Comstock Holding Companies, Inc. Reports Second-Quarter 2013 Results

  Comstock Holding Companies, Inc. Reports Second-Quarter 2013 Results

  *2Q homebuilding revenue of $12.0 million compared to $3.8 million in Q2
    last year
  *2Q net income from continuing operations of $0.1 million compared to net
    loss of $(1.9) million last year
  *Net new home orders increased to 77 for the first six months of 2013
    compared to 34 in the prior year
  *Backlog of $18.8 million at quarter-end, up from $1.5 million one year
    earlier

Business Wire

RESTON, Va. -- August 13, 2013

Comstock Holding Companies, Inc. (NASDAQ: CHCI) (“Comstock” or the “Company”),
a homebuilding and multi-faceted real estate development and services company
in the Washington, D.C. metropolitan area, today announced results for the
second quarter of 2013, ended June 30.

Business Update

“For the second consecutive quarter, our homebuilding revenue for just three
months approximated the homebuilding revenue we generated for the full year
2012,” remarked Chairman and CEO Christopher Clemente. “These results reflect
the rebounding demand for new homes in the Washington, D.C. area and the
positive response to the new communities and products Comstock is bringing to
market.

“Sales at our open communities continue to reflect increased demand for new
homes and the reduced inventory of existing homes for sale. Our robust sales
in the first half of 2013 enabled us to generate total first-half revenue of
$23.8 million, significantly outpacing last year’s results, while generating
current backlog as of August 13th of $23.2 million on 52 pre-sold units.

“However, delays in permitting for our newer projects and the well-publicized
shortage of skilled labor have resulted in what we believe are temporary
production cycle delays. We are now projecting settlements of 125-130 units
with a significant number of these settlements to occur in the fourth quarter
of 2013. As a result, we expect to report revenue from our homebuilding
operations to approximate $64 million and break-even or marginal profitability
for 2013.”

Clemente added, “Returning Comstock to profitability for 2013 while
positioning for additional growth and profitability in 2014 remains a top
priority. We are confident in the steps we have taken to position Comstock for
further growth in 2014 and look forward to opening additional communities that
will build on the progress we have made this year. Recently, we started site
development at two new communities:The Townes at Shady Grove Metro (36
townhouses located in Rockville, MD) and Falls Grove (19 single family homes
and 110 townhomes located in Manassas, VA). We are also preparing to commence
work on additional projects in Loudoun County, VA and Frederick, MD, with the
goal of having seven active communities by early 2014.

“We anticipate that our production cycle will normalize by early 2014, as
critical subcontractor trades increase their workforce to meet the resurgent
demand in the Washington, D.C. market. The demonstrated demand for our
products, tightening inventory and improved market pricing trends bode well
for a 2014.”

Second-Quarter 2013 Financial Results

Net new orders of homes increased to 44 for the three months ended June 30,
2013 from 14 in the prior year. For the six months ended June 30, 2013, net
new orders increased to 77 from 34 in the prior year. The improved order
trends resulted in increased backlog of 43 units (representing $18.8 million
in revenue) for the six months ended June 30, 2013 compared to eight
(representing $1.5 million in revenue) in the prior year. Average backlog
price increased to $438,000 from $187,000 in the prior year.

Total revenue for the second quarter of 2013 totaled $12.2 million ($12.0
million from 22 home settlements) compared to $4.2 million ($3.8 million from
12 home settlements) for the 2012 second quarter. The Company reported net
income from continuing operations of $0.1 million for the second quarter of
2013 compared to a net loss from continuing operations of $(1.9) million for
the same period in 2012. In the second quarter of 2013, net loss attributable
to Comstock Holding Companies totaled $(0.8) million, or $(0.04) per diluted
share, compared to $(3.1) million, or $(0.15) per diluted share, in the
prior-year period. The 2012 period included a loss of $(1.2) million within
net (loss) income from discontinued operations resulting from the tax impact
of the $19.35 million sale of Cascades Apartments, the Company’s first
investment grade multi-family property. The Company’s first-quarter 2013
results reflected the reversal of an impairment charge of $0.7 million
reflecting increased sales activity at its Eclipse project, which was fully
settled and exited by the Company in the second quarter of 2013.

Pipeline Update (see Exhibit 1 and Exhibit 2)

                
                    73 townhome lots and 38 single-family lots in the Lamond
                    Riggs neighborhood in northeast Washington, D.C.
                    Construction on the single-family units began in August
                    2012, with the first closings occurring in March 2013.
• Hampshires        Construction on the townhomes began in April 2013 and the
                    sales center opened in July 2013. There are eight single
                    family units currently in backlog, with average revenue of
                    $730,000. There are seven townhome units currently in
                    backlog, with average revenue of $550,000.
                    
                    36 townhome lots and 117 multi-family lots across the
• Shady Grove       street from the Shady Grove Metro station in Rockville, MD
                    (Montgomery County). Closing on the property took place in
                    March 2013 and site development began on schedule in June.
                    
                    110 townhome lots and 19 single family lots off Route 28
                    in Manassas, VA (Prince William County). The Company
                    purchased the first seven single-family lots in 2011,
• Falls Grove       closing on the remaining lots in May 2013. Site
                    development began on schedule in June 2013 and the
                    community’s sales center opened in July. There are nine
                    units currently in backlog with average revenue of
                    $285,000.
                    
                    66 finished “six-plex” lots in Chantilly, VA (Loudoun
                    County). Construction on the units began in December 2012,
• Eastgate          with the first closings occurring in March 2013. There are
                    28 units currently in backlog, with average revenue of
                    $390,000.
                    

About Comstock Holding Companies, Inc.

Comstock is a homebuilding 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 theWashington,
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 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 the 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: 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; natural disasters; our ability to raise debt and equity
capital and grow our operations on a profitable basis; 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, 2012. 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.

Exhibit 1

Settled Revenue by Community


Three Months Ended June 30, 2013            
Community                          Settled   Settled
                                                 Revenue
Eastgate Villas                      6           $2,268,835
The Hampshires - Singles             4           3,039,877
The Hampshires - Towns               1           503,940
Penderbrook Square (Sold Out Q1)     -           -
The Eclipse                        11        6,174,500
Total                                22          $11,987,152
                                           
                                                 
Six Months Ended June 30, 2013              
Community                            Settled     Settled
                                                 Revenue
Eastgate Villas                      11          $4,100,175
The Hampshires - Singles             10          7,509,527
The Hampshires - Towns               1           503,940
Penderbrook Square (Sold Out Q1)     2           365,000
The Eclipse                        19        10,904,200
Total                                43          $23,382,842
                                           


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

                                        June 30, 2013   December 31, 2012
ASSETS                                     (unaudited)
Cash and cash equivalents                  $  11,411         $   3,539
Restricted cash                               3,575              3,203
Trade receivables                             1,675              1,611
Real estate held for development and          28,427             27,781
sale
Property, plant and equipment, net            266                222
Other assets                                 2,329            2,343      
TOTAL ASSETS                               $  47,683        $   38,699     
                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued               $  7,314          $   4,691
liabilities
Notes payable - secured by real               16,784             19,492
estate held for development and sale
Notes payable - due to affiliates,            4,956              5,041
unsecured
Notes payable - unsecured                     2,838              3,096
Income taxes payable                         -                -          
TOTAL LIABILITIES                            31,892           32,320     
                                                             
Commitments and contingencies (Note           -                  -
10)
SHAREHOLDERS’ EQUITY
Class A common stock, $0.01 par
value, 77,266,500 shares authorized,
18,395,978
and 17,969,345 issued and                     184                176
outstanding, respectively
Class B common stock, $0.01 par
value, 2,733,500 shares authorized,           27                 27
issued and outstanding
Additional paid-in capital                    170,535            170,070
Treasury stock, at cost (426,633              (2,480   )         (2,480     )
shares Class A common stock)
Accumulated deficit                          (162,464 )        (162,349   )
TOTAL COMSTOCK HOLDING COMPANIES,             5,802              5,444
INC. EQUITY
Non-controlling interest                     9,989            935        
TOTAL EQUITY                                 15,791           6,379      
TOTAL LIABILITIES AND SHAREHOLDERS’        $  47,683        $   38,699     
EQUITY



COMSTOCK HOLDING 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,
                                2013         2012           2013         2012
Revenues
Revenue—homebuilding            $ 11,987       $ 3,766         $ 23,383       $ 6,952
Revenue—other                    226          478           387          1,227  
Total revenue                     12,213         4,244           23,770         8,179
                                                                              
Expenses
Cost of                           9,621          3,302           18,417         6,056
sales—homebuilding
Cost of sales—other               276            743             497            1,807
Impairment reversal               -              -               (722   )       -
(Note 2)
Selling, general and              2,215          2,096           4,212          3,982
administrative
Interest, real
estate taxes and
indirect costs                   118          1,192         344          1,792  
related to inactive
projects
Operating (loss)                  (17    )       (3,089 )        1,022          (5,458 )
income
Other income, net                131          8             158          37     
Income (loss) before              114            (3,081 )        1,180          (5,421 )
income tax benefit
Income tax benefit               -            1,202         -            2,114  
Net income (loss)
from continuing                   114            (1,879 )        1,180          (3,307 )
operations
Discontinued
operations:
Income (loss) from
discontinued                      -              16              (4     )       (106   )
operations
(Loss) gain on sale
of real estate from               -              (50    )        -              6,466
discontinued
operations
Income tax expense
from discontinued                -            (1,202 )       -            (2,114 )
operations
Net (loss) income
from discontinued                 -              (1,236 )        (4     )       4,246
operations
Net income (loss)                 114            (3,115 )        1,176          939
Less: Net income from
continuing operations             952            -               1,291          -
attributable to non-controlling
interests
Less: Net income from
discontinued operations          -            -             -            103    
attributable to non-controlling
interests
Net (loss) income
attributable to                 $ (838   )     $ (3,115 )      $ (115   )     $ 836    
Comstock Holding
Companies, Inc.
                                                                              
Basic (loss) income
per share from:
Continuing                      $ (0.04  )     $ (0.09  )      $ (0.01  )     $ (0.16  )
operations
Discontinued                     -            (0.06  )       -            0.20   
operations
Net (loss) income               $ (0.04  )     $ (0.15  )      $ (0.01  )     $ 0.04   
per share
                                                                              
Diluted (loss)
income per share
from:
Continuing                      $ (0.04  )     $ (0.09  )      $ (0.01  )     $ (0.16  )
operations
Discontinued                     -            (0.06  )       -            0.20   
operations
Net (loss) income               $ (0.04  )     $ (0.15  )      $ (0.01  )     $ 0.04   
per share
                                                                              
Basic weighted
average shares                    20,674         20,431          20,599         20,359
outstanding
Diluted weighted
average shares                    20,674         20,431          20,599         20,359
outstanding
                                                                              
Net (loss) income
attributable to
Comstock Holding
Companies, Inc.:
(Loss) income from
continuing                      $ (838   )     $ (1,879 )      $ (111   )     $ (3,307 )
operations
(Loss) income from
discontinued                     -            (1,236 )       (4     )      4,143  
operations
Net (loss) income               $ (838   )     $ (3,115 )      $ (115   )     $ 836    
                                                                              


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

                                                Six Months Ended June 30,
                                                   2013          2012
Cash flows from operating activities:
Net income                                         $ 1,176         $ 939
Adjustment to reconcile net income to net
cash provided by (used in) operating
activities
Amortization of loan discount and deferred           305             1,424
financing fees
Depreciation expense                                 25              99
Provision for bad debt                               2               -
Earnings from unconsolidated joint venture           42              -
Gain on sale of operating real estate, net           -               (6,466  )
Loss on disposal of property, plant and              -               1
equipment
Impairment reversals                                 (722    )       -
Amortization of stock compensation                   278             599
Changes in operating assets and liabilities:
Restricted cash                                      (372    )       (32     )
Trade receivables                                    (66     )       1,162
Real estate held for development and sale            132             4,294
Other assets                                         (482    )       (952    )
Accrued interest                                     (116    )       (709    )
Accounts payable and accrued liabilities             2,623           (1,398  )
Income taxes payable                                -             (10     )
Net cash provided by (used in) operating            2,825         (1,049  )
activities
                                                                   
Cash flows from investing activities:
Investment in unconsolidated joint venture           (7      )       -
Purchase of property, plant and equipment            (69     )       -
Proceeds from sale of Cascades Apartments -         279           18,400  
operating real estate, net
Net cash provided by investing activities           203           18,400  
                                                                   
Cash flows from financing activities:
Proceeds from notes payable                          16,235          9,960
Payments on notes payable                            (19,170 )       (22,995 )
Loan financing costs                                 (123    )       -
Contribution from non-controlling interests          614             -
Distribution to non-controlling interests            -               (2,944  )
holders
Proceeds from Comstock Investor VII, L.C.            7,295           -
private placement
Proceeds from exercise of stock options              1               -
Taxes paid related to net share settlement          (8      )      -       
of equity awards
Net cash provided by (used in) financing           $ 4,844         (15,979 )
activities
                                                                   
Net increase in cash and cash equivalents            7,872           1,372
Cash and cash equivalents, beginning of             3,539         5,639   
period
Cash and cash equivalents, end of period           $ 11,411       $ 7,011   
                                                                   
Supplemental disclosure for non-cash
activity:
Interest paid, net of interest capitalized         $ 212           $ 1,334
Reduction in proceeds from sale of Cascades
Apartment and increase in other assets             $ -             $ 950
related to amounts placed in escrow upon
settlement of Cascades Apartments sale
Increase in class A common stock par value
in connection with issuance of stock               $ 8             $ -
compensation and warrants exercise

Contact:

Company:
Comstock Holding Companies, Inc.
Joe Squeri, 703-230-1229
Chief Financial Officer
or
Investor Relations:
LHA
Jody Burfening / Harriet Fried
212-838-3777
hfried@lhai.com
 
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