Comstock Holding Companies Reports Third Quarter 2018 Results and Provides Update On Transition From For-Sale Homebuilding to Commercial Development and Asset Management

Globe Newswire 9-Nov-2018 3:04 PM

WASHINGTON and RESTON, Va., Nov. 09, 2018 (GLOBE NEWSWIRE) -- Comstock Holding Companies, Inc., (NASDAQ:CHCI), announced results for the three and nine months ended September 30, 2018:

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

  • Total revenue of $14.9 million, as compared to $13.8 million during the same period of the prior year.
  • Revenue from asset management operations of $2.7 million during the third quarter 2018, representing a new and recurring revenue stream that commenced in Q1-2018.
  • Revenue from real estate services of $0.7 million, compared to $0.7 million during the same period of the prior year.
  • G&A expense decreased 81% to $0.2 million, compared to $1.3 million during the same period of the prior year.
  • Net loss attributable to common stockholders of ($1.9) million, or ($0.52) per diluted share, including impairment charges of $1.4 million, as compared to net loss attributable to common stockholders of ($1.5) million, or ($0.45) per diluted share during the same period of the prior year.
  • Homebuilding backlog represents forward revenue of $19.1 million on 34 home sales as compared to $16.4 million on 27 units one-year prior.
  • Wind down of for-sale homebuilding operations continues to meet the Company's previously announced expectations that the wind-down will be substantially completed by year-end 2018.

Highlights of nine months ended September 30, 2018, as compared to nine months ended September 30, 2017:

  • Total revenue of $38.0 million, as compared to $34.6 million during the same period of the prior year.
  • Revenue from asset management operations of $8.5 million during the nine months ended September 30, 2018, representing a new and recurring revenue stream.
  • Revenue from real estate services of $1.8 million, compared to $1.2 million during the same period of the prior year.
  • G&A expense decreased 74% to $1.0 million, compared to $3.7 million during the same period of the prior year.
  • Net loss attributable to common stockholders of ($3.7) million, or ($0.99) per diluted share, including impairment charges of $2.1 million, as compared to net loss attributable to common stockholders of ($0.8) million, or ($0.25) per diluted share during the same period of the prior year.

Update Regarding Comstock's Previously Announced Plans to Wind-Down its For-Sale Homebuilding Operation and Transition Operational Focus to Commercial Development and Asset Management

Comstock has either sold and delivered or secured contracts to sell substantially all of the for-sale home inventory that it held or planned to construct at the time it announced its plans to exit the for-sale homebuilding market earlier this year. The Company expects that by year-end 2018, its remaining inventory of for-sale homes that will carry over for delivery in 2019 will be approximately 28.  Additionally, the Company has secured contracts to sell all of its inventory of for-sale building lots to regional builders. The Company is actively completing site development of this remaining building lot inventory and expects that by year-end 2018, the Company will begin actively delivering these backlog lots.

The assets under management covered by the asset management agreement will at full build out include more than 5 million square feet of investment-grade, mixed-use assets encompassing more than 2,500 multi-family rental units, Class A and Trophy office, retail and entertainment buildings, hotels, and parking garages located adjacent to Washington, DC Silver Line Metro Stations; representing an estimated value of $2.5 to $3.0 billion.

For further details about Comstock's remaining homebuilding inventory, its assets under management, and its pipeline of commercial development assets, please see the Form 10-Q filed by the Company on November 8, 2018, or visit www.ComstockHolding.com

Chairman and CEO, Christopher Clemente commented, "I am pleased to report that the transformation of Comstock's business platform away from on balance-sheet development of for-sale residential communities to a fee-for-service asset management and real estate service model is progressing better than expected. In the 7 months since announcing our new business strategy, we have been able to sell through substantially all of our inventory of for-sale product, expand assets under management, commence build-out of our robust asset management pipeline. increase revenue from environmental services, further reduce G&A costs, and significantly enhance Comstock's executive management team. As a result of the homebuilding impairments taken this period, we also believe the negative earning impacts from the wind down of the homebuilder are largely behind us. Our entire team is energized and excited about the future of Comstock and I look forward to reporting on our continued progress in the coming months.

The Company's latest investor relations presentation describing the strategic vision of the Company can be found at www.ComstockHolding.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 millions of square feet of high quality, mixed-use buildings completed, stabilized, under construction, or fully entitled and positioned to continue the transformation of Reston's skyline above and around the Wiehle-Reston East Metro Station, the Reston Station neighborhood is quickly taking shape and 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. Located adjacent to Metro's Ashburn Station at the terminus of Phase II of Metro's Silver Line, Loudoun Station is already home to hundreds of residents, numerous businesses (including Loudoun County's Department of Economic Development), multiple retail establishments and entertainment venues, and several restaurants. With millions of square feet of high quality, mixed-use buildings completed, stabilized, under construction, or fully entitled and positioned to continue the transformation of the Dulles Corridor in eastern Loudoun County, the Loudoun Station neighborhood is quickly taking shape. The Loudoun Station neighborhood represents Loudoun County's beginning transformation into a transit connected community with direct connectivity to Dulles International Airport, Reston, Tysons 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

About Comstock Holding Companies, Inc.

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 commercial loan origination, real estate brokerage, and environmental consulting 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 4+ 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 mixed-use and urban 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.

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)

  September 30,
2018
  December 31,
2017
  (unaudited)    
ASSETS      
Cash and cash equivalents $   3,469     $   1,806  
Restricted cash     1,248         1,141  
Trade receivables     2,480         491  
Trade receivables - related parties     1,571         145  
Real estate inventories     27,035         44,711  
Fixed assets, net     241         309  
Goodwill     1,702         1,702  
Intangible assets, net     187         237  
Other assets     1,175         616  
TOTAL ASSETS  $   39,108     $   51,158  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable and accrued liabilities  $   5,930     $   9,116  
Deferred revenue     2,500         —  
Notes payable - secured by real estate inventories, net of deferred financing charges     17,401         23,215  
Notes payable - due to affiliates, unsecured, net of discount and deferred financing charges     4,869         14,893  
Notes payable - unsecured, net of deferred financing charges     718         1,285  
Income taxes payable   63         39  
TOTAL LIABILITIES      31,481         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 September 30, 2018 and December 31, 2017, respectively $   7,193     $   442  
       
Class A common stock, $0.01 par value, 11,038,071 shares authorized, 3,683,199 and 3,295,518 issued, and outstanding, respectively      37         33  
       
Class B common stock, $0.01 par value, 220,250 shares authorized, issued, and outstanding, respectively     2         2  
Additional paid-in capital      180,683         177,612  
Treasury stock, at cost (85,570 shares Class A common stock)     (2,662 )       (2,662 )
Accumulated deficit      (193,456 )       (189,803 )
TOTAL COMSTOCK HOLDING COMPANIES, INC. DEFICIT     (8,203 )       (14,376 )
Non-controlling interests     15,830         16,986  
TOTAL EQUITY      7,627         2,610  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $   39,108     $   51,158  
       

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

  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2017   2018   2017
               
Revenues              
Revenue—homebuilding  $   11,497     $   13,076     $   27,767     $   33,375  
Revenue—asset management     2,730         —         8,481         —  
Revenue—real estate services      712         739         1,790         1,228  
Total revenue      14,939         13,815         38,038         34,603  
               
Expenses              
Cost of sales—homebuilding      11,722         12,482         28,760         30,804  
Cost of sales—asset management     2,458         —         7,605         —  
Cost of sales—real estate services     922         846         1,775         1,366  
Impairment charges     1,354         —         2,128         —  
Sales and marketing     281         401         709         1,122  
General and administrative     242         1,263         970         3,735  
Interest and real estate taxes     38         16         147         16  
Operating loss     (2,078 )       (1,193 )       (4,056 )       (2,440 )
Other income, net      26         21         81         69  
Loss before income tax benefit (expense)     (2,052 )       (1,172 )       (3,975 )       (2,371 )
Income tax benefit (expense)     438         (29 )       916         (29 )
Net loss     (1,614 )       (1,201 )       (3,059 )       (2,400 )
Net income (loss) attributable to non-controlling interests     314         309         594         (630 )
Net loss attributable to Comstock Holding Companies, Inc.      (1,928 )       (1,510 )       (3,653 )       (1,770 )
Paid-in-kind dividends on Series B Preferred Stock     —         —         —         78  
Extinguishment of Series B Preferred Stock     —         —         —         (1,011 )
Net loss attributable to common stockholders $   (1,928 )   $   (1,510 )   $   (3,653 )   $   (837 )
               
Basic and diluted net loss per share $   (0.52 )   $   (0.45 )   $   (0.99 )   $   (0.25 )
               
Basic and diluted weighted average shares outstanding      3,743         3,374         3,708         3,299  
               

 

    Pipeline Report as of September 30, 2018
Project   State   Product Type (1)   Estimated 
Units at
Completion
  Units
Settled
  Backlog (9)   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   19   4   1     5   $ 336
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   33   1   1     2   $ 645
Townes at Totten Mews (6)   DC   TH   40   13   23   4     27   $ 582
The Towns at 1333   VA   TH   18   14   -   4     4   $ 922
The Woods at Spring Ridge   MD   SF   21   7   6   8     14   $ 681
Solomons Choice (8)   MD   SF   1   1   -   -     -   $ 653
Townes at Richmond Station   VA   Lot Sale   104       104     104   $
Condominiums at Richmond Station   VA   Lot Sale   54       54     54   $
Total             873     654     34     185         219    
                                     

(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) During the third quarter of 2018, the Company exited this project after settling 1 unit
(9) "Backlog" means we have an executed order with a buyer but the settlement did not occur prior to report date.

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