NEW YORK, NY , a leading developer of multifamily housing for
rent and for sale, today announced its financial results for the
fourth quarter and year ended December 31, 2007. Additional details
about the Company's performance are available in its annual report
on Form 10-K filed with the U.S. Securities and Exchange Commission
on March 28, 2008. Comparable figures from the fourth quarter and
full year of 2006 are provided for reference; however, direct
comparisons are not necessarily meaningful due to the Company's
significant sales of properties during 2007 and the overall impact
of the housing market on Tarragon's business and results of
operations.
Year-End Financial Results
The net loss for 2007 was $388.4 million, or ($13.52) per
diluted share, compared to net income of $11.2 million, or $0.34
per diluted share, in 2006.
Net loss in 2007 reflects impairment charges, write-offs and
gross margin adjustments of $429.0 million after tax, or $14.88 per
share, approximately 85% of which were recorded in the second and
third quarters of 2007. Of this $429.0 million, $153.7 million,
after tax, is reflected in cost of sales and resulted from
market-driven margin adjustments and impairment charges.
Approximately $7.8 million, after tax, is included in general and
administrative expense and relates to the write-off of pursuit
costs on development projects that were canceled or otherwise
terminated. Finally, $267.5 million of impairment charges, after
tax, represent the write-down of land inventory and properties held
for sale to then current estimated market value. This compares to
$35.1 million of impairment charges, gross margin adjustments and
other write-downs, after tax, recorded in 2006. The loss from
continuing operations for 2007 was $379.3 million or ($13.20) per
diluted share compared to income from continuing operations of $3.3
million or $0.09 per diluted share in 2006.
The Company reported consolidated 2007 revenue of $448.5
million, compared to $527.1 million in 2006. Homebuilding sales,
including revenue from unconsolidated entities, were $430.8 million
in 2007 compared to $508.2 million in 2006.
Fourth Quarter Financial Results
The Company reported a net loss for the fourth quarter of 2007
of $18.4 million, or ($0.65) per diluted share, compared to a net
loss of $24.0 million, or ($0.85) per diluted share, in the fourth
quarter of 2006.
Included in the fourth quarter of 2007 net loss were impairment
charges, write-downs and gross margin adjustments totaling $55.2
million after tax, or $1.91 per share. This $55.2 million includes
$46.8 million of market-driven margin reductions and impairments in
cost of sales, $7.5 million related to the write-down of land
inventory and properties held for sale to the then current
estimated market value and $0.9 million write-off of development
pursuit costs recorded in general and administrative expenses.
Impairment charges or other write-downs of $23.8 million related to
price reductions and increased sales incentives were recorded in
the fourth quarter of 2006.
Income from continuing operations was $10.9 million in the
fourth quarter of 2007, or $0.36 per diluted share, compared to a
loss of $22.2 million, or ($0.79) per diluted share in the same
period of 2006.
Consolidated revenue for the fourth quarter of 2007 was $157.1
million, compared with consolidated revenue of $159.5 million in
the same period of 2006. Homebuilding sales, including revenue from
unconsolidated properties, were $147.9 million in the fourth
quarter of 2007, compared to $148.5 million in the fourth quarter
of 2006.
Sales, Orders and Backlog
During 2007, the Company executed 1,023 net new orders totaling
$236.4 million compared to 1,564 net new orders in 2006 worth
$390.9 million. Tarragon delivered 1,539 homes in 2007 valued at
$381.8 million compared to 2,639 homes in 2006 worth $574.5
million.
In the fourth quarter of 2007, the Company wrote 214 net new
orders totaling $72.9 million compared with 448 net new orders
totaling $101.6 million for the same period in 2006. The Company
delivered 354 homes in the fourth quarter 2007 for $70.2 million
compared with 570 homes for $126.4 million in the fourth quarter of
2006. In addition to the above individual home sales, Tarragon sold
and delivered, in bulk, the remaining unsold condominium units at
three of its conversion projects, totaling 423 homes valued at
$49.7 million.
At year-end 2007, the Company's backlog, excluding land
development, was $70.2 million representing 201 homes compared with
$239.6 million representing 607 homes at year-end 2006.
Active Projects/Development Pipeline
At December 31, 2007, Tarragon's active development projects
(including backlog) totaled 3,401 homes in 24 communities,
representing approximately $990 million in projected future
revenue, compared to 6,335 homes in 41 communities representing
about $1.8 billion in projected future revenue at December 31,
2006.
The Company's development pipeline, comprised of sites owned or
controlled by the Company not yet included in active developments,
totaled approximately 2,400 homes in 12 communities at the end of
2007. The Company continues to review its pipeline projects for
feasibility under current market conditions.
Investment Division
For 2007, Investment Division net operating income increased 7.8
percent to $51.1 million from $47.4 million in the same period of
2006. Same store net operating income decreased 5.2 percent.
Average same store occupancy during 2007 was 92.7 percent, down
from 93.6 percent a year ago. These decreases were primarily
attributable to increased vacancy and concessions in the Southeast
as a result of the shadow market created by rentals of unsold
condominiums.
The Investment Division, with 9,093 apartments as of December
31, 2007, had net operating income for the fourth quarter of $11.0
million, compared to $13.8 million from 11,310 apartments in the
prior year.
Outlook and Strategy
During 2007, Tarragon sold 13 Investment Division properties and
five parcels of land for an aggregate sales price of $475.7
million. These sales generated net cash proceeds of $58.3 million
and enabled the Company to reduce its consolidated debt by
approximately $396 million. The Company also closed on the sales of
2,470 homes in 2007, including five bulk sales comprising 931
homes, the proceeds of which were used to reduce consolidated debt
by an additional $298.2 million.
The Company's strategy for 2008 includes a continued focus on
repayment of development and condominium conversion-related debt
while continuing to seek to enhance the Company's liquidity
position through reduction of real estate inventory and sales of
investment properties. By the end of 2008, the Company expects to
have reduced condominium conversion-related debt to approximately
$25 million. Tarragon also plans to continue its strategy of
building high quality rental properties for sale to long-term
investors. As part of this strategy, Tarragon in February 2008
closed on the sale of 1000 Jefferson, a 217-unit luxury rental
building located in Hoboken, New Jersey for a sales price of $116.2
million, the proceeds of which were used to repay approximately $76
million of consolidated debt outstanding as of December 31,
2007.
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 Company's outlook
and strategy, expectations regarding the Company's ability to
reduce condominium conversion-related debt and trends and
conditions in the markets in which the Company operates. 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 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 YEAR ENDED DECEMBER 31, 2007
(Dollars in thousands, except per share data)
(Unaudited)
For the Years Ended
December 31,
----------------------------------
2007 2006 2005
---------- ---------- ----------
Revenue $ 448,518 $ 527,142 $ 578,430
Expenses 823,263 494,849 470,449
Other income and expenses:
Equity in income (loss) of
partnerships and joint ventures (8,356) 17,166 29,603
Minority interests in (income) loss
of consolidated partnerships
and joint ventures 3,955 (4,748) (10,071)
Interest income 946 854 995
Interest expense (72,635) (36,349) (21,685)
Gain on sale of real estate 16,466 1,148 3,808
Loss on disposition of other assets - - (300)
Net gain (loss) on extinguishment of
debt 1,587 (3,984) (34,771)
Provision for litigation,
settlements, and other claims (1,988) - (1,214)
---------- ---------- ----------
Income (loss) from continuing
operations before income taxes (434,770) 6,380 74,346
Income tax (expense) benefit 55,483 (3,039) (28,289)
---------- ---------- ----------
Income (loss) from continuing
operations (379,287) 3,341 46,057
Discontinued operations, net of income
taxes
Income (loss) from operations (36,129) (4,519) 732
Gain on sale of real estate 26,975 12,331 41,709
---------- ---------- ----------
Net income (loss) (388,441) 11,153 88,498
Dividends on cumulative preferred stock (1,534) (971) (899)
---------- ---------- ----------
Net income (loss) allocable to common
stockholders $ (389,975) $ 10,182 $ 87,599
========== ========== ==========
Earnings (loss) per common share - basic
Income (loss) from continuing operations
allocable to common stockholders $ (13.20) $ 0.08 $ 1.75
Discontinued operations (0.32) 0.28 1.64
---------- ---------- ----------
Net income (loss) allocable to common
stockholders $ (13.52) $ 0.36 $ 3.39
========== ========== ==========
Earnings (loss) per common share -
assuming dilution
Income (loss) from continuing operations
allocable to common stockholders $ (13.20) $ 0.09 $ 1.61
Discontinued operations (0.32) 0.25 1.32
---------- ---------- ----------
Net income (loss) allocable to common
stockholders $ (13.52) $ 0.34 $ 2.93
========== ========== ==========
Development
Operating Statements
For the Years Ended December 31,
---------------------------------------------------
2007 2006 2005
---------------- --------------- ----------------
Sales $ 430,778 100% $508,185 100% $ 735,528 100%
Cost of sales (557,357) (129%) (455,261) (90%) (557,848) (76%)
--------- ----- -------- ----- --------- -----
Gross profit (loss) on
sales (126,579) (29%) 52,924 10% 177,680 24%
Minority interests in
sales of consolidated
partnerships and joint
ventures 3,450 1% (2,302) - (2,093) -
Outside partners'
interests in sales of
unconsolidated
partnerships and joint
ventures 2,227 - (2,138) - (33,627) (5%)
Overhead costs associated
with investment in joint
ventures (323) - (600) - (1,410) -
Performance-based
compensation related to
projects of
unconsolidated
partnerships and joint
ventures (7) - (209) - (2,662) -
--------- ----- -------- ----- --------- -----
(121,232) (28%) 47,675 10% 137,888 19%
--------- ----- -------- ----- --------- -----
Other income and
expenses:
Impairment charges (115,648) (27%) (2,721) (1%) - -
Interest expense (17,496) (4%) (18,307) (4%) (5,683) (1%)
Net income from rental
operations 510 - 7,435 1% 8,595 1%
Taxes, insurance, and
other carrying costs (7,198) (2%) (4,706) (1%) (876) -
Mortgage banking income - - 864 - 457 -
General and
administrative expenses (35,981) (8%) (31,777) (6%) (16,229) (2%)
Other corporate items 912 - 250 - 550 -
Provision for
litigation, settlement,
and other claims (1,313) - - - - -
Distributions from
unconsolidated
partnerships and joint
ventures in excess
of investment 405 - 9,625 2% - -
Provision for losses (3,000) (1%) - - - -
Write-off of
investment in joint
venture (6,045) (1%) - - - -
Loss on extinguishment
of debt (562) - (2,855) (1%) (1,199) -
Gain on sale of real
estate 346 - 817 - 1,979 -
--------- ----- -------- ----- --------- -----
Income (loss) before
income taxes (306,302) (71%) 6,300 - 125,482 17%
Income tax (expense)
benefit 33,055 8% (2,410) - (47,746) (6%)
--------- ----- -------- ----- --------- -----
Net income (loss) $(273,247) (63%) $ 3,890 - $ 77,736 11%
========= ===== ======== ===== ========= =====
Reconciliation of segment
revenues to consolidated
revenue:
Total Development
Division revenue $ 430,778 $508,185 $ 735,528
Less: Development
Division sale revenue
presented in discontinued
operations - (2) -
Less: sales revenue
of unconsolidated
partnerships and joint
ventures (71,867) (63,909) (230,806)
--------- -------- ---------
Consolidated
Development Division
sales revenue $ 358,911 $444,274 $ 504,722
========= ======== =========
Investment
Operating Statements
For the Years Ended December 31,
----------------------------------------------------
2007 2006 2005
---------- -------- ---------
Rental revenue $ 107,836 100% $ 92,269 100% $ 114,827 100%
Property operating
expenses (56,783) (53%) (44,858) (49%) (59,492) (52%)
---------- ----- -------- ----- --------- -----
Net operating income 51,053 47% 47,411 51% 55,335 48%
Net gain on sale of
real estate 59,143 24,324 68,856
Distributions from
unconsolidated
partnerships and joint
ventures in excess of
investment - - 88
Minority interests in
(income) loss of
consolidated
partnerships and
joint ventures 505 (2,446) (7,685)
Mortgage banking
income 496 - -
Elimination of
management and
other fees paid to
Tarragon by
unconsolidated
partnerships and
joint ventures - - 310
Outside partners'
interest in income
of unconsolidated
partnerships and
joint ventures - - (1,723)
General and
administrative
expenses (13,334) (6,812) (9,888)
Other corporate items 1,680 1,902 865
Impairment charges (151,792) (810) (3,066)
Net gain (loss) on
extinguishment of debt 122 (1,363) (33,574)
Provision for
litigation,
settlements, and
other claims (726) - (1,214)
Interest expense (72,412) (33,528) (33,669)
Depreciation expense (17,803) (15,948) (16,923)
---------- -------- ---------
Income (loss) before
income taxes (143,068) 12,730 17,712
Income tax (expense)
benefit 27,874 (5,467) (6,950)
---------- -------- ---------
Net income (loss) $ (115,194) $ 7,263 $ 10,762
========== ======== =========
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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