SOURCE: Comstock Homebuilding Companies, Inc.

Comstock Homebuilding Companies, Inc.

May 13, 2011 17:00 ET

Comstock Homebuilding Companies, Inc. Reports Results for Three Months Ended March 31, 2011

RESTON, VA--(Marketwire - May 13, 2011) - Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or the "Company"), a multi-faceted real estate development and services company focused on the Washington, DC market, announced a net loss for its first quarter ended March 31, 2011 of $(1.0) million or $(0.05) per diluted share. The net loss and diluted loss per share for the first quarter of 2011 compares to a net loss of $(0.9) million or $(0.05) earnings per diluted share for the comparable 2010 quarter. Total revenue for the first quarter of 2011 was $4.6 million compared to $9.1 million for the comparable 2010 quarter.

"Having completed our strategic realignment plan in 2010, our sole mission in 2011 is rebuilding shareholder value," said Christopher Clemente, Chairman and Chief Executive Officer. "Our renewed focus on the Washington, DC region, which is widely regarded as the best real estate market in the nation, and our stabilized operating platform and improved balance sheet allows us to be wholly focused on restoring Comstock to profitability. To accomplish this we will continue working on bringing previously announced DC projects to market while pursuing additional opportunities in for-sale and rental properties and in our construction services business."

Notable Events During The Quarter

Several key events occurred during the first quarter of 2011:

  • Restart in construction - On February 17, 2011, the Company announced that it started construction on a 103-unit rental apartment community in the Cascades master planned community located in the Potomac Falls area of Loudoun County, Virginia. The project is being financed with a five-year, $11.0 million construction/mortgage loan provided by Cardinal Bank of Tysons Corner, Virginia. Comstock will begin leasing units in the summer of 2011 and expects construction to be completed in early 2012.

  • Ongoing monetization of real estate assets - Comstock continues to monetize inventory units from its Eclipse and Penderbrook projects. Total units delivered in the first quarter of 2011 were 7. An additional 5 units were delivered during the month of April. There are 38 units remaining for sale at Eclipse and 62 remaining for sale at Penderbrook.

  • Successful refinancing of maturing debt - On February 2, 2011 the Company entered into an $11.85 million refinancing of its Eclipse on Center Park condominium project. The new loan was completed with Eagle Bank and proceeds of the loan were utilized to pay off existing indebtedness owed to KeyBank, N.A. in advance of the KeyBank loan maturity in March 2011. The Eagle Bank loan provides the Company several key benefits including a lower overall cost of financing, a reduced sales quota requirement that better reflects current market conditions and an extended three year term, which Comstock believes will allow for the value of the asset to be maximized through the orderly sale of the remaining condominium units.

On May 6, 2011, Comstock announced that its Board of Directors adopted a Section 382 stockholder rights plan (the "Rights Plan") designed to protect stockholder value by preserving the value of certain deferred tax assets primarily associated with net operating loss carryforwards ("NOLs") under Section 382 of the Internal Revenue Code. The Company currently has approximately $72 million in Federal and State NOLs with a potential value of up to $25 million in tax savings. The Rights Plan was adopted to reduce the likelihood of an unintended "ownership change" which could jeopardize the availability of the Company's NOLs to offset potential tax liabilities resulting from future taxable income. The Rights Plan will be presented to the Company's stockholders for approval at the 2011 Annual Meeting of Stockholders.

About Comstock Homebuilding Companies, Inc.

Comstock is a multi-faceted real estate development and services company. Our substantial experience in building a diverse range of products including single-family homes, townhouses, mid-rise condominiums, high-rise condominiums and mixed-use (residential and commercial) developments has positioned Comstock as a prominent real estate developer and homebuilder in the Washington, DC market. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or its projects please visit www.comstockhomebuilding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements including incurring substantial indebtedness with respect to projects, the diversion of management's attention and other negative consequences. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the Company's most recent Form 10-K, as filed with the Securities and Exchange Commission and other filings with the Securities and Exchange Commission. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.

        COMSTOCK  HOMEBUILDING  COMPANIES,  INC.  AND  SUBSIDIARIES
                 UNAUDITED  CONSOLIDATED  BALANCE  SHEETS
            (Amounts  in  thousands,  except  per  share  data)

                                                  March 31,   December 31,
                                                    2011          2010
                                                ------------  ------------
ASSETS
    Cash and cash equivalents                   $        714  $        475
    Restricted cash                                    3,128         5,201
    Real estate held for development and sale         28,876        34,008
    Construction in process - Variable Interest
     Entity                                            4,029             -
    Property, plant and equipment, net                    45            50
    Other assets                                       2,934         1,194
                                                ------------  ------------

       TOTAL ASSETS                             $     39,726  $     40,928
                                                ============  ============

LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable and accrued liabilities    $      5,020  $      5,884
    Notes payable - secured by real estate held
     for development and sale                         16,041        18,853
    Notes payable - Variable Interest Entity           1,094             -
    Notes payable - due to affiliates,
     unsecured                                         5,008         5,008
    Notes payable - unsecured                          4,383         4,515
                                                ------------  ------------

       TOTAL LIABILITIES                              31,546        34,260
                                                ------------  ------------

    Commitments and contingencies (Note 9)
    SHAREHOLDERS' EQUITY
    Class A common stock, $0.01 par value,
     77,266,500 shares authorized, 17,159,807
     and 17,120,467 issued and outstanding,
     respectively                                        172           171
    Class B common stock, $0.01 par value,
     2,733,500 shares authorized, 2,733,500
     issued and outstanding                               27            27
    Additional paid-in capital                       166,754       166,700
    Treasury stock, at cost (391,400 shares
     Class A common stock)                            (2,439)       (2,439)
    Accumulated deficit                             (158,816)     (157,791)
                                                ------------  ------------
            TOTAL COMSTOCK HOMEBUILDING EQUITY         5,698         6,668
    Non-controlling interest - Variable
     Interest Entity                                   2,482            --
                                                ------------  ------------
            TOTAL EQUITY                               8,180         6,668
                                                ------------  ------------
Accumulated deficit


            TOTAL LIABILITIES AND SHAREHOLDERS'
             EQUITY                             $     39,726  $     40,928
                                                ============  ============




        COMSTOCK  HOMEBUILDING  COMPANIES,  INC.  AND  SUBSIDIARIES
            UNAUDITED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
            (Amounts  in  thousands,  except  per  share  data)

                                                    Three Months Ended
                                                        March 31,
                                                --------------------------
                                                    2011          2010
                                                ------------  ------------
Revenues
      Revenue--homebuilding                     $      3,019  $      5,693
      Revenue--other                                   1,567         3,446
                                                ------------  ------------

  Total revenue                                        4,586         9,139
Expenses
      Cost of sales--homebuilding                      2,722         5,692
      Cost of sales--other                             1,273         2,872
      Selling, general and administrative              1,385         1,455
      Interest, real estate taxes and indirect
       costs related to inactive projects                369           848
                                                ------------  ------------

Operating loss                                        (1,163)       (1,728)
Other income, net                                        270           836
                                                ------------  ------------

Loss before income taxes                                (893)         (892)
Income taxes expense                                      --            --
                                                ------------  ------------

Net loss                                                (893)         (892)

Less: Net income attributable to
 non-controlling interests - Variable Interest
 Entity                                                  132            --
                                                ------------  ------------

Net loss attributable to Comstock Homebuilding  $     (1,025) $       (892)
                                                ============  ============

Basic loss per share                            $      (0.05) $      (0.05)

Diluted loss per share                          $      (0.05) $      (0.05)

Basic weighted average shares outstanding             18,645        18,096
                                                ============  ============

Diluted weighted average shares outstanding           18,645        18,096
                                                ============  ============




          COMSTOCK HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
              UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
              (Amounts in thousands, except per share data)

                                                   Three Months Ended
                                                         March 31,
                                               --------------------------
                                                   2011          2010
                                               ------------  -------------
Cash flows from operating activities:
    Net loss                                   $     (1,025) $        (892)
    Adjustment to reconcile net loss to net
     cash provided by operating activities
       Net income attributable to
        non-controlling interest - Variable
        Interest Entity                                 132             --
       Amortization and depreciation                      4             75
       Gain on M&T note retirement                     (196)            --
       Gain on trade payable settlements               (135)          (770)
       Changes in operating assets and
        liabilities:
          Restricted cash                               (27)           (28)
          Real estate held for development and
           sale                                       2,706          7,911
          Other assets                               (1,739)           148
          Accounts payable and accrued
           liabilities                                1,650            280
                                               ------------  -------------

             Net cash provided by operating
              activities                              1,370          6,724
                                               ------------  -------------

Cash flows from investing activities:
    Investment in Cascades Apartments -
     construction in process                         (1,603)            --
    Purchase of property, plant and equipment            --             (4)
                                               ------------  -------------

             Net cash used in investing
              activities                             (1,603)            (4)
                                               ------------  -------------

Cash flows from financing activities:
    Proceeds from notes payable                      12,233            267
    Payments on notes payable                       (14,111)        (7,036)
    Proceeds from Cascades Private Placement          2,350             --
                                               ------------  -------------

             Net cash provided by (used in)
              financing activities                      472         (6,769)
                                               ------------  -------------

Net increase (decrease) in cash and cash
 equivalents                                            239            (49)
Cash and cash equivalents, beginning of period          475          1,085
                                               ------------  -------------

Cash and cash equivalents, end of period       $        714  $       1,036
                                               ============  =============

Supplemental disclosure for non-cash activity:
    Interest incurred but not paid in cash     $        223  $         655
    Reduction in notes payable in connection
     with troubled debt restructuring          $         --  $       7,689
    Increase in additional paid in capital in
     connection with troubled debt
     restructuring                             $         --  $       7,689
    Reduction in real estate held for
     development and sale in connection with
     deconsolidation of subsidiaries           $         --  $      15,407
    Reduction in notes payable in connection
     with deconsolidation of subsidiaries      $         --  $      15,893
    Reduction in accrued liabilities in
     connection with deconsolidation of
     subsidiaries                              $         --  $         449
    Increase in opening retained earnings in
     connection with deconsolidation of
     subsidiaries                              $         --  $         936
    Reduction in accrued liabilities in
     connection with issuance of stock
     compensation                              $         55  $         571
    Increase in class A common stock par value
     in connection with issuance of stock
     compensation                              $         --  $           3
    Increase in additional paid in capital in
     connection with issuance of stock
     compensation                              $         54  $         568
    Reduction in accounts payable due to
     Cascades Private Placement closing        $      2,100  $          --
    Reduction in restricted cash due to
     Cascades Private Placement closing        $      2,100  $          --

Contact Information

  • Contact:

    Joe Squeri
    Chief Financial Officer
    703.230.1229