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

05/13/2011

RESTON, VA -- (MARKET WIRE) -- 05/13/11 -- 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:



Joe Squeri

Chief Financial Officer

703.230.1229



Source: Comstock Homebuilding Companies, Inc.

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