Highlights of the three and twelve months ended December 31, 2007:
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The Company generated approximately $52.5 million of total revenue for
the fourth quarter and approximately $265.5 million of total revenue for
the year ended December 31, 2007.
The Company generated 110 gross sales valued at $31.0 million during
the fourth quarter and had 31 cancellations for net new orders of 79 valued
at $21.5 million. For the year ended December 31, 2007, the Company
generated 827 gross new orders valued at $198.1 million (inclusive of the
bulk sale of its Bellemeade condominium project in June 2007) with 216
order cancellations for net new orders of 611 valued at $111.7 million.
Backlog at December 31, 2007 was $22.8 million on 70 backlog units.
During the fourth quarter the Company delivered 17 units at the
Eclipse at Potomac Yard project, generating approximately $8.5 million of
residential revenue. At December 31, 2007 the Company had 4 backlog sales
valued at $1.4 million and 124 unsold units remaining in inventory at the
project.
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During the Company's fall marketing campaign, the Company sold
approximately 78 speculative homes valued at approximately $21.8 million.
At December 31, 2007, the Company's inventory of standing unsold single-
family homes was 19, and its inventory of completed for-sale condominiums
was 219 units, which included 124 units at the Eclipse, 44 units available
for sale (not held as rental units) at Penderbrook, 26 units at Belmont Bay
8&9 and 25 units at Haddon Hall.
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The Company's estimated outstanding senior debt at December 31, 2007
was approximately $142.0 million representing a $123.4 million, or 46.5%,
decrease as compared to the Company's $265.4 million of outstanding senior
debt at December 31, 2006.
Bulk sales taking place during the three and twelve months ended
December 31, 2007:
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On December 28, 2007 the Company settled on the $6.2 million sale of
its East Capitol Street condominium project located in Washington, DC. In
connection with the sale the Company retired the $4.5 million related
project loan with Key Bank.
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On December 21, 2007, the Company completed the delivery of the Market
Square retail complex (consisting of five retail condominium units) at its
Eclipse at Potomac Yard project for $14.5 million. In connection with the
sale of the retail complex, and pursuant to the project's loan requirements
Comstock utilized 100% of the net closing proceeds to make a principal
curtailment to Corus Bank. At December 31, 2007 the outstanding loan
balance for the project was approximately $22.5 million; this amount
related exclusively to the remaining 128 undelivered residential
condominium units.
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On August 31, 2007, 2007 the Company settled on the $3.7 million sale
of its Blake Culpeper project located in Culpeper, Virginia. In connection
with the sale the Company retired $2.4 million of related seller
financings.
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On June 28, 2007 the Company settled on the $47.5 million sale of its
316 unit Bellemeade condominium project located in Leesburg, Virginia. In
order to facilitate the sale the Company repurchased 58 condominiums it had
previously delivered to individual unit buyers. In connection with the sale
the Company retired the $33.0 million related project loan with Bank of
America.
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In February and June 2007 the Company settled on the aggregate $7.1
million sale of a portion of its Massey Preserve project located in
Raleigh, North Carolina. In connection with the sale the Company retired
$1.3 million of related project financing with Wachovia Bank.
Other information:
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On January 7, 2008, the Company entered into an agreement with the
noteholder of its $30.0 million senior unsecured notes by which the Company
was granted the option to receive a $15.0 million discount to the principal
amount of the notes by either: (i) paying $15.0 million in cash to the
noteholder on or before March 10, 2008; or (ii) paying $8.0 million in cash
to the noteholder on or before March 10, 2008, issuing a warrant to the
noteholder to buy one million shares of the Company's Class A Common Stock
at an exercise price of $0.70 per share, and entering into an amended and
restated note for $7.0 million.
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The Company is currently evaluating the recoverability of the $34.5
million deferred tax asset which was being carried on its balance sheet at
September 30, 2007. In connection with its December 31, 2007 financial
statements the Company expects to create a valuation allowance for the
remaining balance of its deferred tax asset after accounting for tax
refunds applied for relating to taxes paid in 2005.
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On December 28, 2007, the Company's Board of Directors authorized the
acceleration of all outstanding unvested restricted stock held by employees
representing approximately 844,000 shares. In connection with the
acceleration, certain executives entered into lock up agreements
restricting the sale of 161,882 shares until December 31, 2009 and an
additional 168,424 shares until December 31, 2010. As a result of the
acceleration, the Company will recognize approximately $4.1 million of
compensation expense associated with the subject shares during the 4th
quarter of 2007, thereby eliminating the need to recognize these expenses
in future periods. The Company believes that the transaction will have no
net effect on its shareholder equity because the acceleration is treated as
an equity issuance which offsets the associated expense.
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On December 28, 2007, the Company's Board of Directors authorized the
cancellation of all outstanding vested and unvested stock options
representing approximately 200,000 shares. In connection therewith, the
Company will recognize approximately $0.2 million of compensation expense
associated with the subject options during the 4th quarter of 2007, thereby
eliminating the need to recognize these expenses in future periods.
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On December 28, 2007, the Company's Board of Directors authorized the
granting of up to 650,000 new stock options to certain Company employees,
with a $1.00 strike price. The new stock options were issued to employees
at all levels of the company (not including its CEO) with a strike price
set above the then current closing price as a means of aligning the
interests of the workforce as a whole with the interests of shareholders.
The new stock options vest over a four year period. In connection therewith
the Company will recognize GAAP cost of approximately $0.2 million
associated with the subject options during 2008-2011.
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At December 31, 2007, the Company was in on-going discussions with
certain of its lenders regarding modifications to existing credit
facilities relating to covenants and maturities, including loans that
require principal curtailments or maturities in 2008.
"Market conditions during 2007 were extremely challenging," said
Christopher Clemente, Chairman and CEO, "While we cannot be assured
of improved market conditions in 2008, we believe that our
accomplishments during 2007 significantly improve our prospects for
the future. Among our accomplishments last year we: lowered our
operational costs, reduced our total senior debt by almost 47%,
lowered our inventory of land and spec units, reached agreements with
many of our lenders to improve the flexibility of certain borrowing
facilities, reached agreements with many vendors that will lower our
construction costs, delivered a majority of the units at the Eclipse,
and reached agreement with our senior unsecured note holder regarding
meaningful modifications to those notes. Nonetheless, challenges
remain and we continue to be focused on addressing them."
About Comstock Homebuilding Companies, Inc.:
Established in 1985, Comstock Homebuilding Companies, Inc. is a
publicly traded, diversified real estate development firm with a focus
on affordably 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, DC; Raleigh, North Carolina;
and Atlanta, Georgia metropolitan areas. 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. 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, DC 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
Company's most recent form 10-K, as filed with the Securities and
Exchange Commission on March 16, 2007. Comstock specifically
disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise.
SOURCE: Comstock Homebuilding Companies, Inc.