Paragon Announces Operating Results for the Year Ended December 31, 2004


CLEVELAND, Feb. 28, 2005 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) announced operating results for the twelve months ended December 31, 2004. Net loss attributable to common share holders decreased to $816,000, or $0.02 per share, compared to a net loss of $1,090,000, or $0.06 per share, for the same period of 2003.

For the year ended December 31, 2004, Paragon's continuing operations include twelve months of Richton Trail Apartments, whereas in the same period ended December 31, 2003, Richton Trail is included for only six months because it was acquired on July 1, 2003. In addition, the 2003 net loss included non-comparable items for loss from discontinued operations of the commercial properties of $458,000 that were sold in October 2003 and gain on sale of marketable securities of $136,000. When properties are sold, their operating revenue and expenses are reclassified to "discontinued operations."

The company continues to actively pursue its value-added investment strategy and has been analyzing several portfolios. James C. Mastandrea, Chief Executive Officer and President, commented, "We have been reviewing value-added business opportunities in the apartment industry. With capital generally being available for real estate deals, we remain optimistic of achieving our objectives to make value-added acquisitions."



  Paragon Real Estate Equity and Investment Trust and Subsidiaries
               Consolidated Statements of Operations
                           
                                     For the twelve months ended
                                           December 31,
                                     --------------------------- 
                                         2004            2003
                                     -----------     -----------
 Revenues

  Rental revenue                     $   609,389     $   287,762

  Interest and other                      50,639          18,986
 ---------------------------------------------------------------
  Total revenues                         660,028         306,748
 ---------------------------------------------------------------
 Expenses

  Property operating, taxes,
   insurance                             346,337         149,205

  Depreciation and amortization           87,105          56,869

  Interest                               166,487          66,013

  General and administrative             958,311         951,367
 ---------------------------------------------------------------
  Total expenses                       1,558,240       1,223,454
 ---------------------------------------------------------------
 Loss from operations before
  minority interests                    (898,212)       (916,706)

 Loss allocated to minority
  interests                               81,988         148,609
 ---------------------------------------------------------------
 Loss from operations                   (816,224)       (768,097)

 Gain on sale of marketable
  securities                                  --         136,358
 ---------------------------------------------------------------
 Loss from continuing operations        (816,224)       (631,739)

 Loss from discontinued
  operations                    (1)           --        (457,874)
 ---------------------------------------------------------------
 Net loss attributable to Common
  Shareholders                          (816,224)     (1,089,613)
 ---------------------------------------------------------------
 Net loss attributable to Common
  Shareholders per Common Share:
  Basic and Diluted                       ($0.02)         ($0.06)
 ---------------------------------------------------------------
 Weighted average number of
  Common Shares outstanding:
  Basic and Diluted             (2)   32,993,966      18,171,689
 ===============================================================

 (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 operations for 2004 and 2003 are for an apartment 
      complex purchased on 7/1/03.

 (2)  The weighted average number of common shares increased in 2004 
      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 for 
      26,865,042 common shares.				


  Paragon Real Estate Equity and Investment Trust and Subsidiaries
                   Consolidated Balance Sheet

                                                   As of
                                              December 31, 2004
                                              ----------------- 
 ASSETS

 Investments in real estate, net                 $3,895,046

 Cash and restricted cash                         1,905,548

 Marketable securities, net                          89,948

 Other assets, net                                  124,567
                                                 ----------
 Total Assets                                    $6,015,109
                                                 ---------- 

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Liabilities:

      Mortgage loan payable                      $2,763,272

      Other liabilities                             318,324
                                                 ---------- 
 Total Liabilities                                3,081,596

 Minority interests in consolidated subsidiary    2,167,509

 Shareholders' equity                               766,004
                                                 ---------- 
 Total Liabilities and Shareholders' Equity      $6,015,109
                                                 ----------

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.


            

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