Wellsford Real Properties, Inc. Reports First Quarter 2006 Results
04 May 2006 - 6:58AM
Business Wire
Wellsford Real Properties, Inc. (AMEX:WRP) announced today that its
net assets in liquidation at March 31, 2006 aggregated $53,383,604
or $8.25 per share based upon 6,471,179 common shares outstanding.
Net assets in liquidation aggregated $56,569,414 or $8.74 per share
at December 31, 2005. The $3,185,810 decrease in net assets in
liquidation from December 31, 2005 to March 31, 2006 is primarily
attributable to the recording of a $4,226,938 provision upon the
adoption of modifications by WRP's Board of Directors in the terms
of WRP's stock option plans during the first quarter of 2006. The
provision resulted from the modification to allow for cash payments
that could be made to option holders as consideration for the
cancellation of their options in the amount of the fair value of
WRP's common stock in excess of the adjusted exercise prices of
outstanding options as of March 31, 2006. The decrease was offset
by the net effect of an increase in value to WRP's residential
development projects from the accretion of discounting during the
period of $672,805 and operating income of $368,323 which primarily
represents interest income earned from cash and cash equivalents.
WRP had announced in November 2005 that its stockholders approved
the Plan of Liquidation (the "Plan") at the annual meeting held on
November 17, 2005. After the approval of the Plan by the
stockholders, WRP completed the sale of its largest asset, the
three residential rental phases of its Palomino Park project for
$176,000,000. On December 14, 2005, WRP made an initial liquidating
distribution of $14.00 per share, aggregating approximately
$90,597,000, to its stockholders. For all periods preceding
stockholder approval of the Plan on November 17, 2005, WRP's
financial statements are presented on the going concern basis of
accounting. As required by generally accepted accounting
principles, WRP adopted the liquidation basis of accounting as of
the close of business on November 17, 2005. Under the liquidation
basis of accounting, assets are stated at their estimated net
realizable value and liabilities are stated at their estimated
settlement amounts, which estimates will be periodically reviewed
and adjusted as appropriate. At March 31, 2006, WRP had total
assets of $113,559,697 which was comprised primarily of real estate
assets under development of $48,006,262, investments in joint
ventures of $20,453,074, cash of $39,094,397 and restricted cash
and investments of $3,972,503. Total liabilities and minority
interests of $60,176,093 at March 31, 2006 was comprised of the
reserve for estimated costs during the period of liquidation of
$23,146,001, mortgage notes and construction loans payable of
$23,769,349, the reserve for option cancellations of $4,092,236 and
other accruals and liabilities of $9,168,507. WRP reported first
quarter 2005 revenues of $4,301,505 and a net loss of $(2,790,962),
or $(0.43) per basic and diluted share. Remaining Activities,
Assets and Investments At March 31, 2006, WRP's remaining
activities, assets and investments were comprised primarily of the
following: -- The 259 unit Gold Peak condominium development in
Highlands Ranch, Colorado is the remaining phase from our Palomino
Park development. Sales commenced in January 2006 and by March 31,
2006, 16 Gold Peak units were sold and 88 units were under
contract. -- The Orchards is a single family home development in
East Lyme, Connecticut, upon which WRP commenced building 101
single family homes on 139 acres. An additional 60 homes could be
built on a contiguous 85 acre parcel of land also owned by the
Company. The model home was completed during the fourth quarter of
2005. The completion of the initial homes and closings of initial
sales are expected to occur in 2006. At March 31, 2006, three East
Lyme homes were under contract. -- A 75% ownership interest in a
joint venture that owns two land parcels aggregating approximately
300 acres in Claverack, New York. One land parcel is subdivided
into seven single family home lots upon which Claverack intends to
build and sell homes. The remaining 235 acres, known as The
Stewardship, are currently subdivided into six single family home
lots with the intent to obtain an increase in the number of
developable residential lots, improve the land, obtain construction
financing and construct and sell 48 single family homes. --
Interests in Reis, Inc., a real estate information and database
company. -- A 10% interest in Clairborne Fordham, a company which
currently owns and is selling the remaining two unsold residential
units of a 50-story, 277 unit, luxury condominium apartment project
in Chicago, Illinois. The Plan The Plan contemplates the orderly
sale of each of WRP's remaining assets, which are either owned
directly or through WRP's joint ventures, the collection of all
outstanding loans from third parties, the orderly disposition or
completion of construction of development properties, the discharge
of all outstanding liabilities to third parties and, after the
establishment of appropriate reserves, the distribution of all
remaining cash to stockholders. WRP currently contemplates that
approximately 36 months after the approval of the Plan any
remaining assets and liabilities would be transferred into a
liquidating trust. The liquidating trust would continue in
existence until all liabilities have been settled, all remaining
assets have been sold and proceeds distributed and the appropriate
statutory periods have lapsed. As noted above, WRP's net assets in
liquidation aggregated $53,383,604, or $8.25 per share on March 31,
2006. This amount presents development projects at estimated net
realizable value after giving effect to the present value
discounting of estimated net proceeds there from. All other assets
are presented at estimated net realizable value on an undiscounted
basis. The amount also includes a reserve for future estimated
general and administrative expenses and other costs during the
liquidation. Estimated net realizable value reflects economic
changes and various other changed circumstances over recent months.
There can be no assurance that these estimated values will be
realized, nor if the reserve for future estimated general and
administrative expenses is adequate. Such amount should not be
taken as an indication of the timing or amount of future
distributions to be made by WRP. The timing and amount of interim
liquidating distributions (if any) and the final liquidating
distribution will depend on the timing and amount of proceeds the
Company will receive upon the sale of the remaining assets and the
extent to which reserves for current or future liabilities are
required. Accordingly, there can be no assurance that there will be
any liquidating distributions prior to a final liquidating
distribution. WRP is a company in liquidation. WRP was originally
formed to operate as a real estate merchant banking firm to
acquire, develop, finance and operate real properties and invest in
private and public real estate companies. The Company's remaining
primary operating activities are the development, construction and
sale of three residential projects. This press release, together
with other statements and information publicly disseminated by WRP,
contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of WRP or industry results to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following,
which are discussed in greater detail in the "Risk Factors" section
of WRP's Form 10-K filed with the Securities and Exchange
Commission ("SEC") on March 16, 2006 which is incorporated herein
by reference: general and local economic and business conditions;
future valuation adjustments as a result of possible declines in
the expected values and cash flows of residential development
projects and investments or changes in the intent with regards to
such projects and investments; competition; risks of real estate
development, construction and renovation including construction
delays and cost overruns; inability to comply with zoning and other
laws and obtain governmental approvals; the risk of inflation in
development costs (including construction materials); the
availability of insurance coverages; the inability to obtain or
replace construction financing for development projects; adverse
consequences of debt financing including, without limitation, the
necessity of future financings to repay maturing debt obligations;
inability to meet financial and valuation covenants contained in
loan agreements; inability to repay financings; exposure to
variable rate based financings; risk of foreclosure on collateral;
risks of leverage; risks associated with equity investments in and
with third parties; risks associated with our reliance on joint
venture partners including, but not limited to, the inability to
obtain consent from partners for certain business decisions, the
potential risk that our partners may become bankrupt, have economic
or other business interests and objectives which may be
inconsistent with those of WRP and our partners being in a position
to take action contrary to our interests; inability and/or
unwillingness of partners to provide their share of any future
capital requirements; availability and cost of financing; interest
rate risks; demand by prospective buyers of condominiums and single
family homes; inability to realize gains from sales of condominiums
and single family homes; lower than anticipated sales prices;
inability to close on sales of properties; the risks of seasonality
and increasing interest rates on WRP's ability to sell condominium
units and single family homes; increases in energy costs,
construction materials and interest rates could adversely impact
our home building business as homes become more expensive to build
and profit margins could deteriorate; inability to raise sale
prices to maintain profit margins; the negative impact from a
continuing rise in energy costs and interest rates on our marketing
efforts and the ability for buyers to afford our homes at any price
level, which could result in the inability to meet targeted sales
prices or cause sales price reductions; environmental risks;
inability of Reis to be sold at all, for the amount of proceeds
used by WRP in valuing Reis, or on terms that are favorable to WRP;
the Board could abandon the Plan; failure to achieve proceeds from
the sales of assets to meet the estimated ranges of total
distributions to stockholders under the Plan; the uncertainty as to
the timing of sales of assets and the impact on the timing of
distributions to stockholders; illiquidity of real estate assets
and joint venture investments; increases in expenses which would
negatively impact the amount of distributions pursuant to the Plan;
unknown claims and liabilities which would negatively impact the
amount of distributions pursuant to the Plan; the sale of
undeveloped land, rather than the construction and sale, in the
normal course of business, of single family homes or condominium
units which would negatively impact the amount of distributions
pursuant to the Plan; the inability to utilize all of WRP's Federal
net operating loss carryforwards; and other risks listed from time
to time in WRP's reports filed with the SEC. Therefore, actual
results could differ materially from those projected in such
statements.
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