Insignia sells residential subsidiaries.

Insignia Financial Group, Inc. announced that it has sold its residential real estate services subsidiaries, Insignia Douglas Elliman and Insignia Residential Group, to Montauk Battery Realty LLC, whose principal owners are New Valley Corp. and Dorothy Herman, chief executive officer of Prudential

The punzhase price will be approximately $71.75 million, including $1 million that will be paid a year from closing as well as the assumption of a $4 million existing earn-out obligation.

As part of the transaction, the Douglas Elliman company has entered into a new franchise agreement with The Prudential Real Estate Affiliates, Inc.

As a result of this transaction, Montauk Battery which also owns Prudential Long Island Realty, will have over 2,000 sales professionals and will enjoy the pre-eminent market position from New York City to the Hamptons, and markets in between. Montauk will also become the largest manager of co-op and condo apartments in the New York metropolitan area.

On Feb. 18, Insignia announced that it had entered into a definitive agreement to be acquired by CB Richard Ellis for $11 in cash per share of common stock, subject to adjustment (as described below). Subject to several conditions, the CB Richard Ellis transaction is expected to close in June, at which time CB Richard Ellis would acquire Insignia, including the cash generated from the sale of the residential businesses.

Insignia's press release indicated that in connection with the CB Richard Ellis transaction, Insignia's shareholders may receive as much as an additional $1 per share of common stock of consideration, depending on Insignia's disposition of certain real estate investment assets at or prior to the closing of the transaction. These assets are economic interests in income-producing properties, development properties and real estate securities funds. If Insignia receives net cash proceeds in excess of a specified amount (generally $45 million, subject to increase) from the sales of these real estate investment assets prior to the closing of the merger, Insignia shareholders would receive the excess as additional consideration up to $1 per share of common stock. Insignia Douglas Elliman and Insignia Residential Group are not included in the specified real estate investment assets, and their sale will not affect the consideration to be paid to Insignia shareholders by CB Richard Ellis in the merger.

Insignia Douglas Elliman has more than 950 employees, including 830 brokers, in nine offices in New York City and three offices on Long Island. In 2002, Insignia Douglas Elliman completed one of the most successful years in its 92-year history Robust demand for New York co-ops and condos fueled gross transaction volume of $2.8 billion for the year. Insignia Residential Group, with more than 350 employees, manages more than 60,000 units in over 250 properties, easily the New York area leader.

Prudential Real Estate and Relocation Services is Prudential Financial's integrated real estate brokerage franchise and relocation services business. The real estate group markets franchises primarily to existing real estate companies. As of Dec. 31, there were 1,637 franchise offices and 44,222 sales professionals in the franchise network in the U.S. and Canada