RESTON, VA, Oct 24, 2006 (MARKET WIRE via COMTEX News Network) -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("CHCI") and
Comstock Bellemeade, L.C., a wholly owned subsidiary of CHCI
(collectively "Comstock" or the "Company"), today announced that on
October 18th, 2006, they received a letter from Bank of America, NA
(the "Lender") purporting to be a Notice of Default (the "Notice")
under a Deed of Trust Note and Loan Agreement dated September 18,
2005 (the "Note") regarding the Company's Commons at Bellemeade
project in Leesburg, Virginia (the "Project"). The purported Notice
results from a claim by the Lender that the Company failed to make a
$2.7 million cash curtailment which the Lender asserted was due on
September 30, 2006. The Company promptly informed the Lender that it
disputed the validity of the Notice and of its intent to compel
arbitration to resolve the dispute. Pursuant to ongoing discussions
with the Lender, the Company asserts that the payment was not
currently due and payable as demanded by the Lender based on the fact
that the Note had not been fully funded by the Lender pursuant to its
terms and conditions.
Specifically, the dispute results from a provision in the Note that
stipulates what the maximum outstanding commitments of the Lenders
would be to the Project on certain established dates. The Note
outlines approximately $12.5 million of cash curtailments required by
September 30, 2006 to reduce the outstanding commitment of the Note
to $33,775,000 predicated on the Company having drawn the
approximately $46 million of total funding available for acquisition
and improvements at the Project. To date, the Company has only drawn
approximately $43 million for acquisition and improvements and has
made corresponding principal reductions in excess of $10 million,
thus bringing the outstanding balance at September 30, 2006 below the
maximum outstanding commitment. As such, the Company believes that
the Lenders' Notice is invalid.
"Comstock has consistently met and satisfied every legitimate banking
obligation we have had and we have always worked closely with our
lenders to ensure the security of their loans," said Christopher
Clemente, Chairman and CEO. "We are disappointed in the direction
that Bank of America has chosen to take our long standing
relationship but we are confident that we will prevail in the
resolution of this matter."
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies is a diversified
real estate development firm with a focus on moderately priced
for-sale residential products. Comstock builds and markets
single-family homes, townhouses, mid-rise condominiums, high-rise
condominiums, mixed-use urban communities and active adult
communities. The Company currently markets its products under the
Comstock Homes brand in the Washington, D.C., Raleigh, North
Carolina, Atlanta, Georgia and parts of the Carolinas. Comstock
develops mixed-use, urban communities and active-adult communities
under the Comstock Communities brand. Comstock Homebuilding Companies
Inc. trades on Nasdaq under the symbol CHCI. For more information
please visit http://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. Statements that are predictive in
nature, that depend upon or refer to future events or conditions, or
that include words such as "may," "will," "expects," "projects,"
"anticipates," "estimates," "believes," "intends," "plans," "should,"
"seeks," and similar expressions, including statements related to
Comstock's expected future financial results and anticipated growth
in the Washington, D.C. housing market, are forward-looking
statements. 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. These risks and uncertainties include,
but are not limited to, economic, market and competitive conditions
affecting Comstock and its operations and products, risks and
uncertainties relating to the market for real estate generally and in
the areas where Comstock has projects, the availability and price of
land suitable for development, materials prices, labor costs,
interest rates, Comstock's ability to service its significant debt
obligations, fluctuations in operating results, anticipated growth
strategies, continuing relationships with affiliates, environmental
factors, government regulations, the impact of adverse weather
conditions or natural disasters and acts of war or terrorism.
Additional information concerning these and other important risks and
uncertainties can be found under the heading "Risk Factors" in the
prospectus from Comstock's initial public offering, as filed with the
Securities and Exchange Commission on December 15, 2004. Comstock
specifically disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
Media Contact
Bryan Murray
(703) 883-1700 Option 6