Gavella Corp. Reports 2nd Quarter Results

MAPLE SHADE, N.J., Aug. 5, 2004 (PRIMEZONE) -- Gavella Corp. (OTCBB:GVLA)

We are pleased to report that we are making considerable progress on implementing our business plan, as outlined in our annual report. We are currently engaged in two lines of business: owning and operating income producing real estate, and making investments in and providing consulting services to other businesses.

During 2003 we changed management of our real estate business, substantially completed a major renovation of our apartment complex, and successfully completed a refinancing of our mortgage debt. We anticipated that the renovation would result in higher revenues and that the refinancing would lower our interest costs going forward. For the six months ending June 30, 2004, our real estate revenues increased from $441,084 to $488,487, an increase of $47,403 or 10.7%. We reported total revenues of $500,987. Our interest expense, net of interest income, decreased by $36,850 from $146,564 to $109,714. Our operating costs, including depreciation, increased to $508,395 primarily due to increases in our corporate overhead related to the acquisition in January of H. James Santoro, Inc. That acquisition, however, enhances our ability to execute on the second part of our business plan which is to invest in and provide consulting services to other businesses. We realized an $11,157 gain on the sale of an investment. Our net loss from operations was $105,965, after deducting $77,437 in depreciation. After adjusting for depreciation, non-cash charges, and other adjustments we used $22,608 to fund our operations, a substantial improvement from last year. We expect to generate positive cash flow from operations at year end assuming our operations continue to improve as forecasted.

As discussed in our periodic filings, our primary business is to own and operate income-producing real estate. However, due to the high prices being paid for multi-family real estate, and hence low returns, we see little reason to invest in additional multi-family units at the present time. Now that the capital requirements of our existing real estate business is winding down, we plan to use our real estate business as a base, but plan to invest our surplus cash in other businesses and business opportunities in 2004. At June 30, 2004 we had $233,879 in cash on hand.

One sector of the real estate business where we believe we can realize a worthwhile return on investment is in healthcare related real estate. We made a small investment in two companies that specialize in owning healthcare related real estate. We anticipate making additional investments in this sector and others in the near future. We believe that investments in a diversified portfolio of healthcare related properties is a sound long-term investment strategy that we hope will produce a compound annual return of around 15% on our investments. Healthcare related properties include, but are not limited to: medical office buildings, long-term care facilities, hospitals, and assisted living facilities. We believe that the fundamentals of the healthcare sector augur well for the future. Individuals are living longer than in the past and the Baby Boom generation is nearing retirement, which should lead to higher spending by this group for services supported by this real estate sector. We believe investments in this area are a good complement to our multi-family real estate business.

We are also looking into making investments in other businesses and business opportunities.

Certain statements made in this Press Release are "forward-looking statements". Without limiting the generality of the foregoing, such information can be identified by the use of forward-looking terminology such as "anticipate," "will," "would," "expect," "hope," "intend," "plans to" or "believes," or other variations thereon, or comparable terminology. Actual results, performance or developments may differ materially from those expressed or implied by such forward-looking statements as a result of market uncertainties or industry factors. We believe that the following factors, among others, could affect our future performance and cause our actual results to differ materially from those expressed in or implied by forward-looking statements made by us or on our behalf: (a) changes in interest rates; (b) the rental rate and demand for apartment rental units; (c) fluctuations in the costs to operate our business; (d) uninsurable risks; (e) general economic conditions; (f) acts of terror, and other risks described in periodic reports we file with the Securities and Exchange Commission including Form 10KSB. Gavella Corp. disclaims any obligation or responsibility to update any such forward-looking statements.


Contact Data