Tarragon Corporation (NASDAQ: TARR), a leading urban homebuilder
specializing in the development and marketing of high- density
residential communities, today announced its financial results for
the second quarter ended June 30, 2008.
Second Quarter Financial Results
Consolidated revenue for the second quarter of 2008 was $64.4
million, compared to $69.9 million in the same period of 2007.
Homebuilding sales, including revenue from unconsolidated
properties, were $48.3 million in the second quarter of 2008,
compared to $84.5 million in the same period of 2007.
The loss from continuing operations was ($39.5 million) in the
second quarter of 2008, compared to a loss of ($155.0 million) in
the same period of 2007.
The net loss for the second quarter of 2008 was ($39.4 million),
or ($1.37) per diluted share, compared to a net loss of ($181.0
million), or ($6.31) per diluted share, in the second quarter of
2007.
The loss in the second quarter of 2007 included impairment
charges of $199.0 million, of which $39.1 million was presented in
cost of sales and $38.7 million was presented in discontinued
operations. Impairment charges of $19.5 million were recorded in
the second quarter of 2008. Of this amount, $709,000 was presented
in cost of sales.
Six-Month Financial Results
Consolidated revenue for the first six months of 2008 was $229.1
million, compared to $214.2 million for the same period of 2007.
Homebuilding sales, including revenue from unconsolidated
properties, were $202.3 million in the first six months of 2008
compared to $215.0 million in the same period of 2007.
The loss from continuing operations during the first six months
of 2008 was ($55.7 million) compared to a loss of ($156.4 million)
for the same period of 2007.
The net loss for the first six months of 2008 was ($48.2
million), or ($1.69) per diluted share, compared to a loss of
($185.3 million), or ($6.55) per diluted share, in the comparable
period of 2007.
The 2008 and 2007 periods included impairment charges of $34.1
million and $203.4 million, respectively. Of these amounts, $1.7
million and $43.5 million, respectively, were presented in cost of
sales. In addition, in the 2007 period, impairment charges of $38.7
million were presented in discontinued operations.
Sales, Orders and Backlog
In the second quarter of 2008, the Company recorded sales of 142
homes representing $48.3 million compared with 407 homes for $84.5
million in the second quarter of 2007.
In the second quarter of 2008 the Company wrote 41 net new
orders totaling $5.0 million at an average sale price of $121,000,
compared with 360 net new orders totaling $69.0 million for the
same period in 2007 at an average sale price of $192,000.
At the end of the second quarter of 2008, the Company's backlog,
excluding land development, was $31.4 million representing 82 homes
compared with $194.2 million at the end of the second quarter of
2007 representing 482 homes. The average contract price was
$383,000 at June 30, 2008 compared to $403,000 at June 30,
2007.
Active Projects
At June 30, 2008, Tarragon's active for-sale communities
(including backlog) totaled 987 homes in 11 communities,
representing about $328.3 million in projected revenue, compared to
3,147 homes representing $1 billion in projected revenue at June
30, 2007.
Development Pipeline
The Company's homebuilding pipeline at the end of the second
quarter of 2008, which is comprised of sites owned or controlled by
the Company not yet included in active developments, totaled nearly
1,600 homes in nine communities compared to 3,757 homes in 18
communities at the end of the second quarter last year.
Based on the number of units, 60 percent of the development
pipeline comes from rental developments, 22 percent from high- and
mid-rise developments, 5 percent from townhome communities and 13
percent from mixed residential and commercial communities. Tarragon
has a 70 percent, weighted-average ownership interest in the
development pipeline.
Investment Division
The Investment Division, comprising 7,696 apartments as of June
30, 2008, had net operating income for the second quarter of $9.1
million, compared with the previous year's net operating income of
$12.5 million from 11,920 apartments. Same store apartment net
operating income was $8.3 million for both the second quarter of
2008 and the second quarter of 2007.
For the first six months of 2008, the Investment Division had
net operating income of $18.9 million, compared with income of
$26.3 million for the first half of 2007. Same store net operating
income was $17.1 million, compared to $17.4 million in the same
period 2007. Average same store occupancy during the first six
months of 2008 was 93.4 percent, compared to 92.9 percent a year
ago.
Previously Announced Transaction with Northland
In March 2008, the Company entered into a contract to sell
Bermuda Island, a rental apartment community located in Naples,
Florida, to an affiliate of Northland Investment Corporation
("Northland"). On July 31, Northland failed to close this purchase,
despite receiving several extensions and the consent of the lender
to the assumption and extension of the existing financing. After
the Company requested the $250,000 contract deposit from the escrow
agent, Northland immediately commenced litigation over entitlement
to the deposit. This dispute with Northland may negatively impact
the Company's ability to obtain the consent of its principal lender
to the previously announced transaction with Northland, which could
delay closing or otherwise adversely affect the Company's ability
to close the transaction.
About Tarragon Corporation
Tarragon Corporation is a leading developer of multifamily
housing for rent and for sale. The Company's operations are
concentrated in the Northeast, Florida, Texas and Tennessee. To
learn more about Tarragon Corporation, visit:
www.tarragoncorp.com
Forward-looking Statements
Information in this press release includes "forward-looking
statements" made pursuant of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that are based on
management's expectations, estimates, projections and assumptions.
Words such as "may," "expects," "anticipates," "intends,"
"estimates" and variations of these words and similar expressions
are intended to identify forward-looking statements, which include
but are not limited to statements regarding the closing of the
transaction with Northland. Actual results and the timing of
certain events could differ materially from those projected or
contemplated by these forward-looking statements due to a number of
factors, including conditions in the homebuilding industry, the
satisfaction of the conditions to formation of the joint ventures
with Northland, the Company's ability to identify and enter into
suitable developments or ventures with financially strong partners,
the residential real estate and mortgage markets and the capital
and financial markets generally, business opportunities that may be
available to Tarragon, general economic conditions, interest rates
and other risk factors outlined in Tarragon's SEC reports,
including its Annual Report on Form 10-K for the year ended
December 31, 2007 and any subsequently filed Quarterly Reports on
Form 10-Q. Tarragon assumes no responsibility to update
forward-looking information contained in this press release.
TARR-E
TARRAGON CORPORATION
FINANCIAL HIGHLIGHTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenue $ 64,353 $ 69,888 $ 229,132 $ 214,186
Expenses 83,364 241,298 241,678 378,190
Other income and expenses:
Equity in income (loss)
of partnerships and
joint ventures 529 (5,729) 415 (5,438)
Minority interests in
income of consolidated
partnerships
and joint ventures (127) (779) (8,293) (1,446)
Interest income 167 221 438 401
Interest expense (18,174) (13,034) (32,776) (24,772)
Gain on sale of real
estate - - - 398
Net loss on
extinguishment of debt (34) - (34) (1,422)
Net loss on debt
restructuring (45) - (3,534) -
Gain on transfer of
assets 2,237 - 2,237 -
Provision for litigation,
settlements and other
claims (5,080) (1,864) (5,696) (1,864)
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes (39,538) (192,595) (59,789) (198,147)
Income tax benefit 9 37,612 4,091 41,757
---------- ---------- ---------- ----------
Loss from continuing
operations (39,529) (154,983) (55,698) (156,390)
Discontinued operations,
net of income tax
(expense) benefit
Income (loss) from
operations 122 (26,880) (506) (29,718)
Gain on sale of real
estate - 854 8,034 854
---------- ---------- ---------- ----------
Net loss (39,407) (181,009) (48,170) (185,254)
Accrued dividends on
cumulative preferred stock (390) (388) (781) (764)
---------- ---------- ---------- ----------
Net loss allocable to
common stockholders $ (39,797) $ (181,397) $ (48,951) $ (186,018)
========== ========== ========== ==========
Loss per common share -
basic and diluted
Loss from continuing
operations allocable
to common stockholders $ (1.37) $ (5.40) $ (1.95) $ (5.53)
Discontinued operations - (0.91) 0.26 (1.02)
---------- ---------- ---------- ----------
Net loss allocable to
common stockholders $ (1.37) $ (6.31) $ (1.69) $ (6.55)
========== ========== ========== ==========
Development
Operating Statements
For the Three Months Ended June 30,
-------------------------------------
2008 2007
----------------- ------------------
Sales revenue $ 48,338 100% $ 84,466 100%
Cost of sales (43,095) (89%) (120,391) (143%)
---------- ----- ---------- ------
Gross profit (loss) on sales 5,243 11% (35,925) (43%)
Minority interests in sales of
consolidated partnerships and joint
ventures (252) (1%) (779) (1%)
Outside partners' interests in sales
of unconsolidated partnerships and
joint ventures (135) - (6,717) (8%)
Overhead costs associated with
investments in joint ventures - - (221) (1%)
Performance-based compensation
related to projects of
unconsolidated partnerships and
joint ventures - - 7 -
---------- ----- ---------- ------
4,856 10% (43,635) (53%)
---------- ----- ---------- ------
Other income and expenses:
Impairment charges (18,069) (37%) (75,871) (90%)
Interest expense (7,774) (16%) (2,613) (3%)
Depreciation expense (128) - - -
Net income (loss) from rental
operations (678) (1%) 150 -
Taxes, insurance, and other
carrying costs (1,540) (3%) (862) (1%)
General and administrative expenses (8,023) (17%) (10,469) (12%)
Other corporate items 552 1% 569 1%
Provision for litigation,
settlements and other claims (5,081) (11%) (1,034) (1%)
Distributions from unconsolidated
partnerships and joint
ventures in excess of investment 109 - - -
Loss on extinguishment of debt - - - -
Loss on debt restructuring - - - -
---------- ----- ---------- ------
Loss before income taxes (35,776) (74%) (133,765) (159%)
Income tax benefit - - 33,055 39%
---------- ----- ---------- ------
Net loss $ (35,776) (74%)$ (100,710) (120%)
========== ===== ========== ======
Reconciliation of segment revenues
to consolidated revenue:
Total Development Division revenue $ 48,338 $ 84,466
Less: sales revenue of
unconsolidated partnerships
and joint ventures (3,062) (35,776)
---------- ----------
Consolidated Development Division
sales revenue $ 45,276 $ 48,690
========== ==========
For the Six Months Ended June 30,
-------------------------------------
2008 2007
----------------- ------------------
Sales revenue $ 202,291 100% $ 214,993 100%
Cost of sales (171,381) (85%) (242,983) (113%)
---------- ----- ---------- ------
Gross profit (loss) on sales 30,910 15% (27,990) (13%)
Minority interests in sales of
consolidated partnerships and joint
ventures (9,080) (4%) (1,446) (1%)
Outside partners' interests in sales
of unconsolidated partnerships and
joint ventures 117 - (6,944) (3%)
Overhead costs associated with
investments in joint ventures - - (285) -
Performance-based compensation
related to projects of
unconsolidated partnerships and
joint ventures - - (7) -
---------- ----- ---------- ------
21,947 11% (36,672) (17%)
---------- ----- ---------- ------
Other income and expenses:
Impairment charges (31,552) (16%) (75,871) (35%)
Interest expense (13,153) (7%) (4,738) (2%)
Depreciation expense (128) - - -
Net income (loss) from rental
operations (613) - 461 -
Taxes, insurance, and other
carrying costs (2,836) (1%) (1,129) (1%)
General and administrative expenses (15,556) (8%) (15,704) (7%)
Other corporate items 558 - 686 -
Provision for litigation,
settlements and other claims (5,568) (3%) (1,034) -
Distributions from unconsolidated
partnerships and joint
ventures in excess of investment 109 - - -
Loss on extinguishment of debt - - (1,414) (1%)
Loss on debt restructuring (4,445) (2%) - -
---------- ----- ---------- ------
Loss before income taxes (51,237) (26%) (135,415) (63%)
Income tax benefit - - 33,055 15%
---------- ----- ---------- ------
Net loss $ (51,237) (26%)$ (102,360) (48%)
========== ===== ========== ======
Reconciliation of segment revenues
to consolidated revenue:
Total Development Division revenue $ 202,291 $ 214,993
Less: sales revenue of
unconsolidated partnerships
and joint ventures (11,157) (42,477)
---------- ----------
Consolidated Development Division
sales revenue $ 191,134 $ 172,516
========== ==========
Investment
Operating Statements
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
2008 2007 2008 2007
-------- --------- -------- --------
Rental
revenue $ 19,330 100% $ 26,810 100% $ 39,093 100% $ 53,405 100%
Property
operating
expenses (10,185) (53%) (14,309) (53%) (20,190) (52%) (27,127) (51%)
-------- ----- --------- ----- -------- ----- -------- -----
Net
operating
income 9,145 47% 12,501 47% 18,903 48% 26,278 49%
Net gain
on sale
of real
estate - 1,362 12,813 1,760
Minority
interests
in loss of
consolidated
partnerships
and joint
ventures 126 - 787 -
Mortgage
banking
income 15 164 34 298
General
and
administrative
expenses (1,744) (3,212) (4,110) (5,083)
Other
corporate
items 319 564 813 778
Impairment
recoveries
(charges) 115 (89,887) 84 (89,887)
Net loss on
extinguishment
of debt (34) - (1,112) (8)
Net gain
(loss)
on debt
restructuring (44) - 912 -
Gain on
transfer
of assets 2,237 - 2,237 -
Provision
for
litigation,
settlements
and other
claims - (955) (128) (955)
Interest
expense (10,790) (16,199) (20,617) (31,105)
Depreciation
expense (2,917) (5,388) (7,162) (10,844)
-------- --------- -------- --------
Income
(loss)
before
income
taxes (3,572) (101,050) 3,454 (108,768)
Income
tax
(expense)
benefit (59) 20,751 (387) 25,874
-------- --------- -------- --------
Net
income
(loss) $ (3,631) $ (80,299) $ 3,067 $(82,894)
======== ========= ======== ========
Reconciliation
of segment
revenues to
consolidated
revenue:
Total
Investment
Division
revenue $ 19,330 $ 26,810 $ 39,093 $ 53,405
Less
Investment
Division
rental
revenue
presented in
discontinued
operations (1,237) (7,032) (2,571) (14,047)
Add
management
fee and
other
revenue
included
in other
corporate
items 704 913 932 1,065
Add rental
revenues
from
development
properties
presented
in net
loss from
property
operations 280 507 544 1,247
-------- --------- -------- --------
Consolidated
Investment
Division
sales
revenue $ 19,077 $ 21,198 $ 37,998 $ 41,670
======== ========= ======== ========
Contacts: Broadgate Consultants, LLC Alan H. Oshiki (212)
232-2222 Email Contact Tarragon Corporation William S. Friedman
(212) 949-5000 Email Contact
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