36	$	0.49	$	0.41	$	0.99	$	0.77

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 ~~transaction professional~~capital markets advisor of the Operating Partnerships, John Fowler, a current director emeritus of the Company’s board of directors and a ~~transaction professional~~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 ~~transaction professional~~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.

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. The Company has recorded $111.4 million and $111.4 million for this obligation to HFF Holdings as a liability on the consolidated balance sheet as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

In recent years, the Company has entered into arrangements with ~~newly-hired transaction professionals~~newly hired capital markets advisors whereby these ~~transaction professionals~~capital markets advisors would be paid additional compensation if certain performance targets are met over a defined period. These payments will be made to the ~~transaction professionals~~capital markets advisors only if they enter into an employment agreement at the end of the performance period. Payments under these arrangements, if earned, would be paid in fiscal years 2017 through 2019. Currently, the Company cannot reasonably estimate the amounts that would be payable under all of these arrangements. The Company begins to accrue for these payments when it is deemed probable that payments will be made; therefore, on a quarterly basis, the Company evaluates the probability of each of the ~~transaction professionals~~capital markets advisors achieving the performance targets and the probability of each of the ~~transaction professionals~~capital markets advisors signing an employment agreement. As of ~~March 31,~~June 30, 2017 and December 31, 2016, $0.3 million and $0.1 million, respectively, have been accrued for these arrangements on the consolidated balance sheet.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

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

The following discussion summarizes the financial position of the Company and its subsidiaries as of ~~March 31,~~June 30, 2017, and the results of our operations for the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2017, and should be read in conjunction with (i) the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form10-Q and (ii) the consolidated financial statements and accompanying notes to our Annual Report on Form10-K for the year ended December 31, 2016.

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 24 offices with approximately ~~924~~944 associates including approximately ~~345 transaction professionals.~~357 capital markets advisors.

Substantially all of our revenues are in the form of capital markets services fees collected from our clients, usually negotiated on atransaction-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 sales, 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:

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 sales and loan originations and related servicing fees. If our debt placement and investment sales 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 in the global capital and credit markets, and in particular the domestic capital markets. While conditions in the most recent years have generally improved, the global and domestic credit and liquidity issues, coupled with the global and domestic economic recession/slow down as well as other global and domestic macro events beyond our control, could reduce in the future the number of acquisitions, dispositions and loan originations, as well as the respective number of transactions and transaction volumes. This has had, and may have in the future, 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 of the 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 global and domestic economies and 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 Form10-Q.

Following is a discussion of our results of operations for the three months ended ~~March 31,~~June 30, 2017 and ~~March 31,~~June 30, 2016. The table included in the period comparisons below provides summaries of our results of operations. Theperiod-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 Form10-K for the year ended December 31, 2016.


	For the Three Months Ended March 31,																		For the Three Months Ended June 30,
	2017						2016												2017						2016
	Dollars			% of Revenue			Dollars			% of Revenue			Total Dollar Change			Total Percentage Change			Dollars			% of Revenue			Dollars			% of Revenue			Total Dollar Change			Total Percentage Change
	(dollars in thousands, unless percentages)																		(dollars in thousands, unless percentages)
Revenues
Capital markets services revenue	$	132,713			95.6	%	$	113,670			96.7	%	$	19,043			16.8	%	$	133,715			97.3	%	$	113,868			96.8	%	$	19,847			17.4	%
Interest on mortgage notes receivable		4,999			3.6	%		3,264			2.8	%		1,735			53.2	%		2,717			2.0	%		2,912			2.5	%		(195	)		(6.7	)%
Other		1,094			0.8	%		596			0.5	%		498			83.6	%		932			0.7	%		885			0.8	%		47			5.3	%

Total revenues		138,806			100.0	%		117,530			100.0	%		21,276			18.1	%		137,364			100.0	%		117,665			100.0	%		19,699			16.7	%
Operating expenses
Cost of services		80,131			57.7	%		68,502			58.3	%		11,629			17.0	%		79,290			57.7	%		66,486			56.5	%		12,804			19.3	%
Personnel		14,332			10.3	%		13,579			11.6	%		753			5.5	%		15,290			11.1	%		14,403			12.2	%		887			6.2	%
Occupancy		4,215			3.0	%		3,353			2.9	%		862			25.7	%		4,157			3.0	%		3,377			2.9	%		780			23.1	%
Travel and entertainment		4,709			3.4	%		4,465			3.8	%		244			5.5	%		5,000			3.6	%		4,036			3.4	%		964			23.9	%
Supplies, research and printing		1,768			1.3	%		1,796			1.5	%		(28	)		(1.6	)%		2,028			1.5	%		2,095			1.8	%		(67	)		(3.2	)%
Other		12,887			9.3	%		9,094			7.7	%		3,793			41.7	%		12,202			8.9	%		9,683			8.2	%		2,519			26.0	%

Total operating expenses		118,042			85.0	%		100,789			85.8	%		17,253			17.1	%		117,967			85.9	%		100,080			85.1	%		17,887			17.9	%

Operating income		20,764			15.0	%		16,741			14.2	%		4,023			24.0	%		19,397			14.1	%		17,585			14.9	%		1,812			10.3	%
Interest and other income, net		10,794			7.8	%		6,317			5.4	%		4,477			70.9	%		13,042			9.5	%		8,739			7.4	%		4,303			49.2	%
Interest expense		(7	)		(0.0	)%		(13	)		(0.0	)%		6			(46.2	)%		(5	)		(0.0	)%		(11	)		(0.0	)%		6			(54.5	)%
(Increase) decrease in payable under tax receivable agreement		—			0.0	%		—			0.0	%		—			0.0	%		—			0.0	%		—			0.0	%		—			0.0	%

Income before income taxes		31,551			22.7	%		23,045			19.6	%		8,506			36.9	%		32,434			23.6	%		26,313			22.4	%		6,121			23.3	%
Income tax expense		11,895			8.6	%		9,169			7.8	%		2,726			29.7	%		12,972			9.4	%		10,467			8.9	%		2,505			23.9	%

Net income	$	19,656			14.2	%	$	13,876			11.8	%	$	5,780			41.7	%	$	19,462			14.2	%	$	15,846			13.5	%	$	3,616			22.8	%

Adjusted EBITDA (1)	$	32,457			23.4	%	$	24,716			21.0	%	$	7,741			31.3	%	$	32,850			23.9	%	$	27,977			23.8	%	$	4,873			17.4	%

(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 anon-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 arenon-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 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.

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,~~June 30, 2017 and 2016:


Adjusted EBITDA for the Company is calculated as follows:							Adjusted EBITDA for the Company is calculated as follows:
(dollars in thousands)							(dollars in thousands)
	For the Three Months Ended March 31,							For the Three Months Ended June 30,
	2017			2016				2017			2016
Net income	$	19,656		$	13,876			$	19,462		$	15,846
Add:
Interest expense		7			13				5			11
Income tax expense		11,895			9,169				12,972			10,467
Depreciation and amortization		3,667			2,669				4,032			2,893
Stock-based compensation (a)		3,906			2,839				4,846			3,197
Initial recording of mortgage servicing rights		(6,674	)		(3,850	)			(8,467	)		(4,437	)
Increase (decrease) in payable under the tax receivable agreement		—			—				—			—

Adjusted EBITDA	$	32,457		$	24,716			$	32,850		$	27,977

Revenues.Our total revenues were ~~$138.8~~$137.4 million for the three months ended ~~March 31,~~June 30, 2017 compared to ~~$117.5~~$117.7 million for the same period in 2016, an increase of ~~$21.3~~$19.7 million, or ~~18.1%~~16.7%. Revenues increased primarily due to a ~~12.9%~~25.0% increase in total production volume as compared to the ~~first~~second quarter of 2016.

Total Operating Expenses.Our total operating expenses were $118.0 million for the three months ended ~~March 31,~~June 30, 2017 compared to ~~$100.8~~$100.1 million for the same period in 2016, an increase of ~~$17.3~~$17.9 million, or approximately ~~17.1%~~17.9%. Expenses increased primarily due to increased cost of services primarily from an increase in capital markets services revenue. Additionally, personnel, occupancy, travel and entertainment, and other operating costs increased most of which is due to the increase in headcount.

The cost of services for the three months ended ~~March 31,~~June 30, 2017 increased ~~$11.6~~$12.8 million, or ~~17.0%~~19.3%, to ~~$80.1~~$79.3 million from ~~$68.5~~$66.5 million for the same period in 2016. The increase is primarily the result of the increase in commissions and other incentive compensation directly related to the increase in capital markets services revenues and higher ~~salaries~~salary and fringe benefit costs from increased headcount. These increases were partially offset by a decrease in compensation expense directly tied to performance-based incentives earned in connection with employment agreements for recruited transaction professionals. Cost of services as a percentage of capital markets services revenues was approximately ~~60.4%~~59.3% and ~~60.3%~~58.4% for the three month periods ended ~~March 31,~~June 30, 2017 and ~~March 31,~~June 30, 2016, respectively.

Personnel expenses that are not directly attributable to providing services to our clients increased approximately ~~$0.8~~$0.9 million, or ~~5.5%~~6.2%, to ~~$14.3~~$15.3 million for the three months ended ~~March 31,~~June 30, 2017 from ~~$13.6~~$14.4 million for the same period in 2016. The increase is primarily related to an increase in salaries and equity compensation costs (excluding profit participation equity costs) of ~~$0.5~~$0.8 million. This increase is partially offset by decreased profit participation costs of ~~$0.1~~$0.3 million during the ~~first~~second quarter 2017 as compared to the ~~first~~second quarter 2016. Personnel expenses are also 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 ~~$3.9~~$4.8 million and ~~$2.8~~$3.2 million for the three months ended ~~March 31,~~June 30, 2017 and 2016, respectively. The increase in stock compensation costs is primarily due to increased restricted stock awards granted in February 2017 of ~~$0.6~~$0.4 million. At ~~March 31,~~June 30, 2017, there was approximately ~~$45.8~~$41.7 million of unrecognized compensation cost related to share-based awards. The weighted average remaining contractual term of the unvested restricted stock units is ~~2.8~~2.5 years as of ~~March 31,~~June 30, 2017. The weighted average remaining contractual term of the vested options is ~~2.9~~2.6 years as of ~~March 31,~~June 30, 2017.

Net Income.Our net income for the three months ended ~~March 31,~~June 30, 2017 was ~~$19.7~~$19.5 million, an increase of approximately ~~$5.8~~$3.6 million versus ~~$13.9~~$15.8 million for the same fiscal period in 2016. This increase is primarily due to the increase in operating income and interest and other income, net.

Following is a discussion of our results of operations for the six months ended June 30, 2017 and June 30, 2016. The table included in the period comparisons below provides summaries of our results of operations. Theperiod-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 Form10-K for the year ended December 31, 2016.


Adjusted EBITDA for the Company is calculated as follows:
(dollars in thousands)
	For the Six Months Ended June 30,
	2017			2016
Net income	$	39,118		$	29,722
Add:
Interest expense		12			24
Income tax expense		24,867			19,636
Depreciation and amortization		7,699			5,562
Stock-based compensation (a)		8,752			6,036
Initial recording of mortgage servicing rights		(15,141	)		(8,287	)
Increase (decrease) in payable under the tax receivable agreement		—			—

Adjusted EBITDA	$	65,307		$	52,693

Revenues.Our total revenues were $276.2 million for the six months ended June 30, 2017 compared to $235.2 million for the same period in 2016, an increase of $41.0 million, or 17.4%. Revenues increased primarily due to a 19.2% increase in total production volumes as compared to the first six months of 2016.

Total Operating Expenses.Our total operating expenses were $236.0 million for the six months ended June 30, 2017 compared to $200.9 million for the same period in 2016, an increase of $35.1 million, or 17.5%. Expenses increased primarily due to increased cost of services and other costs resulting primarily from an increase in capital markets services revenue and increased headcount.

Personnel expenses that are not directly attributable to providing services to our clients increased $1.6 million, or 5.9%, to $29.6 million for the six months ended June 30, 2017 from $28.0 million for the same period in 2016. The increase is primarily related to an increase in equity compensation (excluding equity compensation relating to the profit participation plans) of $1.3 million and an increase in salaries and incentive compensation costs of $0.4 million and offset by a decrease in profit participation costs of $0.8 million. These increases were partially offset by a decrease in expense relating to our firm and office profit participation plans of $0.5 million. Personnel expenses are impacted quarterly by the adjustments made to accrue for the estimated expense associated with the performance-based firm and office profit participation plans. Both the firm and office profit participation 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 $8.8 million and $6.0 million for the six months ended June 30, 2017 and 2016, respectively. At June 30, 2017, there was approximately $41.7 million of unrecognized compensation cost related to share based awards. The weighted average remaining contractual term of the unvested restricted stock units is 2.5 years as of June 30, 2017. The weighted average remaining contractual term of the vested options is 2.6 years as of June 30, 2017.

Net Income.Our net income for the six months ended June 30, 2017 was $39.1 million, an increase of approximately $9.4 million versus $29.7 million for the same fiscal period in 2016. This increase is primarily due to the increase revenues as discussed above.

Total assets increased to $1.2 billion at ~~March 31,~~June 30, 2017 from $716.7 million at December 31, 2016, primarily due to an increase in mortgage notes receivable of ~~$553.5~~$469.2 million due to a higher number of loans pending sale to Freddie Mac at ~~March 31,~~June 30, 2017, compared to December 31, 2016, an increase in intangible assets, net of ~~$4.4 million, an increase in goodwill of $4.8~~$8.5 million, and an increase in other noncurrent assets of ~~$2.2~~$5.2 million. These increases in assets were partially offset by a decrease inof cash and cash equivalents of ~~$59.8 million primarily due to a dividend payment of $60.0~~$33.8 million and a decrease in ~~the~~ deferred tax ~~assets~~asset, net of ~~$10.2~~$13.0 million.

Total liabilities increased to ~~$1.0 billion~~$941.7 million at ~~March 31,~~June 30, 2017 from $480.1 million at December 31, 2016, primarily due to an increase in amounts outstanding under the warehouse lines of credit of ~~$550.6~~$466.3 million due to a higher number of loans ~~outstanding related~~pending sale to ~~our~~ Freddie Mac ~~business~~ at ~~March 31,~~June 30, 2017, compared to December 31, 2016. ~~This was partially offset by a decrease in accrued compensation and related taxes of $16.3 million primarily due to the payment of incentive compensation that was accrued as of December 31, 2016.~~

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

Cash and cash equivalents decreased ~~$59.8~~$33.8 million in the ~~three~~six months ended ~~March 31,~~June 30, 2017. Net cash of ~~$13.1~~$40.5 million was provided by operating activities, primarily resulting from ~~$19.7~~$39.1 million of net income which was partially offset by uses of cash from a $1.5 million decrease in accrued compensation and related taxes, a $5.2 million increase in other noncurrent assets and a ~~decrease of $1.7~~$2.8 million increase in prepaid taxes, prepaid expenses and other current assets. ~~These increases in cash were partially offset by uses of cash from a $13.0 million decrease in accrued compensation and related taxes and a $2.2 million increase in other noncurrent assets.~~ Investing activities used ~~$6.9~~$8.2 million of cash resulting from $6.2 million for the purchase of businesses and ~~$0.7~~$2.0 million for investing in property and equipment. Financing activities used ~~$66.0~~$66.1 million primarily due to a $60.0 million dividend payment that we made to holders of our Class A common stock on February 21, 2017. Additionally, payments on certain capital leases used ~~$0.1~~$0.3 million and $5.9 million was used to purchase shares of Class A common stock in connection with the minimum employee statutory tax withholdings.

Cash and cash equivalents decreased ~~$90.4~~$57.2 million in the ~~three~~six months ended ~~March 31,~~June 30, 2016. Net cash of ~~$17.9~~$16.1 million was ~~used in~~provided by operating activities, primarily resulting from $29.7 million of net income which was partially offset by uses of cash from a ~~$28.4~~$15.8 million decrease in accrued compensation and related taxes, a ~~$10.8~~$7.6 million decrease in other accrued liabilities, ~~and~~ a ~~$2.3~~$3.1 million ~~increase~~decrease in prepaid taxes, prepaid expenses and other current ~~assets. These uses of cash were partially offset by $13.9~~assets and a $1.3 million ~~of net income.~~decrease in accounts payable. Cash of ~~$0.4~~$1.2 million was used for investing in property and equipment. Financing activities used ~~$72.0~~$72.2 million primarily due to a $68.4 million dividend payment that we made to holders of our Class A common stock on February 19, 2016. Additionally, payments on certain capital leases used ~~$0.1~~$0.3 million, $2.9 million was used to purchase shares of Class A common stock in connection with the minimum employee statutory tax withholdings and we recognized a $0.6 million incremental tax ~~benefit~~adjustment related to share-based award activities.

Our current assets typically have consisted primarily of cash and cash equivalents and accounts receivable in relation to earned transaction fees. At ~~March 31,~~June 30, 2017, our cash and cash equivalents of approximately ~~$175.8~~$201.8 million were invested or held in a mix of money market funds and bank demand deposit accounts at two 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.

Over the ~~three~~six month period ended ~~March 31,~~June 30, 2017, we generated approximately ~~$13.1~~$40.5 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~~six months ended ~~March 31,~~June 30, 2017, we incurred approximately ~~$118.0~~$236.0 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~~six months ended ~~March 31,~~June 30, 2017, approximately ~~58.8%~~59.3% 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.

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 $111.4 million, of which approximately $11.3 million is anticipated to be paid in 2017.

Our liquidity needs related to our long term obligations are primarily related to our facility leases. For the ~~three~~six months ended ~~March 31,~~June 30, 2017, we incurred approximately ~~$4.2~~$8.4 million in occupancy expenses and approximately ~~$7,000~~$12,000 in interest expense.

We are a party to an uncommitted $450 million financing arrangement with PNC, ~~that can be increased~~which has a maximum capacity of $1.5 billion for the remainder of 2017 at which time it will revert to ~~$550 million four times per year for a period of 45 calendar days.~~$450 million. We are also party to an uncommitted ~~$125~~$150 million financing arrangement with Huntington. The Huntington ~~National Bank that~~arrangement was amended in July 2017 to increase the uncommitted amount from $125 million to $150 million, which can be increased to ~~$150~~$175 million three times in aone-year period for ~~30 business~~45 calendar days and may be increased to ~~fund our Freddie Mac loan closings.~~$175 million from October 1, 2017 through February 15, 2018. Pursuant to these arrangements, PNC or Huntington funds the multifamily Freddie Mac loan closings on atransaction-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. On September 30, 2016, HFF LP entered into an extended funding agreement with Freddie Mac whereby Freddie Mac could extend the Original Funding Date (as defined in the agreement) on any mortgage that HFF LP funded within the fourth quarter of 2016, to February 15, 2017. In

connection with the extended funding agreement with Freddie Mac, PNC agreed to increase the financing arrangement to $2.0 billion through March 31, 2017. PNC also agreed to a maximum capacity of $1.5 billion for the remainder of 2017. On January 1, 2018 the capacity under the PNC agreement will revert to $450 million. As of ~~March 31,~~June 30, 2017, we had outstanding borrowings of ~~$841.6~~$757.3 million under the PNC/Huntington arrangements.Non-cash activity totaling ~~$550.6~~$466.3 million increased these financing arrangements during the ~~three~~six month period ended ~~March 31,~~June 30, 2017 andnon-cash activity of ~~$196.8 increased~~$168.8 decreased these financing arrangement during the ~~three~~six month period ended ~~March 31,~~June 30, 2016. 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.

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/or 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/or 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.

Intangible Assets.Our intangible assets primarily include mortgage servicing rights under agreements with third party lenders. 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,~~June 30, 2017, the fair value and net book value of the servicing rights were ~~$54.2~~$59.0 million and ~~$40.2~~$44.2 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 ~~151%~~136%, the discount rate increased ~~99%~~89% or if there is a ~~13%~~15% 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 amortizable intangible assets on an annual basis, or more frequently if circumstances so indicate, for potential impairment.

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 ~~$102.4~~$99.5 million at ~~March 31,~~June 30, 2017 is comprised mainly of a ~~$114.7~~$111.6 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 of ~~$114.7~~$111.6 million represents annualpre-tax deductions on the Section 754 basis step up and payments under the tax receivable agreement of approximately $36.4 million in 2017, then increasing to $52.6 million in 2021 and then decreasing over the next nine years to approximately $0.1 million in 2030. In order to realize the anticipatedpre-tax benefit of approximately $36.4 million in 2017, the Company needs to generate approximately $318 million in revenue, assuming a constant cost structure. In the event that the Company cannot realize the annualpre-tax benefit each year, the shortfall becomes a net operating loss that can be carried back 2 years to offset prior years’ taxable income, if any, or carried forward 20 years 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 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.

Leases. The Company leases all of its facilities under operating lease agreements. These lease agreements typically contain tenant improvement allowances. The Company records tenant improvement allowances as leasehold improvement assets, included in property and equipment, net in the consolidated balance sheet, and related deferred rent liabilities and amortizes them on a straight-line basis over the shorter of the term of the lease or useful life of the asset as additional depreciation expense and a reduction to rent expense, respectively. Lease agreements sometimes contain rent escalation clauses or rent holidays, which are recognized on a straight-line basis over the life of the lease in accordance with ASC 840,Leases(ASC 840). Lease terms generally range from three to eleven years. An analysis is performed on each equipment lease to determine whether it should be classified as a capital or operating lease according to ASC 840.

Employment /Non-compete Agreements. The Company has entered into arrangements with newly hired ~~transaction professionals~~capital markets advisors whereby these ~~transaction professionals~~capital markets advisors would be paid additional compensation if certain performance targets are met over a defined period. Some of these agreements contain provisions that the payments will be made to the ~~transaction professionals~~capital markets advisors only if they enter into an employment agreement at the end of the performance period. Payments under these arrangements, if earned, would be paid in fiscal years 2017 through 2019. We begin to accrue for these payments when it is deemed probable that payments will be made; therefore, on a quarterly basis, we evaluate the probability of each of the ~~transaction professionals~~capital markets advisors achieving the performance targets and the probability of each of the ~~transaction professionals~~capital markets advisors signing an employment agreement, if applicable. As of ~~March 31,~~June 30, 2017, $0.3 million is accrued for these arrangements.

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 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 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.

We do not currently invest in anyoff-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our consolidated financial statements.

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 aquarter-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, given the recent disruptions, write-offs and credit losses in the global and domestic capital markets, the liquidity issues facing all global capital markets, and in particular the U.S. commercial real estate markets, this historical pattern of seasonality may or may not continue.

Inflation and/or deflation, or both, could significantly affect our compensation costs, particularly those not directly tied to our ~~transaction professionals’~~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 and/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 Form10-Q.

In December 2016, the FASB issued ~~Update~~update2016-19 – “Technical Corrections and Improvements,” which covers a wide range of ~~Topics~~topics in the Accounting Standards ~~Codification.~~Codification (“ASC”). The amendments in this ~~Update~~update represent changes to clarify, correct errors, or make minor improvements to the ASC, making it easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments generally fall into one of the following categories: amendments related to differences between original guidance and the ASC, guidance clarification and reference corrections, simplification, or minor improvements. Most of the amendments in this ~~Update~~update do not require transition guidance and are effective upon issuance of this ~~Update.~~update.

beginning in fiscal year 2017 and the Company made an election to change its accounting for forfeitures from the previously-required estimation method to recognizing forfeitures when they occur. The Company recognized $0.6 million as a reduction in retained earnings on January 1, 2017 as a result of eliminating the estimated forfeiture rate on unvested restricted stock units.

In February 2016, the FASB issued new guidance on the accounting for leases. This new guidance will require 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 new lease accounting requirements are effective for the Company’s 2019 fiscal year with a modified retrospective transition approach required, with early adoption permitted. The Company is currently evaluating the impact of ~~the~~this new guidance on its consolidated financial statements.

In May 2014, the FASB issued ~~changes~~ASUNo. 2014-09, “Revenue from Contracts with Customers,” which is required to be adopted by the Company in fiscal year 2018. This ASU supersedes the revenue recognition ~~with customers. This update provides~~requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. The standard implements a five-step ~~analysis of transactions to determine~~model for determining when and how revenue is recognized. AnUnder the model, an entity ~~should~~will be required to recognize revenue to depict the transfer of ~~promised~~ goods or services to ~~customers in~~a customer at an amount ~~that reflects~~reflecting the consideration ~~to which the entity~~it expects to ~~be entitled~~receive in exchange for those goods or services. ~~This update will be effective for the Company beginning in fiscal year 2018. This update may be applied~~The new standard also permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying ~~this update~~the guidance recognized at the date of initial ~~application. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.~~application (modified retrospective method).

In January 2017, FASB issued ASUNo. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU eliminates Step 2 from the goodwill impairment test. This ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. We are evaluating the effect that ASU2017-04 will have on our goodwill assessment process, but do not believe the adoption of ASU2017-04 will have a material impact on our consolidated financial statements and related disclosures.

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, foreign currency exchange rate risk, equity price risk or other market risk.

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 Rule13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of ~~March 31,~~June 30, 2017, 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.

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.

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 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.

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 Form10-K for the year ended December 31, 2016, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form10-K 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/or operating results.

~~On March 29, 2017, we completed the acquisition~~ of ~~Hentschel & Company, LLC, pursuant to which we issued 83,333 restricted shares~~Equity Securities and Use of our Class A common stock to the equity holder of the acquired entity as part of the transaction consideration. No underwriters were involved in the foregoing issuance of securities. The issuance of such shares was deemed to be exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) and Rules 505 and 506 thereunder, as transactions by an issuer not involving a public offering. We determined that the acquirer of the restricted shares in the transaction, Stephen Hentschel, was an accredited investor.Proceeds.

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.


Delaware		51-0610340
(State of Incorporation)		~~51-0610340~~
	(I.R.S. Employer Identification No.)

One Victory Park 2323 Victory Avenue, Suite 1200 Dallas, Texas		75219
(Address of Principal Executive Offices)		(Zip code)


	Page
PART I. FINANCIAL INFORMATION		4

Item 1. Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures about Market Risk		2931
Item 4. Controls and Procedures		3031

PART II. OTHER INFORMATION		33

Item 1. Legal Proceedings		3133
Item 1A. Risk Factors		3133
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3133
Item 3. Defaults upon Senior Securities		3133
Item 4. Mine Safety Disclosures		3133
Item 5. Other Information		3133
Item 6. Exhibits		3133

Signatures		3234
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 1350


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


Dated: August 3, 2017	HFF, INC.

~~Dated: May 4, 2017~~	By:	/s/ Mark D. Gibson
		Mark D. Gibson
		Chief Executive Officer,
		Director and Executive Managing Director
		(Principal Executive Officer)

Dated: ~~May 4,~~August 3, 2017	By:	/s/ Gregory R. Conley
		Gregory R. Conley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)


	For the Six Months Ended June 30,
	2017						2016
	Dollars			% of Revenue			Dollars			% of Revenue			Total Dollar Change			Total Percentage Change
	(dollars in thousands, unless percentages)
Revenues
Capital markets services revenue	$	266,428			96.5	%	$	227,538			96.7	%	$	38,890			17.1	%
Interest on mortgage notes receivable		7,716			2.8	%		6,176			2.6	%		1,540			24.9	%
Other		2,026			0.7	%		1,481			0.6	%		545			36.8	%

Total revenues		276,170			100.0	%		235,195			100.0	%		40,975			17.4	%
Operating expenses
Cost of services		159,421			57.7	%		134,988			57.4	%		24,433			18.1	%
Personnel		29,622			10.7	%		27,982			11.9	%		1,640			5.9	%
Occupancy		8,372			3.0	%		6,730			2.9	%		1,642			24.4	%
Travel and entertainment		9,709			3.5	%		8,501			3.6	%		1,208			14.2	%
Supplies, research and printing		3,796			1.4	%		3,891			1.7	%		(95	)		(2.4	)%
Other		25,089			9.1	%		18,777			8.0	%		6,312			33.6	%

Total operating expenses		236,009			85.5	%		200,869			85.4	%		35,140			17.5	%

Operating income		40,161			14.5	%		34,326			14.6	%		5,835			17.0	%
Interest and other income, net		23,836			8.6	%		15,056			6.4	%		8,780			58.3	%
Interest expense		(12	)		(0.0	)%		(24	)		(0.0	)%		12			(50.0	)%
(Increase) decrease in payable under tax receivable agreement		—			0.0	%		—			0.0	%		—			0.0	%

Income before income taxes		63,985			23.2	%		49,358			21.0	%		14,627			29.6	%
Income tax expense		24,867			9.0	%		19,636			8.3	%		5,231			26.6	%

Net income	$	39,118			14.2	%	$	29,722			12.6	%	$	9,396			31.6	%

Adjusted EBITDA (1)	$	65,307			23.6	%	$	52,693			22.4	%	$	12,614			23.9	%

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