Comstock Holding Companies Reports Second Quarter 2018 Results

WASHINGTON and RESTON, Va., Aug. 14, 2018 (GLOBE NEWSWIRE) — Comstock Holding Companies, Inc., (NASDAQ: CHCI), announced results for the three and six months ended June 30, 2018:

Highlights of Second Quarter 2018, as compared to Second Quarter 2017:

  • Total revenue of $14.3 million, as compared to $10.5 million.
  • Revenue from asset management operations of $3.0 million during the quarter ended June 30, 2018, representing a new and recurring revenue stream.
  • Revenue from real estate services increased 121% to $0.6 million, compared to $0.3 million.
  • G&A expense decreased 70% to $0.4 million, compared to $1.2 million.
  • Net loss attributable to common stockholders of ($1.0) million, or ($0.27) per diluted share, including impairment charges of $0.2 million, as compared to net income attributable to common stockholders of $0.4 million, or $0.11 per diluted share.
  • Pursuant to an asset management agreement, commenced development and construction of Momentum at Shady Grove, a 110-unit all workforce housing multifamily building adjacent to the Shady Grove Metro Station in Rockville, Maryland.
  • Continued wind down of for-sale homebuilding operations, on par with previously announced expectations that wind down of the for-sale homebuilding operation will be substantially completed by year-end 2018.
  • Homebuilding backlog represents forward revenue of $25.4 million on 40 home sales as compared to $22.4 million on 39 units.
  • Completed the conversion of a majority of its notes payable to affiliates into the Company’s existing Series C Non-Convertible Preferred Equity.

Highlights of first half 2018, as compared to first half 2017:

  • Total revenue of $23.1 million as compared to $20.8 million.
  • Revenue from asset management operations of $5.8 million during the first half of 2018.
  • Revenue from real estate services increased 120% to $1.1 million, compared to $0.5 million.
  • G&A expense decreased 71% to $0.7 million, as compared to $2.5 million.
  • Net loss attributable to common stockholders of ($1.7) million, or ($0.47) per diluted share, including impairment charges of $0.8 million, as compared to net income attributable to common stockholders of $0.7 million, or $0.20 per diluted share.

“Second quarter results begin to demonstrate benefits of the previously announced transformation of our business platform, including among other things, the deleveraging of our balance sheet,” said Christopher Clemente, Chairman and Chief Executive Officer of Comstock.  “As we continue expanding our asset management platform I fully expect continued improvement to bottom line results, which is why I elected to convert significant debt held by family-owned entities to preferred equity. I am excited about the progress made in the early months of our strategic transformation and look forward to reporting on Comstock’s additional progress in the near future.”

The Company’s latest investor relations presentation describing the strategic vision of the Company can be found at www.ComstockCompanies.com.

About Comstock Holding Companies, Inc.

CHCI is a multi-faceted real estate development, asset management and real estate related services company that, since 1985, has designed, developed, constructed and managed several thousand residential units and millions of square feet of residential and mixed-use projects throughout the Washington, DC metropolitan market and in other key markets in the southeastern United States. In early 2018, CHCI transitioned its operating platform from being primarily focused on developing on-balance sheet, for-sale, homebuilding projects to being focused on commercial real estate development, asset management and real estate related services. As a result, CHCI began operating through two real estate focused platforms, CDS Asset Management (“CAM”) and Comstock Real Estate Services (“CRES”). CAM provides real estate development, asset management, and property management services, while CRES provides development supply chain services, including capital markets, real estate brokerage, environmental consulting and design services in the Washington, DC metropolitan area and in New Jersey and Pennsylvania. Anchoring the transition of CHCI is a long-term asset management agreement covering two of the largest transit-oriented, mixed-use developments in the Washington, DC area; Reston Station, a 3 million square foot transit-oriented, mixed-use development located in Reston, VA, and Loudoun Station, a 2.5 million square foot transit-oriented, mixed-use development in Ashburn, VA, as well as other additional development assets. Comstock’s substantial experience in entitling, designing, developing, and managing a diverse range of properties including apartments, single-family homes, townhomes, mid-rise condominiums, high-rise condominiums and mixed-use (residential and commercial) properties, as well as large scale commercial parking garages and infrastructure projects, has positioned the Comstock organization as a premier developer and real estate related service provider in the mid-Atlantic Region. The Company is a publicly traded company, trading on NASDAQ under the symbol CHCI. For more information about CHCI or its businesses, please visit www.ComstockCompanies.com.

About Reston Station

Strategically located mid-way between Tysons Corner and Dulles International Airport, Reston Station is among the largest mixed-use, transit-oriented developments in the Washington, DC area. Located at the terminus of Phase I of Metro’s Silver Line, Reston Station is already home to more than 1,000 residents, numerous businesses, multiple retail establishments, and several restaurants. With more than 1 million square feet of completed and stabilized buildings, more than 2 million square feet of additional development in various stages of entitlement, development and construction, and a 3,500-space underground parking garage and transit facility adjacent to the Wiehle Reston-East Metro Station, the Reston Station neighborhood is taking shape and quickly becoming Fairfax County’s urban focal point in the Dulles Corridor. For more information about Reston Station, please visit www.RestonStation.com

About Loudoun Station

Located at the terminus station on Metro’s Silver Line, minutes from Dulles International Airport, Loudoun Station represents Loudoun County’s first (and currently its only) Metro-connected development. Loudoun Station has approximately 700,000 square feet of mixed-use development completed, including hundreds of rental apartments, approximately 150,000 square feet of retail, restaurants, and entertainment venues, 50,000 square feet of Class-A office, and a 1,500-space commuter parking garage. More than 2 million square feet of additional development is slated for Loudoun Station.  Located adjacent to Metro’s Ashburn Station, the Loudoun Station neighborhood represents Loudoun County’s beginning transformation into a transit connected community with direct connectivity to Dulles International Airport, Reston, Tysons Corner and downtown Washington, DC. As Loudoun County’s only transit connected neighborhood, Loudoun Station has become the new downtown of Loudoun County in the Dulles Corridor. For more information about Loudoun Station, please visit www.LoudounStation.com

Comstock New Home Communities Currently Open

Comstock, having significantly reduced its focus on on-balance sheet development of new home communities is working through its remaining inventory of building lots to maximize revenue from all sources as it transitions away from the capital intensive for-sale homebuilding business toward commercial development, asset management and real estate services. Currently the Company has 6 remaining communities open for sale in Virginia, Maryland, and Washington, D.C., including townhomes and single-family homes priced from the high $370s to the $900s.  For further details, see the attached Pipeline Report as of June 30, 2018, the Form 10-Q filed by the Company on August 14, 2018 or visit www.ComstockHolding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release includes “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seeks” or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. Some factors which may affect the accuracy of the forward-looking statements apply generally to the real estate industry, while other factors apply directly to us. Any number of important factors which could cause actual results to differ materially from those in the forward-looking statements include, without limitation: completion of Comstock’s financial accounting and review procedures; general economic and market conditions, including interest rate levels; our ability to service our debt; inherent risks in investment in real estate; our ability to compete in the markets in which we operate; economic risks in the markets in which we operate, including actions related to government spending; delays in governmental approvals and/or land development activity at our projects; regulatory actions; fluctuations in operating results; our anticipated growth strategies; shortages and increased costs of labor or building materials; the availability and cost of land in desirable areas; adverse weather conditions or natural disasters; our ability to raise debt and equity capital and grow our operations on a profitable basis; the reliance of substantially all of our revenues derived from our provision of management services to a limited number of companies; the Asset Management Agreement and other agreements with clients are subject to termination; and our continuing relationships with affiliates. Additional information concerning these and other important risk and uncertainties can be found under the heading “Risk Factors” in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the fiscal year ended December 31, 2017. Our actual results could differ materially from these projected or suggested by the forward-looking statements. Comstock claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements contained herein. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Company:
Comstock Holding Companies, Inc.
Christopher Guthrie, 703-230-1292
Chief Financial Officer
Source: Comstock Holding Companies, Inc.

 

COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)

         
    June 30,  2018   December 31, 2017
    (unaudited)    
ASSETS        
Cash and cash equivalents    $   5,725     $   1,806  
Restricted cash        1,237         1,141  
Trade receivables        596         491  
Trade receivables – related parties       11         145  
Real estate inventories        34,915         44,711  
Fixed assets, net        262         309  
Goodwill and intangibles       1,906         1,939  
Other assets, net       1,266         616  
TOTAL ASSETS    $   45,918     $   51,158  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Accounts payable and accrued liabilities    $   4,886     $   9,116  
Accounts payable – related parties       687         –   
Deferred revenue       2,812         –   
Notes payable – secured by real estate inventories, net of deferred financing charges       20,188         23,215  
Notes payable – due to affiliates, unsecured, net of discount and deferred financing charges       4,874         14,893  
Notes payable – unsecured, net of deferred financing charges       1,096         1,285  
Income taxes payable       57         39  
TOTAL LIABILITIES        34,600         48,548  
         
Commitments and contingencies (Note 13)        
STOCKHOLDERS’ EQUITY (DEFICIT)         
Series C preferred stock $0.01 par value, 3,000,000 shares authorized, 2,799,848 and 579,158        
  shares issued and outstanding and liquidation preference of $13,999 and $2,896,         
  at June 30, 2018 and December 31, 2017, respectively   $   7,193     $   442  
Class A common stock, $0.01 par value, 11,038,071 shares authorized, 3,690,693        
  and 3,295,518 issued, and outstanding, respectively        37         33  
Class B common stock, $0.01 par value, 220,250 shares authorized, issued,       2         2  
  and outstanding, respectively        
Additional paid-in capital        181,009         177,612  
Treasury stock, at cost (85,570 shares Class A common stock)       (2,662 )       (2,662 )
Accumulated deficit        (191,528 )       (189,803 )
TOTAL COMSTOCK HOLDING COMPANIES, INC. DEFICIT       (5,949 )       (14,376 )
Non-controlling interests       17,267         16,986  
TOTAL EQUITY        11,318         2,610  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY    $   45,918     $   51,158  
         

 COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)

                 
    Three Months Ended June 30,   Six Months Ended June 30,
      2018       2017       2018       2017  
                 
Revenues                
Revenue—homebuilding    $   10,709     $   10,235     $   16,270     $   20,299  
Revenue—asset management       2,960         –          5,751         –   
Revenue—real estate services        631         285         1,078         489  
Total revenue        14,300         10,520         23,099         20,788  
                 
Expenses                
Cost of sales—homebuilding        11,543         9,221         17,038         18,322  
Cost of sales—asset management       2,606         –          5,147         –   
Cost of sales—real estate services       676         296         853         520  
Impairment charges       216         –          774         –   
Sales and marketing       209         340         428         721  
General and administrative       368         1,226         728         2,472  
Interest and real estate taxes       24         –          109         –   
Operating loss       (1,342 )       (563 )       (1,978 )       (1,247 )
Other income, net        41         28         55         48  
Loss before income tax benefit       (1,301 )       (535 )       (1,923 )       (1,199 )
Income tax benefit       484         –          478         –   
Net loss       (817 )       (535 )       (1,445 )       (1,199 )
Net income (loss) attributable to non-controlling interests       185         (922 )       280         (939 )
Net (loss) income attributable to Comstock Holding Companies, Inc.        (1,002 )       387         (1,725 )       (260 )
Paid-in-kind dividends on Series B Preferred Stock       –          –          –          78  
Extinguishment of Series B Preferred Stock       –          –          –          (1,011 )
Net (loss) income attributable to common stockholders   $   (1,002 )   $   387     $   (1,725 )   $   673  
                 
Basic net (loss) income per share   $   (0.27 )   $   0.12     $   (0.47 )   $   0.20  
Diluted net (loss) income per share   $   (0.27 )   $   0.11     $   (0.47 )   $   0.20  
                 
Basic weighted average shares outstanding        3,759         3,359         3,684         3,351  
Diluted weighted average shares outstanding        3,759         3,397         3,684         3,403  
                 

 

                   
  Pipeline Report as of June 30, 2018
Project State Product Type (1)  Estimated Units at Completion   Units Settled   Backlog (8)   Units Owned Unsold   Units Under Control (2)   Total Units Owned,
Unsettled and Under Control 
 Average New Order Revenue
Per Unit to Date 
City Homes at the Hampshires DC SF   38   38   –    –    –    –  $   747
Townes at the Hampshires (3) DC TH   73   73   –    –    –    –  $   551
Estates at Falls Grove VA SF   19   19   –    –    –    –  $   545
Townes at Falls Grove VA TH   110   110   –    –    –    –  $   304
Townes at Shady Grove Metro MD TH   36   27   –    9   –    9 $   583
Townes at Shady Grove Metro (4) MD SF   3   3   –    –    –    –  $   – 
Momentum | Shady Grove Metro (5) MD Condo   110   110   –    –    –    –  $   26
Estates at Emerald Farms MD SF   84   84   –    –    –    –  $   426
Townes at Maxwell Square MD TH   45   45   –    –    –    –  $   421
Townes at Hallcrest VA TH   42   42   –    –    –    –  $   465
Estates at Leeland VA SF   24   17   4   3   –    7 $   379
Villas | Preserve at Two Rivers 28′ MD TH   6   6   –    –    –    –  $   458
Villas | Preserve at Two Rivers 32′ MD TH   10   10   –    –    –    –  $   504
Marrwood East (7) VA SF   35   30   4   1   –    5 $   645
Townes at Totten Mews (6) DC TH   40   13   18   9   –    27 $   589
The Towns at 1333 VA TH   18   7   6   5   –    11 $   928
The Woods at Spring Ridge MD SF   21   5   7   9   –    16 $   681
Solomons Choice MD SF   56   –    1   55   –    56 $   653
Townes at Richmond Station VA TH   104   –    –    104   –    104 $   – 
Condominiums at Richmond Station VA MF   54   –    –    54   –    54 $   – 
Total       928   639   40   249       289  
                   
(1) “SF” means single family home, “TH” means townhouse, “Condo” means condominium, “MF” means multi-family. 
(2) Under land option purchase contract, not owned. 
(3) 3 of these units are subject to statutory affordable dwelling unit program. 
(4) Units are subject to statutory moderately priced dwelling unit program; not considered a separate community. 
(5) 16 of these units are subject to statutory moderately priced dwelling unit program. 
(6) 5 of these units are subject to statutory affordable dwelling unit program. 
(7) 1 of these units is subject to statutory affordable dwelling unit program. 
(8) “Backlog” means we have an executed order with a buyer but the settlement did not occur prior to report date. 
                   

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