Paragon Announces Earnings For Third Quarter Ended September 30, 2003


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
                                 -------------------------------
                                     9/30/03          9/30/02
                                 ------------       ------------
 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
                                  ------------------------------       
                                      9/30/03         9/30/02
                                  ------------      ------------
 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
                                              ------------- 

 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
                                               -------------
 Total Assets                                   $ 13,327,118
                                               -------------
 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
                                               -------------
 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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