Paragon Announces Operating Results for Third Quarter and Nine Months Ended September 30, 2005


CLEVELAND, Oct. 20, 2005 (PRIMEZONE) -- Paragon Real Estate Equity and Investment Trust (AMEX:PRG) announced operating results for the three and nine months ended September 30, 2005. Net loss attributable to common shareholders for the quarter ended September 30, 2005 was $168,000, or $0.01 per share, compared to a net loss of $241,000, or $0.01 per share, for the same quarter of 2004. For the nine months ended September 30, 2005, the net loss attributable to common shareholders was $842,000, or $0.03 per share, compared to a net loss of $587,000, or $0.02 per share, for the first nine months of 2004.

Paragon's general and administrative expenses decreased by $76,000 for the third quarter of 2005 to $177,000, and for the nine months of 2005, these expenses increased by $158,000 to $875,000. The decrease for the quarter is a result of higher legal and accounting expenses incurred during the third quarter of 2004, and the increase for the nine months of 2005 is related to due diligence undertaken mostly during the first quarter of 2005 on a large potential acquisition.

During the third quarter, Paragon announced an acquisition of a portfolio of eight apartment communities in Texas and two in Ohio. This portfolio includes 1,478 units at a price of $64.7 million, or approximately $43,800 per unit. The transaction is expected to close at the end of 2005.

James C. Mastandrea, Chief Executive Officer of Paragon, said, "We look forward to completing this first acquisition, and then focusing on acquiring additional value-added apartment properties. We expect most of the on-site and regional staff will remain with the portfolio and join Paragon's management company." Mr. Mastandrea continued, "The acquisition of the existing regional management team adds an integral piece to the platform we are building."

Paragon is a real estate company with a value-added business plan to acquire well located, under-performing multi-family properties and reposition them through renovation, leasing, improved management and additional capital investment.

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, including the acquisition of ten properties in Texas and Ohio, 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
                              (Unaudited)

                                        For the three months ended
                                               September 30,
                                        --------------------------
                                            2005           2004
                                        -----------    -----------
 Revenues
   Rental revenue                         $ 153,128      $ 160,130
   Interest and other                        10,686         11,054
 -----------------------------------------------------------------
   Total revenues                           163,814        171,184
 -----------------------------------------------------------------
 Expenses

   Property operating, taxes, 
    insurance                                75,132         89,081
   Depreciation and amortization             22,956         21,997
   Interest                                  40,994         41,760
   General and administrative               177,468        253,024
 -----------------------------------------------------------------
   Total expenses                           316,550        405,862
 -----------------------------------------------------------------
 Loss from operations before 
  minority interests                       (152,736)      (234,678)
 Income allocated to 
  minority interests                        (15,050)        (5,859)
 -----------------------------------------------------------------
 Net loss attributable to 
  Common Shareholders                    $ (167,786)    $ (240,537)
 -----------------------------------------------------------------
 Net loss attributable to Common 
  Shareholders per Common Share:  
   Basic and Diluted                         ($0.01)        ($0.01)
 -----------------------------------------------------------------
 Weighted average number of 
  Common Shares outstanding:  
   Basic and Diluted                     33,541,570     33,342,790
 -----------------------------------------------------------------



    Paragon Real Estate Equity and Investment Trust and Subsidiaries
               Consolidated Statements of Operations
                          (Unaudited)
                                           For the nine months ended
                                                 September 30,
                                          ---------------------------
                                            2005              2004
                                        ------------      ------------
 Revenues
   Rental revenue                         $ 453,917         $ 455,741
   Interest and other                        31,087            38,511
 ----------------------------------------------------------------------
   Total revenues                           485,004           494,252
 ----------------------------------------------------------------------
 Expenses
   Property operating, taxes, 
     insurance                              243,893           249,526
   Depreciation and amortization             67,689            65,006
   Interest                                 122,219           124,912
   General and administrative               874,963           717,386
 ----------------------------------------------------------------------
   Total expenses                         1,308,764         1,156,830
 ----------------------------------------------------------------------
 Loss from operations before minority
    interests                              (823,760)         (662,578)
 (Income) loss allocated to 
     minority interests                     (17,807)           75,158
 ----------------------------------------------------------------------
 Net loss attributable to
     Common Shareholders                 $ (841,567)       $ (587,420)
 ----------------------------------------------------------------------
 Net loss attributable to Common
     Shareholders per Common Share:
     Basic and Diluted                       ($0.03)           ($0.02)
 ----------------------------------------------------------------------
 Weighted average number of
     Common Shares outstanding:
     Basic and Diluted                   33,617,311        32,899,490
 ----------------------------------------------------------------------


     Paragon Real Estate Equity and Investment Trust and Subsidiaries
                    Consolidated Balance Sheet
                          (Unaudited)

                                                  As of
                                            September 30, 2005
                                           --------------------
 ASSETS
 Investments in real estate, net                $3,858,723
 Cash and restricted cash                        1,047,680
 Marketable securities, net                         87,591
 Other assets, net                                 191,706
                                                -----------
 Total Assets                                   $5,185,700
                                                -----------
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
      Mortgage loan payable                     $2,723,978
      Other liabilities                            230,399
                                                ----------
 Total Liabilities                               2,954,377
 Minority interests in consolidated subsidiary   2,185,316
 Shareholders' equity                               46,007
                                                ----------
 Total Liabilities and Shareholders' Equity     $5,185,700
                                                ----------

            

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