CLEVELAND, May 14, 2004 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) today announced operating results for the first quarter ended March 31, 2004. Net loss attributable to common shares decreased to approximately $133,000, or $0.00 per share, compared to a net loss of approximately $245,000, or $0.05 per share, for the same period of 2003.
In 2003, the net loss included approximately $52,000 of loss from discontinued operations related to the commercial properties that were sold last year. Paragon sold the four commercial properties on October 1, 2003, and reclassified the operations to "discontinued operations" for 2003. In 2004, Paragon did not have any discontinue operations and continuing operations included Richton Trail Apartments, which was acquired on July 1, 2003. The weighted average number of common shares during the first quarter of 2004 of approximately 32.6 million shares was significantly higher than the first quarter of 2003 at approximately 4.5 million shares mainly due to the exchange of preferred shares into common shares completed last year.
Paragon's management team is focused on its value-added business plan to acquire well located, under-performing multi-family residential properties, which will then be repositioned through renovation, leasing, improved management, and branding. The management team's previous experience in commercial, multi-family, and development real estate, including property management, permits them to perform a considerable amount of the due diligence internally. Management analyzed and/or viewed in excess of $100,000,000 of properties in multiple markets during the first quarter of 2004, and several offers to purchase properties were presented to sellers. While no property is presently under a binding contract, management is confident that its efforts are consistent with Paragon's plan. Paragon's management team has also met with a considerable number of institutional investors and lenders to discuss the capital and financing requirements necessary to accomplish its acquisition and repositioning program, and received enthusiastic responses.
James C. Mastandrea, Chief Executive Officer and President, commented on the current situation, "We are being deliberate and disciplined with regard to the properties and markets we are willing to consider, and believe that our patience will be rewarded." Mr. Mastandrea continued, "We trust our years of experience in buying, selling, and financing real estate to determine when and where we will buy properties, and not letting the hype of the current, short-term market conditions lead us into decisions that would not benefit our shareholders."
At the end of the first quarter of 2004, Paragon had approximately $2.3 million of cash available, tax loss carry forwards of approximately $11.8 million at the end of 2003, and a corporate structure that would permit Paragon to return to REIT status in the future. Mr. Mastandrea said, "There is substantial capital and financing available to invest with the experience that we provide, and an increasing volume of acquisition opportunities are being presented to us." Mr. Mastandrea said in summary, "We are encouraged and optimistic about Paragon's future and chances for success."
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
For the three months ended
March 31,
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2004 2003
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Revenues
Rental revenue $ 150,602 $ --
Interest and other 18,157 2,429
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Total revenues 168,759 2,429
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Expenses
Property, operating, taxes,
insurance 86,434 --
Depreciation and amortization 21,431 5,438
Interest 41,667 --
General and administrative 239,593 199,591
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Total expenses 389,125 205,029
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Loss from operations before
minority interests (220,366) (202,600)
Loss allocated to minority interests 86,896 9,858
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Loss from continuing operations (133,470) (192,742)
Discontinued operations:
Loss from commercial properties(1) -- (52,456)
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Net loss attributable to
Common Shareholders $ (133,470) $ (245,198)
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Net loss attributable to
Common Shareholders per Common Share:
Basic and Diluted ($0.00) ($0.05)
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Weighted average number of Common Shares
outstanding: Basic and Diluted(2) 32,580,976 4,517,524
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(1) The company sold its interest in four commercial properties on
10/1/03. Revenues and expenses for those properties were
reclassified to discontinued operations for 2003. Revenues and
expenses from continuing operations for 2004 are for an
apartment complex purchased on 7/1/03.
(2) The weighted average number of common shares increased 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% of the outstanding preferred
shares, for 26,865,042 common shares.
Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Balance Sheet
As of
March 31, 2004
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Assets
Investments in real estate, net $3,933,983
Cash and restricted cash 2,393,486
Marketable securities, net 74,700
Other assets 131,795
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Total Assets $6,533,964
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Liabilities and Shareholders' Equity
Liabilities:
Mortgage loan payable $2,799,965
Other liabilities 223,385
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Total Liabilities 3,023,350
Minority Interest in consolidated subsidiaries 2,162,600
Total Shareholders' Equity 1,348,014
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Total Liabilities and Shareholders' Equity $6,533,964
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