CLEVELAND, March 30, 2004 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) today announced operating results for the year ended December 31, 2003. Net loss attributable to common shares decreased to $1,090,000, or $0.06 per share, compared to a net loss of $4,188,000, or $0.93 per share, for the same period of 2002.
In 2002, the net loss included a negative charge of $1,048,000 for loss in value of marketable securities and a $2,023,000 provision for loss on the four commercial properties that were sold October 1, 2003, $630,000 for preferred share dividends, and an $82,000 loss from discontinued operations of the technology segment. In 2003, the net loss included a $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 chief executive officer for severance provided in his employment contract. Paragon sold the four commercial properties on October 1, 2003, and reclassified the operations to "discontinued operations" for both 2003 and 2002. In 2003, continuing operations included Richton Trail Apartments, which was acquired on July 1, 2003. At December 31, 2003, Paragon has a net tax loss carryforward of $11.8 million, which it intends to use in the future to offset taxable income, and for its 2005 tax year, Paragon will be eligible to re-elect REIT status, if it so chooses.
James C. Mastandrea, Chairman, Chief Executive Officer and President, commenting on Paragon's business plan, said, "Paragon has developed a value-added business plan that is primarily focused on acquiring well located, under-performing multi-family residential properties and repositioning them through renovation, leasing, improved management, and branding. This strategy, while relatively unique to public companies, is common among private companies on both a local and limited regional basis. Paragon's investments will be in properties, portfolios and companies with value-added programs." Mr. Mastandrea continued, "Paragon intends to raise equity primarily with institutional investors through joint venture structures to be used for property and portfolio acquisitions. We will also use tax-deferred operating partnership units for acquisitions of companies, as well as properties and portfolios."
** Financial Statements Follow **
Paragon Real Estate Equity and Investment Trust and Subsidiaries
Consolidated Statements of Operations
For the year ended
December 31,
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2003 2002
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Revenues
Rental revenue $ 287,762 $ --
Interest and other 18,986 27,128
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Total revenues 306,748 27,128
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Expenses
Property operating, taxes, insurance 149,205 --
Depreciation and amortization 56,869 21,262
Interest 66,013 1,016
General and administrative (1) 951,367 408,615
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Total expenses 1,223,454 430,893
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Loss from operations before
minority interests (916,706) (403,765)
Loss allocated to minority interests 148,609 168,388
----------- -----------
Loss from operations (768,097) (235,377)
Gain on sale of marketable
securities 136,358 55,889
Provision for loss on marketable
securities -- (1,047,600)
----------- -----------
Loss from continuing operations (631,739) (1,227,088)
Discontinued operations:
Loss from technology segment -- (82,164)
Loss from commercial properties (2) (457,874) (2,248,805)
----------- -----------
Net loss (1,089,613) (3,558,057)
Preferred Share Dividends -- (630,126)
----------- -----------
Net loss attributable to
Common Shareholders $(1,089,613) $(4,188,183)
----------- -----------
Net loss attributable to
Common Shareholders per
Common Share:
Basic and Diluted $ (0.06) $ (0.93)
----------- -----------
Weighted average number of
Common Shares outstanding:
Basic and Diluted (3) 18,171,689 4,517,524
=========== ===========
(1) General and administrative expense in 2003 includes $300,000 for
a non-cash severance payment in the form of 95,541 preferred
shares made to the former CEO of the company upon his resignation
in 4/03, and increased professional fees related to putting in
place new management and obtaining shareholder approval to
reposition the company.
(2) 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 and 2002.
Discontinued operations for the commercial properties also
includes loss reserves of $350,000 in 2003 and $2,023,000 in
2002. Revenues and expenses from operations for 2003 are for an
apartment complex purchased on 7/1/03.
(3) 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% 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
December 31, 2003
----------
Assets
Investments in real estate, net $3,951,005
Cash and restricted cash 2,315,756
Marketable securities, net 99,200
Other assets 378,845
----------
Total Assets $6,744,806
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Liabilities and Shareholders' Equity
Liabilities:
Mortgage loan payable $2,812,136
Other liabilities 260,222
----------
Total Liabilities 3,072,358
Minority Interest in consolidated subsidiaries 2,249,497
Total Shareholders' Equity 1,422,951
----------
Total Liabilities and Shareholders' Equity $6,744,806
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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.