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Comstock Holding Companies, Inc. Reports Results for Three and Twelve Months Ended December 31, 2012

03/26/2013

Reston, Virginia (March 27, 2013) – Comstock Holding Companies, Inc. (NASDAQ: CHCI) (“Comstock” or the  “Company”), a home building and multi-faceted real estate development and services company in the Washington, D.C. metropolitan area, announced a net loss for its fourth quarter ended December 31, 2012 of ($2.0) million or ($0.10) per basic and diluted share on total revenue of $2.6 million as compared to a net loss for its fourth quarter ended December 31, 2011 of ($2.7) million or ($0.14) per basic and diluted share on total revenue of $6.1 million. For the year ended December 31, 2012, the Company reported a net loss of ($5.7) million or ($0.28) per basic and diluted share on total revenue of $14.3 million as compared to a net income of $1.1 million or $0.05 per basic and diluted share on total revenue of $21.9 million for year ended December 31, 2011. The 2012 results include impairment charges of $2.4 million on the Company’s one remaining legacy project, the Eclipse, while results for 2011 include a one-time gain on legal settlement of $9.4 million. During 2012, the Company also reported a gain of $6.5 million within net income from discontinued operations as a result of the $19.35 million sale of the Cascades apartment project in the first quarter.  

2013 Outlook

“For the first time in a number of years there is clear and convincing evidence that the housing market has rebounded and will continue to improve,” said Christopher Clemente, Comstock’s Chairman and CEO. “The inventory of existing homes on the market has dropped to levels not seen in decades, while the number of days on market has dropped to pre-recession levels. Further, historically low interest rates are contributing to the affordability of new homes, while residential rental rates continue to climb. Although the results we reported for 2012 are disappointing, our primary focus during 2012 was securing and positioning new projects to generate positive results in 2013 and beyond. Based upon our early sales success at our recently opened new communities, 2013 is off to a great start, with unit sales and revenue in the first quarter of 2013 expected to approximate the revenue levels for all of 2012”.

“Based on the increased demand for new homes in the D.C. market, and our scheduled openings of additional communities, we anticipate 2013 homebuilding revenue and home settlements to be exponentially higher than in 2012,” continued Clemente. “As a result, we are projecting a return to profitability for 2013. Furthermore, we believe the rebounding housing market in the D.C. area will provide an opportunity for additional growth beyond this year. Accordingly, we anticipate generating additional growth in home settlements and revenue with the goal of reaching 250-300 settlements and $125M - $150M of revenue by 2015."

The Company’s forecasted homebuilding revenues and settlements for 2013 is as follows (revenue in thousands):

 

Actual

Forecast

 
 

12/31/12

Q1-2013

FY-2013

   

Homebuilding Revenue

$11,633

$10,000 - $12,000

$55,000 - $64,000

   

Home Settlements

45

18 - 22

105 - 125

   

Sales Backlog (Period end)

9

31

n/a

   

Backlog Revenue (Period end)

$5,400

$16,100

n/a

   

As of the date of this press release, the Company has settled 12 homes in the first quarter of 2013 realizing $5.4 million in revenue. The total value of settled homes combined with the value of current backlog is approximately $21.5 million, representing an increase of year-to-date homebuilding revenue of more than 80% as compared to the homebuilding revenue generated in all of 2012.

Notable Events

  • Subsequent to year end, the Company raised approximately $6.9 million of equity capital through a newly formed subsidiary, Comstock Investors VII, L.C. (“Investors VII’). The proceeds of the private placement are primarily being used to acquire and capitalize new residential development projects specifically: The Townes at Shady Grove Metro and The Boulevard at Shady Grove Metro in Rockville, Maryland, The Hampshires community in Washington, D.C. and Falls Grove in Manassas, Virginia. Accredited investors participating in Investors VII included unrelated third parties as well as members of the Company’s management team and certain members of the Board of Directors of the Company. The terms of the offering include a preferred return equal to a maximum of 20% per annum on capital account balances with no prepayment penalty.

2012 Highlights

  • Gross new order revenue for the year ended December 31, 2012 increased $4.4 million to $18.9 million on 57 homes as compared to $14.5 million on 50 homes for the year ended December 31, 2011. Net new order revenue for the year ended December 31, 2012 increased $2.3 million to $16.4 million on 51 homes as compared to $14.1 million on 48 homes for the year ended December 31, 2011. The average gross new order revenue per unit for the year ended December 31, 2012 increased by $42 to $332, as compared to $290 for the year ended December 31, 2011.
  • During 2012, the Company continued to monetize existing inventory at the Penderbrook Square condominium project, where it settled 37 units reducing remaining inventory to 2 units (out of a total of 424 units) at year-end and at the Eclipse condominium project where it settled 8 units reducing remaining inventory to 19 (out of a total of 465 units). Subsequently, as of the date of this press release, the Company sold and settled all remaining units at the Penderbrook Square condominium project and reduced the inventory of remaining units at the Eclipse condominium project to 19 at year-end 2012.
  • The Company announced plans to develop its latest Transit-Oriented residential community located adjacent to the Shady Grove Metro Station in Rockville, Maryland, the terminus of Metro’s “Red Line”. The community will include 36 upscale townhomes, 3 single-family homes, and 117 luxury apartments. The Company acquired the land on December 27, 2012 and is preparing to commence land development in spring-2013. The Company plans to commence sales of the townhomes mid-2013 with first deliveries expected in late-2013. Leasing of the apartments will commence in early-2014.
  • The Company announced plans to develop its latest Prince William County, Virginia residential community located in Manassas, Virginia near the Virginia Railway Express Station. The community, to be known as Falls Grove, will include 110 townhomes and 19 single-family homes. The Company is preparing to commence land development in spring-2013 and plans to commence sales of the townhomes, priced from the high $200’s, in mid-2013 with first deliveries expected in late-2013. Sales are expected to commence on the single-family homes in late 2013 or early 2014.
  • In early 2012, the Company closed on the sale of its 103-unit Cascades Apartment project for $19.35 million, recognizing a gain of $6.5 million from the sale. The Cascades apartment project represented the Company’s first “merchant-build” rental apartment project sale.   
  • During the third quarter of 2012, the Company formed Comstock Eastgate, L.C., a joint venture of Comstock Holding Companies, Inc. and BridgeCom Development I, LLC, to develop and construct Eastgate One, a 66-unit subdivision situated within the 400-unit Eastgate master-planned community located in Loudoun County. Construction on the first building containing six units, two of which are model homes, commenced in December 2012, with sales commencing in the 1st quarter of 2013. As of the date of this press release, the Company had received 15 new orders (sales contracts) for units within the Eastgate community.  Settlements of homes at Eastgate began in the first quarter of 2013.
  • Based on the improving market conditions, and increasing revenue potential associated with its new communities, the Company recently entered into an affiliated business arrangement with Stewart Title Insurance Company promoting the sale of title and real estate settlement services. This ancillary business venture, named Superior Title Services, LC (“STS”), is anticipated to generate additional revenue for the Company in 2013.   

 

About Comstock Holding Companies, Inc.

Comstock is a home building and multi-faceted real estate development and services company that builds a wide range of housing products under its Comstock Homes brand through its wholly owned subsidiary, Comstock Homes of Washington, LC. Our track record of developing numerous successful new home communities and more than 5,500 homes, together with our substantial experience in building a diverse range of products including apartments, single-family homes, townhouses, mid-rise condominiums, high-rise condominiums and mixed-use (residential and commercial) developments has positioned Comstock as a leading residential developer and homebuilder in the Washington, D.C. metropolitan area. Comstock Holding Companies, Inc. is a publicly traded company, trading on NASDAQ under the symbol: CHCI. For more information about Comstock or its new home communities, please visit www.comstockhomes.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. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

Contact:

 

Joe Squeri

Chief Financial Officer

703.230.1229

SOURCE: Comstock Holding Companies, Inc.

 

 

 

 

 

 

 

 

 


 

COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

  

December 31,
2012

 

 

December 31,
2011

 

ASSETS

  

 

 

 

 

 

 

 

Cash and cash equivalents

  

$

3,539

  

 

$

5,639

  

Restricted cash

  

 

3,203

  

 

 

3,082

  

Trade receivables

  

 

1,611

  

 

 

2,228

  

Real estate held for development and sale

  

 

27,781

  

 

 

21,212

  

Operating real estate, net

  

 

  

 

 

12,095

  

Property, plant and equipment, net

  

 

222

  

 

 

105

  

Other assets

  

 

2,343

  

 

 

2,018

  

 

  

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

  

$

38,699

  

 

$

46,379

  

 

  

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

  

 

 

 

 

 

 

 

LIABILITIES

  

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

  

$

4,691

  

 

$

3,987

  

Notes payable - secured by real estate held for development and sale, net of discount

  

 

19,492

  

 

 

10,541

  

Notes payable - secured by operating real estate

  

 

  

 

 

9,957

  

Notes payable - due to affiliates, unsecured

  

 

5,041

  

 

 

5,008

  

Notes payable - unsecured

  

 

3,096

  

 

 

4,309

  

Income taxes payable

  

 

  

 

 

33

  

 

  

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

  

 

32,320

  

 

 

33,835

  

 

  

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 15)

  

 

—  

  

 

 

—  

  

SHAREHOLDERS’ EQUITY

  

 

 

 

 

 

 

 

Class A common stock, $0.01 par value, 77,266,500 shares authorized, 17,627,826 and 17,944,503 issued and outstanding, respectively

  

 

176

  

 

 

179

  

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

  

 

170,070

  

 

 

168,620

  

Treasury stock, at cost (391,400 shares Class A common stock)

  

 

(2,480)

 

 

 

(2,439

Accumulated deficit

  

 

(162,349)

 

 

 

(156,684

 

  

 

 

 

 

 

 

 

 

 

 

TOTAL COMSTOCK HOLDING COMPANIES, INC.  EQUITY

  

 

5,444

  

 

 

9,703

  

Non-controlling interests

  

 

935

  

 

 

2,841 

  

 

  

 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

  

 

6,379

  

 

 

12,544

  

 

  

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

  

$

38,699

  

 

$

46,379

  

 

  

 

 

 

 

 

 

 

                       

 

 

 

 

 

COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

  

Twelve Months Ended December 31,

 

 

  

2012

 

 

2011

 

Revenues

  

 

 

 

 

 

 

 

Revenue - homebuilding

  

$

11,633

  

 

$

14,062

  

Revenue - other

  

 

2,669

  

 

 

7,871

  

 

  

 

 

 

 

 

 

 

 

 

 

Total revenue

  

 

14,302

  

 

 

21,933

  

Expenses

  

 

 

 

 

 

 

 

Cost of sales - homebuilding

  

 

9,692

  

 

 

12,160

  

Cost of sales - other

  

 

3,484

  

 

 

7,434

  

Impairments and write-offs

  

 

2,358

  

 

 

—  

  

Selling, general and administrative

  

 

8,658

  

 

 

7,399

  

Interest, real estate taxes and indirect costs related to inactive projects

  

 

2,135

  

 

 

2,739

  

 

  

 

 

 

 

 

 

 

Operating loss

  

 

(12,025

)

 

 

(7,799

Gain on troubled debt restructuring

  

 

 

 

 

(219

)  

Gain on legal settlement, net

  

 

 

 

 

(9,434

 ) 

Other income, net

  

 

(18

 

 

(304

 

  

 

 

 

 

 

 

 

(Loss) income before income tax benefit (expense)

  

 

(12,007

)  

 

 

2,158

 

Income taxes benefit (expense)

  

 

2,484

  

 

 

(33

)  

 

  

 

 

 

 

 

 

 

Net (loss) income from continuing operations

  

 

(9,523

)  

 

 

2,125

 

Discontinued operations:

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

(98

)

 

 

(527

)

Gain on sale of the real estate from discontinued operations

 

 

6,466

 

 

 

 

Income tax expense from discontinued operations

 

 

(2,484

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from discontinued operations

 

 

3,884

 

 

 

(527

)

Net (loss) income

 

 

(5,639

)

 

 

1,598

 

Less: Net loss from continuing operations attributable to non-controlling interests

 

 

(77

)

 

 

 

Less: Net income from discontinued operations attributable to non-controlling interests

  

 

103

 

 

 

491

 

 

  

 

 

 

 

 

 

 

Net (loss) income attributable to Comstock Holding Companies, Inc.

  

$

(5,665

)  

 

$

1,107

 

 

  

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.47

)

 

$

0.10

 

Discontinued operations

 

 

0.19

 

 

 

(0.05

)

Net (loss) income per share

  

 $

(0.28

)  

 

 $

0.05

  

Diluted (loss) income per share:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.47

)

 

$

0.10

 

Discontinued operations

 

 

0.19

 

 

 

(0.05

)

Net (loss) income per share

  

 $

(0.28

)  

 

 $

0.05

  

Basic weighted average shares outstanding

 

 

19,970

 

 

 

20,287

 

Diluted weighted average shares outstanding

 

 

19,970

 

 

 

20,720

 

Net (loss) income attributable to Comstock Holding Companies, Inc.:

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

 

$

(9,446

)

 

$

2,125

 

Income (loss) from discontinuing operations

 

 

3,781

 

 

 

(1,018

)

Net (loss) income

 

$

(5,665

)

 

$

1,107

 

 

  

 

 

 

 

 

 

 

                   

 

 

COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

  

Twelve Months Ended December 31,

 

 

  

2012

 

 

2011

 

Cash flows from operating activities:

  

 

 

 

 

 

 

 

Net  (loss) income

  

$

(5,639)

  

 

$

1,598

  

Adjustment to reconcile net  (loss) income to net cash (used in) provided by operating activities

  

 

 

 

 

 

 

 

Amortization of loan discount and deferred financing fees

  

 

1,283

  

 

 

1,444

  

Depreciation expense

  

 

122

  

 

 

196

  

Provision for bad debt

  

 

60

  

 

 

1

  

Impairments and write-offs

  

 

2,358

  

 

 

—  

  

Amortization of stock compensation

  

 

1,447

  

 

 

932

  

Loss (gain) on extinguishment of notes payable

  

 

73

 

 

 

(219

Gain on trade payable settlements

  

 

 

 

 

(161

Gain on sale of operating real estate, net

 

 

(6,466)

 

 

 

— 

 

Loss on disposal of property, plant and equipment

 

 

1

 

 

 

— 

 

Changes in operating assets and liabilities:

  

 

 

 

 

 

 

 

Restricted cash

  

 

(121)

  

 

 

19

  

Trade receivables

  

 

569

 

 

 

(1,837

Real estate held for development and sale

  

 

(8,984)

  

 

 

10,292

  

Other assets

  

 

(433)

 

 

 

(678

Accrued interest

  

 

(495)

  

 

 

752

  

Accounts payable and accrued liabilities

  

 

217

  

 

 

364

  

Income taxes payable

  

 

(33)

  

 

 

33

  

 

  

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by operating activities

  

 

(16,041)

  

 

 

12,736

  

 

  

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

  

 

 

 

 

 

 

 

Investment in Cascades Apartments – operating real estate, net

  

 

— 

 

 

 

(9,764

Purchase of property, plant and equipment

 

 

(158)

 

 

 

(78

Proceeds from sale of Cascades Apartments – operating real estate, net

  

 

19,075

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

  

 

18,917

 

 

 

(9,842

 

  

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

  

 

 

 

 

 

 

 

Proceeds from notes payable

  

 

24,986

  

 

 

38,908

  

Payments on notes payable

  

 

(27,512)

 

 

 

(38,436

Loan financing costs

  

 

(518)

 

 

 

(1,548

)  

Proceeds from SunBridge warrant issuance

  

 

  

 

 

996

  

Distribution to non-controlling interest holders

  

 

(2,944

)  

 

 

—  

  

Contribution from non-controlling interest holders

  

 

1,012

  

 

 

2,350

  

 

  

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

  

 

(4,976)

  

 

 

2,270

 

 

  

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

  

 

(2,100)

  

 

 

5,164

 

Cash and cash equivalents, beginning of period

  

 

5,639

  

 

 

475

  

 

  

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

  

$

3,539

  

 

$

5,639

  

 

  

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

  

 

 

 

 

 

 

 

Interest paid, net of interest capitalized

  

$

1,226

  

 

$

522

  

Reduction in proceeds from sale of Cascades Apartments and increase in other assets related to amount placed in escrow upon settlement of Cascades Apartments sale

 

$

275

  

 

$

 

Increase in class A common stock par value in connection with issuance of stock compensation

 

$

  

 

$

8

 

Increase in additional paid  in capital in connection with SunBridge warrant

  

$

  

 

$

996

  

Increase in treasury stock and accrued liabilities for net-settlement of stock compensation

  

$

41

  

 

$

—  

  

 

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