CLEVELAND, Ohio, Nov. 13, 2003 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) today announced earnings for the third quarter and nine months ended September 30, 2003.
For the quarter ended September 30, 2003, net income attributable to common shares was $35,000, or $0.00 per share, compared to a net loss of $2,504,000, or $0.55 per share, for the quarter ended September 30, 2002. The third quarter of 2002 included a negative charge of $1,048,000 for loss in value of marketable securities, whereas the third quarter of 2003 included a gain of $105,000 from the sale of a portion of those marketable securities. The third quarter of 2002 also included $1,350,000 as a provision for loss on four commercial properties. On October 1, 2003, Paragon sold the four commercial properties located in Minneapolis, MN, which have been reclassified for all periods after January 1, 2002 to "discontinued operations" including the provision for loss. Presently, the continuing operations of Paragon include Richton Trail Apartments, the apartment complex acquired on July 1, 2003.
For the nine months ended September 30, 2003, net loss attributable to common shares was $1,077,000, or $0.08 per share, compared to $3,119,000, or $0.69 per share, for the same period of 2002. In 2002, the net loss included the negative charge of $1,048,000 for the marketable securities and $1,350,000 provision for loss on the four commercial properties, both items mentioned above, $315,000 for preferred share dividends, and $73,000 loss from discontinued operations of the technology segment. In 2003, the net loss included $350,000 provision for loss on the four commercial properties and $300,000 in general and administrative expenses representing the value of preferred shares issued during the first quarter to the former CEO for severance required under his employment contract. As explained above, Paragon sold the four commercial properties on October 1, 2003, and reclassified the operations to "discontinued operations" for all periods shown. In 2003, continuing operations include Richton Trail Apartments, which was acquired on July 1, 2003. Also, in 2003, the shareholders approved the elimination of the preferred share dividend as part of an exchange offer that concluded on June 30, 2003.
Commenting on the quarterly results, James C. Mastandrea, Chairman and CEO of Paragon, noted, "We have worked diligently since becoming involved with Paragon to reposition it for growth. In the second quarter we issued a proxy statement and preferred share exchange offer. Our shareholders overwhelmingly approved the five proposals to reposition the company. Since then, we've been looking to acquire real estate, such as underperforming multifamily properties, with potential for increased value by capitalizing on the redevelopment expertise of our management team. We are exploring alternatives for raising equity for our plan, including joint ventures with institutional partners, and then leveraging the equity with non-recourse financing."
Mr. Mastandrea added, "In order to help carry out our plan, in October we sold our four commercial properties located in Minnesota, netting approximately $1.3 million in proceeds, including prorations, and the return of 2.9 million of our common shares. In addition, we refinanced Richton Trail Apartments, the property contributed in July, and netted cash of approximately $1.3 million."
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/A, 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
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9/30/03 9/30/02
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Revenues
Rental revenue $ 144,408 $ --
Interest and other 4,347 7,195
Total revenues 148,755 7,195
Expenses
Property operating,
taxes, insurance 62,384 --
Depreciation and
amortization 26,743 5,436
Interest 27,975 --
General and
administrative 155,277 118,716
Total expenses 272,379 124,152
Loss from operations
before minority
interests (123,624) (116,957)
Loss allocated to
minority interests (1,125) 100,253
Loss from operations (124,749) 16,704
Gain on sale of
marketable securities 105,421 --
Provision for loss on
marketable securities -- 1,047,600
Loss from continuing
operations (19,328) (1,064,304)
Discontinued operations:
Loss from technology
segment -- (23,598)
Loss from commercial
properties 54,811 (1,415,608)
Net loss attributable to
Common Shareholders $ 35,483 $ (2,503,510)
Net loss attributable to
Common Shareholders per
Common Share:
Basic and Diluted $0.00 ($0.55)
Weighted average number of
Common Shares outstanding:
Basic (1) 31,382,566 4,517,524
Weighted average number of
Common Shares outstanding:
Diluted (1) 35,487,410 4,517,524
(1) The weighted average number of common shares increased in 2003
due to the one-time incentive exchange offer, which ended on
6/30/03, providing for each preferred share to be exchanged for
22.881 common shares. Preferred shareholders exchanged 1,174,120
preferred shares, or nearly 81%, for 26,865,042 common shares.
Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Statements of Operations
(unaudited)
For the nine months ended
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9/30/03 9/30/02
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Revenues
Rental revenue $ 144,408 $ --
Interest and other 7,570 22,588
Total revenues 151,978 22,588
Expenses
Property operating,
taxes, insurance 62,384 --
Depreciation and
amortization 35,812 15,826
Interest 27,975 1,015
General and
administrative 754,027 289,686
Total expenses 880,198 306,527
Loss from operations
before minority
interests (728,220) (283,939)
Loss allocated to
minority interests 41,445 124,989
Loss from operations (686,775) (158,950)
Gain on sale of
marketable securities 105,421 55,889
Provision for loss on
marketable securities -- (1,047,600)
Loss from continuing
operations (581,354) (1,150,661)
Discontinued operations:
Loss from technology
segment -- (73,355)
Loss from commercial
properties (495,158) (1,579,676)
Net loss (1,076,512) (2,803,692)
Preferred Share Dividends -- (315,063)
Net loss attributable to
Common Shareholders $ (1,076,512) $(3,118,755)
Net loss attributable to
Common Shareholders per
Common Share:
Basic and Diluted ($0.08) ($0.69)
Weighted average number
of Common Shares
outstanding:
Basic and Diluted (1) 13,669,351 4,517,524
(1) The weighted average number of common shares increased in 2003
due to the one-time incentive exchange offer, which ended on
6/30/03, providing for each preferred share to be exchanged for
22.881 common shares. Preferred shareholders exchanged 1,174,120
preferred shares, or nearly 81%, for 26,865,042 common shares.
Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Balance Sheet
As of
9/30/2003
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ASSETS
Investments in real estate, net $ 3,967,648
Cash and restricted cash 844,505
Marketable securities, net 116,250
Other assets 264,616
Property held for sale, net 8,134,099
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Total Assets $ 13,327,118
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage loans payable $ 1,537,199
Other liabilities 453,813
Liabilities related to properties
held for sale 6,743,490
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Total Liabilities 8,734,502
Minority Interests in consolidated
subsidiaries 2,326,081
Total Shareholders' Equity 2,266,535
Total Liabilities and Shareholders'
Equity $ 13,327,118
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