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Tarragon Corporation Announces Fourth Quarter and Year-End 2007 Financial Results
(Market Wire Via Thomson Dialog NewsEdge) NEW YORK, NY, March 28 / MARKET WIRE/ --
Tarragon Corporation (NASDAQ: TARR), 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) 232-2222Email Contact
Tarragon Corporation
William S. Friedman
(212) 949-5000Email Contact
Copyright ? 2008 Market Wire, Incorporated
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