CLEVELAND, Aug. 15, 2005 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) announced operating results for the three and six months ended June 30, 2005.
Net loss attributable to common shareholders for the quarter ended June 30, 2005 was $228,000, or $0.01 per share, compared to a net loss of $213,000, or $0.01 per share, for the same quarter of 2004. For the six months ended June 30, 2005, the net loss attributable to common shareholders was $674,000, or $0.02 per share, compared to a net loss of $347,000, or $0.01 per share, for the first six months of 2004.
During the second quarter and first six months of 2005, Richton Trail Apartments performed at approximately the same level compared to last year. Paragon's general and administrative expenses increased by $14,000 for the second quarter of 2005 to $239,000, and for the six months of 2005, these expenses increased by $233,000 to $697,000 for due diligence undertaken mostly during the first quarter of 2005 on a large potential acquisition. James C. Mastandrea, Chief Executive Officer and President of Paragon, said, "During the second quarter, we also performed due diligence on two apartment portfolios, comprised of 20 properties and approximately 5,000 apartment units. We submitted bids on both portfolios, which were competitive because we were included in the final round of bidding, but in the end both sellers chose other bidders."
As previously reported concerning the increased general and administrative expenses for the first quarter, Paragon hired several highly experienced professionals as independent consultants and used other service firms to assist with due diligence on a large potential acquisition. The seller was an institution that was divesting its portfolio of affordable housing investments for non-economic reasons but decided to retain the portfolio.
Commenting further on Paragon's strategy of buying value-added multi-family apartment properties, Mr. Mastandrea noted, "The acquisition market has been fiercely competitive. Some even categorize it as 'overheated.' Since December 2003, we have done significant amounts of review and due diligence on eight portfolios of apartment assets, including more than 60 apartment complexes valued at $500 million and an affordable housing portfolio of over $1 billion invested in approximately 350 apartment communities. More recently, we have been raising our bid offers anticipating that we will be able to increase the value of the apartment properties over the medium-to-long term. Yet, other buyers have bid so high that if we paid those prices, our shareholders would not receive the returns they deserve. Therefore, while we continue to review new offerings of C-class apartment properties, we may begin to look at 'alternative value-added real estate investments,' such as development properties, where we also have significant experience. In doing so, we and our board of trustees remain committed to creating value for our shareholders."
-- Financial Statements Follow --
Forward-Looking Statements
Certain matters discussed within this press release may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Paragon Real Estate Equity and Investment Trust believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that the planned implementation of a national real estate acquisition, development and re-development strategy will be completed in whole or in part. Factors that could cause actual results to differ materially from Paragon's expectations include changes in local or national economic or real estate conditions, the ability to meet competition, loss of existing key personnel, ability to hire and retain future personnel and other risks detailed from time to time in Paragon's SEC reports and filings, including its annual report on Form 10-K, quarterly reports on Form 10-Q and periodic reports on Form 8-K. Paragon assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the
three months ended
June 30,
----------------------
2005 2004
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Revenues
Rental revenue $150,014 $145,009
Interest and other 9,780 9,300
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Total revenues 159,794 154,309
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Expenses
Property operating, taxes, insurance 83,109 74,011
Depreciation and amortization 22,491 21,578
Interest 40,739 41,485
General and administrative 238,819 224,769
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Total expenses 385,158 361,843
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Loss from operations before minority interests (225,364) (207,534)
Income allocated to minority interests (2,589) (5,879)
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Net loss attributable to Common Shareholders ($227,953) ($213,413)
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Net loss attributable to Common Shareholders
per Common Share: Basic and Diluted ($0.01) ($0.01)
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Weighted average number of Common Shares
outstanding: Basic and Diluted 33,899,956 32,775,781
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Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the
six months ended
June 30,
----------------------
2005 2004
---------- ----------
Revenues
Rental revenue $300,789 $295,611
Interest and other 20,401 27,457
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Total revenues 321,190 323,068
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Expenses
Property operating, taxes, insurance 168,761 160,445
Depreciation and amortization 44,733 43,009
Interest 81,225 83,152
General and administrative 697,495 464,362
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Total expenses 992,214 750,968
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Loss from operations before minority interests (671,024) (427,900)
(Income) loss allocated to minority interests (2,757) 81,017
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Net loss attributable to Common Shareholders ($673,781) ($346,883)
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Net loss attributable to Common Shareholders
per Common Share: Basic and Diluted ($0.02) ($0.01)
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Weighted average number of Common Shares
outstanding: Basic and Diluted 33,655,808 32,678,378
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Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
As of
June 30, 2005
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ASSETS
Investments in real estate, net $3,869,286
Cash and restricted cash 1,215,840
Marketable securities, net 76,704
Other assets, net 112,347
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Total Assets $5,274,177
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage loan payable $2,736,822
Other liabilities 184,652
----------
Total Liabilities 2,921,474
Minority interests in consolidated subsidiary 2,170,266
Shareholders' equity 182,437
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Total Liabilities and Shareholders' Equity $5,274,177
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