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Comstock Homebuilding Companies, Inc. Reports Results for Three and Six Months Ended June 30, 2010

08/13/2010

RESTON, VA, Aug 13, 2010 (MARKETWIRE via COMTEX News Network) -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or the "Company"), a prominent real estate development and homebuilding firm in the Washington, D.C. area announced a net loss for its second quarter ended June 30, 2010 of $1,843,000, $.10 per diluted share. The net loss and diluted loss per share for the second quarter of 2010 decreased 93.4% and 93.7%, respectively, when compared to the second quarter of 2009. Total revenue for the second quarter of 2010 increased 146.2 % to $6.4 million from $2.6 million for the comparable 2009 quarter.

For the six months ended June 30, 2010, the Company reported a net loss of $2,735,000, $.15 per diluted share. The net loss and diluted loss per share for the six months ended June 30, 2010 decreased 91.0% and 91.3%, respectively, when compared to the first half of 2009. Total revenue for the first half of 2010 increased 105.3 % to $15.6 million from $7.6 million for the comparable 2009 quarter.

New orders, net of cancellations, in the second quarter of 2010 decreased 23.5% to 13 units, when compared to 17 units in the second quarter of 2009. There were zero cancellations in the second quarter of 2010 compared to 5 in the second quarter of 2009. New orders, net of cancellations, for the six months ended June 30, 2010 increased 6.9% to 31 units, when compared to 29 units for the six months ended June 30, 2009. There was 1 cancellation during the six months ended June 30, 2010 compared to 5 cancellations for the same period in 2009.

The number of units settled increased 200.0% to 18 units in the second quarter of 2010 as compared to 6 settlements during the comparable quarter in 2009. The number of units settled increased 142.9% to 34 units for the six months ended June 30, 2010 as compared to 14 settlements during the first half of 2009.

The Company ended the second quarter of 2010 without a backlog of homes sold but not settled, compared to a backlog of 18 units for the same period in 2009. The value of gross revenue applicable to the backlog units at the end of the second quarter in 2009 was $4.1 million. Because unit sales in 2010 are being generated with completed inventory of units the time between sale and settlement tends to be a little as thirty days, thereby generating low backlog at period ends.

Homebuilding revenues for the three months ended June 30, 2010 totaled $5.9 million, a 227.8% increase over the same period of 2009. Homebuilding revenues for the six months ended June 30, 2010 totaled $11.6 million, a 96.6% increase over the same period of 2009. The gross margin on homebuilding decreased to 1.7% for the six months ended June 30, 2010, compared to 8.5% for the same period in 2009.

Other revenue for the three months ended June 30, 2010 totaled $0.5 million, a 37.5% decrease from the same period of 2009. Rental income of $0.5 million was generated during the three months ended June 30, 2010 as compared to $0.8 million in the same period of 2009. Other revenue for the six months ended June 30, 2010 totaled $4.0 million, a 150.0% increase from the same period of 2009. Rental income of $1.0 million was generated during the six months ended June 30, 2010 as compared to $1.5 million in the same period of 2009. The decrease in rental revenue primarily resulted from the Company's continued sale of inventory units, thereby reducing the number of units operated as rental units. Other revenue for the six months ended June 30, 2010 also includes $2.8 million related to the sale of land at our Station View project.

During the six months ended June 30, 2010, the Company recognized other income related to settlements with vendors on trade payables of $0.9 million, as compared to $0.3 million of other income related to settlements with vendors on trade payables in the same period of 2009.

As of June 30, 2010 the Company's total debts were $34.1 million, representing a decrease of $33.5 million from December 31, 2009, and a decrease of $61.3 million from one year earlier. In addition to the decrease in debt resulting from the restructuring of the Senior Note described below, the Company recorded an additional $15.9 million decrease in Wachovia debt in connection with the deconsolidation of certain subsidiaries of which the Company is no longer the primary beneficiary.

Shareholder's equity as of June 30, 2010 increased to $10.7 million, or $0.58 per diluted share, from $4.1 million, or $0.23 per diluted share at December 31, 2009. The increase in shareholder's equity during the six months ended June 30, 2010 was in large part driven by the restructuring of the Company's Senior Subordinated Note ("Senior Note"), as reported on February 17, 2010. As a result of the restructuring of the Senior Note the principal balance due was reduced to $4.5 million. Prior to the restructuring, the carrying value of the Senior Note debt was $12.7 million. As reported by the Company on December 31, 2009, the Senior Note was acquired by Stonehenge Funding, LC, ("Stonehenge") an entity wholly owned by Comstock's Chief Executive Officer, Christopher Clemente. Subsequent to the purchase of the Senior Note by Stonehenge, Gregory Benson, the Company's Chief Operating Officer and a member of the Board of Directors, purchased a participating interest in the Senior Note. In accordance with the rules of accounting applicable to the restructuring of debt held by insiders, the $7.7 million gain on the transaction was treated as a capital contribution to the Company and is not included in the calculation of net income for the six months ended June 30, 2010.

As previously reported, the Company has completed its Strategic Realignment Plan, reducing overall debt from a peak of approximately $340 million in 2006 to approximately $34.1 million as of June 30, 2010. Among the many benefits to the Company of successfully implementing its strategy to stabilize its business is the accumulation of significant loss carry forward provision, which the Company believes will enhance future operating cashflow due to reduced tax liabilities associated with potential future profitability.

"We continue to implement the final steps of our Strategic Realignment Plan and take steps to improve results in coming periods," said Christopher Clemente, Comstock's Chairman and Chief Executive Officer. "We believe this initiative has significantly stabilized the Company and will contribute to our ability to return Comstock to profitability on a regular basis in the near future."

About Comstock Homebuilding Companies, Inc.

Comstock is a multi-faceted real estate development company engaged in the development of for-sale residential and mixed use products. 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, D.C. market place. For more information please visit www.comstockhomebuilding.com.

Cautionary Statement

This release may contain "forward-looking" statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the Company's Form 10-K as filed with the Securities and Exchange Commission on March 31, 2010. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

       COMSTOCK HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
               UNAUDITED CONSOLIDATED BALANCE SHEETS
           (Amounts in thousands, except per share data)
                                                   June 30,   December 31,
                                                     2010         2009
                                                 ------------ ------------
ASSETS
    Cash and cash equivalents                    $        747 $      1,085
    Restricted cash                                     3,132        3,249
    Real estate held for development and sale          42,146       70,890
    Property, plant and equipment, net                     64          144
    Other assets                                        1,906        1,963
                                                 ------------ ------------
       TOTAL ASSETS                              $     47,995 $     77,331
                                                 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable and accrued liabilities     $      3,214 $      5,579
    Notes payable - secured by real estate held
     for development and sale                          24,668       50,530
    Notes payable - due to affiliates, unsecured        5,054       12,743
    Notes payable - unsecured                           4,391        4,346
                                                 ------------ ------------
       TOTAL LIABILITIES                               37,327       73,198
                                                 ------------ ------------
    Commitments and contingencies (Note 8)
    SHAREHOLDERS' EQUITY
    Class A common stock, $0.01 par value,
     77,266,500 shares authorized, 16,078,478
     and 15,608,438 issued and outstanding,
     respectively                                         161          156
    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                        165,747      157,418
    Treasury stock, at cost (391,400 Class A
     common stock)                                     (2,439)      (2,439)
    Accumulated deficit                              (152,828)    (151,029)
                                                 ------------ ------------
       TOTAL EQUITY                                    10,668        4,133
                                                 ------------ ------------
       TOTAL LIABILITIES AND SHAREHOLDERS'
        EQUITY                                   $     47,995 $     77,331
                                                 ============ ============
          COMSTOCK HOMEBUILDING COMPANIES, INC. AND SUBSIDIARIES
              UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in thousands, except per share data)
                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Revenues
    Revenue - homebuilding      $   5,919  $   1,777  $  11,613  $   5,936
    Revenue - other                   509        829      3,955      1,626
                                ---------  ---------  ---------  ---------
Total revenue                       6,428      2,606     15,568      7,562
Expenses
    Cost of sales -
     homebuilding                   5,673      1,287     11,364      5,448
    Cost of sales - other             413        256      3,285        573
    Impairments and write-offs         --     15,351         --     15,351
    Selling, general and
     administrative                 1,405      2,228      2,861      4,267
    Interest, real estate taxes
     and indirect costs related
     to inactive projects             821      1,310      1,670      2,592
                                ---------  ---------  ---------  ---------
Operating loss                     (1,884)   (17,827)    (3,612)   (20,669)
Other (income) loss, net              (41)        87       (877)      (270)
                                ---------  ---------  ---------  ---------
Loss from continuing operations
 before income taxes               (1,843)   (17,914)    (2,735)   (20,399)
Income taxes expense                   --         --         --          1
                                ---------  ---------  ---------  ---------
Loss from continuing operations    (1,843)   (17,914)    (2,735)   (20,400)
Discontinued operations:
Loss from discontinued
 operations, net of taxes              --     (9,829)        --     (9,988)
                                ---------  ---------  ---------  ---------
Net loss                        $  (1,843) $ (27,743) $  (2,735) $ (30,388)
                                =========  =========  =========  =========
Basic loss per share
Continuing operations           $    (.10) $   (1.02) $    (.15) $   (1.16)
Discontinued operations                --       (.56)        --       (.57)
                                ---------  ---------  ---------  ---------
Net loss per share              $    (.10) $   (1.58) $    (.15) $   (1.73)
Diluted loss per share
Continuing operations           $    (.10) $   (1.02) $    (.15) $   (1.16)
Discontinued operations                --       (.56)        --       (.57)
                                ---------  ---------  ---------  ---------
Net loss per share              $    (.10) $   (1.58) $    (.15) $   (1.73)
Basic weighted average shares
 outstanding                       18,365     17,554     18,231     17,554
                                =========  =========  =========  =========
Diluted weighted average shares
 outstanding                       18,365     17,554     18,231     17,554
                                =========  =========  =========  =========

Contact:
Jeffrey R. Dauer
Chief Financial Officer
703.883.1700 ext: 1229


SOURCE: Comstock Homebuilding Companies, Inc.

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