Comstock Homebuilding Companies, Inc. Reports Third Quarter Earnings for Three Months Ended September 30, 2006

11/06/2006

RESTON, VA, Nov 06, 2006 (MARKET WIRE via COMTEX News Network) -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock or the "Company") today announced financial results for three and nine months ended September 30, 2006. For the three months ended September 30, 2006 the Company reported a net loss of $5.8 million or ($0.36) per share basic and diluted on total revenue of $35.3 million as compared to net income of $11.5 million or $0.82 per share basic and $0.81 per share diluted on $78.4 million of total revenue for the three months ended September 30, 2005. The Company reported a net loss for the nine months ended September 30, 2006 of $11.6 million or ($0.78) per share basic and diluted as compared to net income of $18.4 million or $1.47 per share basic and $1.45 per share diluted on total revenue of $147.1 million for the nine months ended September 30, 2005.

The Company announced that for the three months ended September 30, 2006 it had recorded a non-cash pre-tax charge to assets of $1.8 million as a result of impairments to its real estate inventory. The Company announced that it had not written off any option deposits during the three months ended September 30, 2006. The total non-cash pre-tax impairment charges for the nine months ended September 30, 2006 was $14.7 million.

The Company will conduct a conference call for interested investors on Monday, November 6, 2006, at 10:00 a.m. Eastern Standard Time. During the call the Company will discuss the financial results detailed in this release. The dial-in number for the conference call is (800) 632-2975 and the access code is 8046790; the call may also be accessed on the Internet at www.comstockhomebuilding.com in the Investor Relations section.

                    Summary of Sales and Settlement Results
                                       ----------------------------------
                                        Three months ended September 30,
                                       ----------------------------------
    ($ in 000s except units)              2006        2005      % Change
                                       ----------- ----------- ----------
    Net new orders                            93         117      -20.5%
    Net new order revenue                  $26.3       $34.4      -23.5%
    Settlements                              110         202      -45.5%
    Settlement revenue                     $30.4       $72.4      -58.0%
    Backlog units                            549         567       -3.2%
    Backlog revenue                       $211.0      $231.8       -9.0%
                                       ----------------------------------
                                        Nine months ended September 30,
                                       ----------------------------------
    ($ in 000s except units)              2006        2005      % Change
                                       ----------- ----------- ----------
    Net new orders                           466         523      -10.9%
    Net new order revenue                 $139.3      $197.8      -29.6%
    Settlements                              387         403       -4.0%
    Settlement revenue                    $117.1      $140.5      -16.7%
    Backlog units                            549         567       -3.2%
    Backlog revenue                       $211.0      $231.8       -9.0%

Highlights of Financial Results - Three months ended September 30, 2006:

--  The Company reported a net loss of $5.8 million or ($0.36) per share
    basic and diluted, as compared to net income of $11.5 million or $0.82 per
    share basic and $0.81 per share diluted for the three months ended
    September 30, 2005;

--  As a result of softening market conditions and project repositioning
    in the Company's markets, the Company recorded a $1.8 million non-cash
    charge to assets for impairments to its real estate inventory at four
    projects, two of which were in Atlanta and two in Raleigh;

--  On a pro-forma basis, before impairments option contract related write
    offs, the Company reported a net loss after tax of $4.7 million or ($0.29)
    per share for the three months ended September 30, 2006 as compared to net
    income of $0.73 per share on a pro-forma basis for the three months ended
    September 30, 2005, as adjusted for the current share count;

--  Total revenue was $35.3 million with $30.4 million of revenue from
    homebuilding as compared to total revenue of $78.4 million for the three
    months ended September 30, 2005 with $72.4 million of revenue derived from
    homebuilding;

--  The Company delivered 110 new homes at an average per unit revenue of
    approximately $276,000 as compared to 202 new homes at an average per unit
    revenue of $358,000 for the three months ended September 30, 2005;

--  Gross profit from homebuilding was $2.1 million on a pro-forma basis
    before impairments representing a 6.8% gross margin as compared to $21.6
    million for the three months ended September 30, 2005 representing a gross
    margin from homebuilding of 30.0%;

--  New order revenue was $26.3 million on 93 new orders for an average
    new order revenue of $283,000 as compared to $34.4 million of new order
    revenue on 117 new orders for an average of $294,000 per new order for the
    three months ended September 30, 2005;

--  Backlog at September 30, 2006 was $211.0 million on 549 units as
    compared to $231.8 million on 567 units at September 30, 2005.


Highlights of Financial Results - Nine months ended September 30, 2006:

--  The Company reported a net loss of $11.6 million or ($0.78) per share
    basic and diluted, as compared to net income of $18.4 million or $1.47 per
    share basic and $1.45 per share diluted for the nine months ended September
    30, 2005;

--  On a pro-forma basis, before impairments and non-cash option contract
    related write offs, the Company reported a net loss after tax of $2.7
    million or ($0.18) per share for the nine months ended September 30, 2006
    as compared to net income of $1.23 per share on a pro-forma basis for the
    nine months ended September 30, 2005, as adjusted for the current share
    count;

--  Total revenue was $122.6 million with $117.1 million of revenue from
    homebuilding, as compared to total revenue of $147.1 million for the nine
    months ended September 30, 2005 with $140.5 million of revenue derived from
    homebuilding;

--  The Company delivered 387 new homes at an average per unit revenue of
    approximately $303,000 as compared to 403 new homes at an average per unit
    revenue of $349,000 for the nine months ended September 30, 2005;

--  Gross profit from homebuilding was $20.3 million on a pro-forma basis
    before impairments and write-offs representing a 17.4% gross margin as
    compared to $42.4 million for the nine months ended September 30, 2005
    representing a gross margin from homebuilding of 30.2%;

--  New order revenue was $139.3 million on 466 new orders for an average
    new order revenue of $299,000 as compared to $197.8 million of new order
    revenue on 523 new orders for an average of $378,000 per new order for the
    nine months ended September 30, 2005.



"Market conditions continue to present challenges for our industry," said Christopher Clemente, Chairman and Chief Executive Officer. "Currently, our focus is on balance sheet enhancement, risk mitigation, project positioning, cost controls, and lender relationships. We believe we will weather this storm and that the upcoming settlements at the Eclipse project will position Comstock for a better 2007 and beyond."

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; and Atlanta, Georgia metropolitan areas. 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 on the Company or it projects 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.

Preliminary Financial Results from Operations

COMSTOCK HOMEBUILDING COMPANIES  Three Months Ended     Nine Months Ended
INCOME STATEMENT                    September 30,         September 30,
                                --------------------  --------------------
                                  2006       2005       2006       2005
                                ---------  ---------  ---------  ---------
Revenues
  Sale of real estate--Homes     $  30,367  $  72,409  $ 117,083  $ 140,473
  Other revenue                     4,913      6,028      5,489      6,604
                                ---------  ---------  ---------  ---------
Total revenue                      35,280     78,437    122,572    147,077
Expenses
  Cost of sales of real estate     28,290     50,838     96,746     98,087
  Cost of sales of other            4,994      3,118      5,024      3,138
  Impairments and write-offs        1,802          0     14,717          0
  Selling, general and
   administrative                   9,903      6,562     25,978     17,222
                                ---------  ---------  ---------  ---------
Operating income                   (9,709)    17,919    (19,893)    28,630
Other (income) expense, net          (330)      (463)      (918)      (653)
                                ---------  ---------  ---------  ---------
Income before minority interest
 and equity in earnings of real
 estate partnerships               (9,379)    18,382    (18,975)    29,283
Minority interest                      12          6         17         14
                                ---------  ---------  ---------  ---------
Income before equity in
 earnings of real estate
 partnerships                      (9,391)    18,376    (18,992)    29,269
Equity in earnings of real
 estate partnerships                  (13)        48        (66)        82
                                ---------  ---------  ---------  ---------
Total pre-tax income               (9,404)    18,424    (19,058)    29,351
Income taxes                       (3,650)     6,941     (7,421)    10,993
                                ---------  ---------  ---------  ---------
Net income                      $  (5,754) $  11,483  $ (11,637) $  18,358
                                =========  =========  =========  =========
Basic earnings per share            (0.36)      0.82      (0.78)      1.47
                                =========  =========  =========  =========
Basic weighted average shares
 outstanding                       15,804     13,987     14,946     12,491
                                =========  =========  =========  =========
Diluted earnings per share          (0.36)      0.81      (0.78)      1.45
                                =========  =========  =========  =========
Diluted weighted average shares
 outstanding                       15,804     14,168     14,946     12,653
                                =========  =========  =========  =========
COMSTOCK HOMEBUILDING COMPANIES, INC.                 September  December
BALANCE SHEET                                         30, 2006   31, 2005
                                                      ---------  ---------
ASSETS
  Cash and cash equivalents                           $  10,840  $  42,167
  Restricted cash                                        16,330     10,800
  Receivables                                             3,906      6,365
  Note receivables                                            -      1,250
  Due from related parties                                3,567      2,899
  Real estate held for development and sale             509,692    263,802
  Inventory not owned - variable interest entities       54,666     89,890
  Property, plant and equipment                           2,071        605
  Investment in real estate partnerships                   (101)       (35)
  Deferred income tax                                         -      2,545
  Other assets                                           18,305     11,031
                                                      ---------  ---------
  TOTAL ASSETS                                        $ 619,276  $ 431,319
                                                      =========  =========
LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable and accrued liabilities               66,668     59,131
  Due to related parties                                     40         40
  Obligations related to inventory not owned             52,032     83,015
  Notes payable                                         310,274    142,994
  Junior subordinated debt                               30,000          -
  Notes payable--related parties                             663        663
  Deferred income tax                                     6,986          -
                                                      ---------  ---------
  TOTAL LIABILITIES                                     466,663    285,843
                                                      ---------  ---------
  Commitments and contingencies (Note 15)
  Minority interest                                         414        400
                                                      ---------  ---------
SHAREHOLDERS' EQUITY
    Class A common stock, $0.01 par value, 77,266,500
     shares authorized, 14,231,822 issued and
     outstanding                                            142        115
    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                            147,633    126,461
  Treasury stock, at cost (391,400 class A common
   stock)                                                (2,439)         -
  Retained earnings (accumulated deficit)                 6,836     18,473
                                                      ---------  ---------
  TOTAL SHAREHOLDERS' EQUITY                            152,199    145,076
                                                      ---------  ---------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          ---------  ---------
   (DEFICIT)                                          $ 619,276  $ 431,319
                                                      =========  =========

Media Contact:
Bryan Murray
Contact via http://www.marketwire.com/mw/emailprcntct?id=25E8119FD20405F6
703.883.1700 ext. 217

SOURCE: Comstock Homebuilding Companies, Inc.