Comstock Reports Second Quarter 2024 Results

Rhea-AI Summary

Comstock Holding Companies (Nasdaq: CHCI) reported strong Q2 2024 results, showcasing continued growth in its asset-light, debt-free business model. Key highlights include:

- Revenue increased 20% to $10.8 million; YTD up 11% to $21.4 million
- Net income rose 99% to $0.9 million; YTD up 51% to $1.9 million
- Adjusted EBITDA grew 56% to $1.6 million; YTD up 16% to $3.1 million
- 103% increase in recurring fee-based Property & Parking Management revenue; YTD up 74%
- 24 additional Assets Under Management compared to prior year
- 6 new commercial leases executed in Q2, representing over 60,000 sqft of office and retail space
- Residential managed portfolio 97% leased; in-place rent growth of 7% vs. prior year

The company's managed portfolio performance demonstrates the 'flight-to-quality' trend in commercial real estate, with stabilized assets approximately 95% leased overall.

Positive

• Revenue increased 20% to $10.8 million in Q2 2024
• Net income rose 99% to $0.9 million in Q2 2024
• Adjusted EBITDA grew 56% to $1.6 million in Q2 2024
• 103% increase in recurring fee-based Property & Parking Management revenue
• 24 additional Assets Under Management compared to prior year
• 6 new commercial leases executed in Q2, representing over 60,000 sqft of office and retail space
• Residential managed portfolio 97% leased with 7% in-place rent growth
• Commercial managed portfolio 93% leased
• Pre-sales of JW Marriott-branded residences exceeding projections on volume and pricing

Negative

• None.

Insights

Financial Analyst

Comstock's Q2 2024 results demonstrate robust growth and operational efficiency. Revenue increased by 20% to $10.8 million, while net income surged 99% to $0.9 million. The 103% increase in recurring fee-based Property & Parking Management revenue is particularly noteworthy, indicating a strong, stable income stream. Adjusted EBITDA growth of 56% to $1.6 million suggests improved profitability and operational efficiency.

The company's asset-light, debt-free model appears to be paying dividends, allowing for scalable growth without significant capital expenditure. The expansion of the managed portfolio to 69 assets (up 24 from the prior year) underpins this growth strategy. With a 93% leased commercial portfolio and 97% leased residential portfolio, Comstock is well-positioned to generate consistent cash flows.

Real Estate Market Analyst

Comstock's performance reflects the "flight-to-quality" trend in commercial real estate. The company's focus on trophy-class office properties and transit-oriented developments is proving successful, with leasing rates well above industry averages. The 7% in-place rent growth for the residential portfolio is impressive, especially given current market conditions.

The progress at The Row at Reston Station is particularly promising. The pre-sales of JW Marriott-branded residences exceeding projections in both volume and pricing indicates strong demand for luxury mixed-use developments. The opening of VIDA Fitness and securing Fresh Market as an anchor tenant for Midline at Reston Station further enhances the attractiveness of these properties. This success in mixed-use development could provide a blueprint for future projects and sustained growth.

Market Strategist

Comstock's strategy of focusing on high-quality, mixed-use, transit-oriented properties in the Washington, D.C. region appears to be paying off. The company's ability to attract and retain tenants, even in a challenging office market, speaks to the strength of its portfolio and management. The expansion into parking management through ParkX, with 91% QTD revenue growth, demonstrates successful diversification of revenue streams.

Looking ahead, Comstock's pipeline of projects, including the JW Marriott Hotel & Residences and new Trophy-Class office towers, positions the company for continued growth. The strong pre-sales of condominiums and interest from office tenants in these new developments suggest that Comstock is well-aligned with market demands. However, investors should monitor broader economic conditions and their potential impact on commercial real estate, particularly in the office sector.

Asset-light, debt-free business model continues to deliver positive results

• Revenue increased 20% to $10.8 million; YTD increase of 11% to $21.4 million
  • 103% increase in recurring fee-based Property & Parking Management revenue; YTD increase of 74%
  • 24 additional AUM vs. prior year
• Net income increased 99% to $0.9 million; YTD increase of 51% to $1.9 million
• Adjusted EBITDA increased 56% to $1.6 million; YTD increase of 16% to $3.1 million
• 6 new commercial leases executed in Q2 representing over 60,000 sqft. of office and retail space
• Residential managed portfolio 97% leased; in-place rent growth of 7% vs. prior year

RESTON, Va.--(BUSINESS WIRE)-- Comstock Holding Companies, Inc. (Nasdaq: CHCI) (“Comstock” or the “Company”), a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region, announced its financial results for the second quarter ended June 30, 2024.

“Our growth continued as expected in Q2, as we achieved comparative quarterly revenue growth for the 16th consecutive period driven by the expansion of our managed portfolio and the predictable, low-risk, fee-based nature of our business,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “The stabilized assets in our managed portfolio are approximately 95% leased in total, and include numerous trophy-class office properties leased well-above industry averages as well as multiple residential buildings that are essentially at full capacity. The performance of our managed portfolio clearly demonstrates the “flight-to-quality” trend that is reshaping the commercial real estate landscape. It is also a testament to our dedicated team of professionals who show up every day to make a difference for our customers, our stakeholders, and in the communities that we serve.”

Mr. Clemente continued, “During the quarter, our long-term vision for The Row at Reston Station started coming into focus. We topped off two new buildings, Virginia’s first-ever JW Marriott Hotel and Residences and the BLVD Haley residential tower. We held a grand opening for a state-of-the-art VIDA Fitness facility, the first of several exciting retail openings scheduled to occur during the next year, which impressively has already attracted approximately 2,000 members. In addition, we opened the on-site sales office for the JW Marriott-branded residences that will occupy the top half of the 28-story tower and begin delivering in mid-2025. I am pleased to report that pre-sales of the residences are currently exceeding projections on both volume and pricing, a strong indicator that sales of the remaining units will continue. I look forward to reporting on our accomplishments in the upcoming periods as we continue to focus on driving further value for all stakeholders.”

Key Performance Metrics

($ in thousands, except per share and portfolio data)		Q1 2024			Q1 2023			YTD 2024			YTD 2023
	Revenue	$	10,753		$	8,967		$	21,391		$	19,242
	Net income	$	946		$	475		$	1,856		$	1,229
	Adjusted EBITDA		1,601			1,027			3,087			2,653
	Net income per share — diluted	$	0.09		$	0.05		$	0.18		$	0.12
	Managed Portfolio - # of assets		69			45			69			45
	Please see the included financial tables for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure.

Additional Information

• Commercial managed portfolio leased percentage of 93%¹; 16 leases representing over 100,000 square feet executed YTD, including ~75,000 square feet leased to new office and retail tenants.
• Residential managed portfolio leased percentage of 97%; more than 300 units leased YTD.
• Continued rapid expansion of ParkX AUM led to QTD and YTD increases in total revenue of 91% and 67%, respectively.
• Significant activity from key assets located at The Row, which represents the second phase of the Reston Station development, including:
  • Continued construction progress on the JW Marriott Hotel & Residences; double-digit pre-sales of condominiums located in the building, exceeding expectations for sales projections and pricing.
  • Continued construction progress on two new Trophy-Class office towers that will be ready for occupancy in 2025 and 2026, one of which includes the flagship 50,000 square foot VIDA Fitness that opened in May 2024. Both buildings are attracting considerable interest from office tenants seeking to relocate from aging office parks to the well-planned, mixed-use, and transit-oriented developments in the Dulles Corridor.
• Significant progress on design and retail leasing for Midline at Reston Station, the next phase of the Reston Station development; includes an anchor tenant, Fresh Market, among other leases.

_____________________________
1	% represents stabilized assets and excludes recently delivered office tower from The Row at Reston Station

About Comstock

Founded in 1985, Comstock is a leading asset manager, developer, and operator of mixed-use and transit-oriented properties in the Washington, D.C. region. With a managed portfolio that includes approximately 10 million square feet of stabilized, under construction, and planned assets that are strategically located at key Metro stations, Comstock is at the forefront of the urban transformation taking place in one of the nation’s best real estate markets. Comstock’s developments include some of the largest and most prominent mixed-use and transit-oriented projects in the mid-Atlantic region, as well as multiple large-scale public-private partnership developments. For more information, please visit Comstock.com.

Cautionary Statement Regarding Forward-Looking Statements

This release may include "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by use of words such as "anticipate," "believe," "estimate," "may," "intend," "expect," "will," "should," "seeks" or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. You should not place any undue reliance on any forward-looking statement, which speaks only as of the date made. Any number of important factors could cause actual results to differ materially from those projected or suggested by the forward-looking statements. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise.

COMSTOCK HOLDING COMPANIES, INC. Consolidated Balance Sheets (Unaudited; In thousands)
	June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents	$	17,431			$	18,788
Accounts receivable, net		437				496
Accounts receivable - related parties		6,106				4,749
Prepaid expenses and other current assets		514				353
Total current assets		24,488				24,386
Fixed assets, net		545				478
Intangible assets		144				144
Leasehold improvements, net		74				89
Investments in real estate ventures		6,239				7,077
Operating lease assets		6,358				6,790
Deferred income taxes, net		10,318				10,885
Deferred compensation plan assets		390				53
Other assets		24				37
Total assets	$	48,580			$	49,939
Liabilities and Stockholders' Equity
Current liabilities:
Accrued personnel costs	$	1,433			$	4,681
Accounts payable and accrued liabilities		882				838
Current operating lease liabilities		888				854
Total current liabilities		3,203				6,373
Deferred compensation plan liabilities		391				77
Operating lease liabilities		5,819				6,273
Total liabilities		9,413				12,723
Stockholders' equity:
Class A common stock		96				94
Class B common stock		2				2
Additional paid-in capital		202,205				202,112
Treasury stock		(2,662	)			(2,662	)
Accumulated deficit		(160,474	)			(162,330	)
Total stockholders' equity		39,167				37,216
Total liabilities and stockholders' equity	$	48,580			$	49,939

COMSTOCK HOLDING COMPANIES, INC. Consolidated Statements of Operations (Unaudited; In thousands, except per share data)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue	$	10,753			$	8,967			$	21,391			$	19,242
Operating costs and expenses:
Cost of revenue		8,907				7,681				17,792				16,004
Selling, general, and administrative		546				572				1,081				1,136
Depreciation and amortization		73				71				141				138
Total operating costs and expenses		9,526				8,324				19,014				17,278
Income (loss) from operations		1,227				643				2,377				1,964
Other income (expense):
Interest income		166				—				307				—
Gain (loss) on real estate ventures		(101	)			(68	)			(294	)			(479	)
Other income (expense), net		11				47				33				47
Income (loss) from operations before income tax		1,303				622				2,423				1,532
Provision for (benefit from) income tax		357				147				567				303
Net income (loss)	$	946			$	475			$	1,856			$	1,229
Weighted-average common stock outstanding:
Basic		9,830				9,632				9,812				9,608
Diluted		10,300				10,052				10,243				10,060
Net income (loss) per share:
Basic	$	0.10			$	0.05			$	0.19			$	0.13
Diluted	$	0.09			$	0.05			$	0.18			$	0.12

COMSTOCK HOLDING COMPANIES, INC. Non-GAAP Financial Measures (Unaudited; In thousands)
Adjusted EBITDA   The following table presents a reconciliation of net income (loss) from continuing operations, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA:
	Three Months Ended June 30,							Six Months Ended June 30,
		2024				2023			2024				2023
Net income (loss)	$	946			$	475		$	1,856			$	1,229
Interest income		(166	)			—			(307	)			—
Income taxes		357				147			567				303
Depreciation and amortization		73				71			141				138
Stock-based compensation		290				266			536				504
(Gain) loss on real estate ventures		101				68			294				479
Adjusted EBITDA	$	1,601			$	1,027		$	3,087			$	2,653

The increases in Adjusted EBITDA for the three and six months ended June 30, 2024 were primarily driven by the significant increases in recurring fee-based property management revenue in the current period.

We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and gain or loss on equity method investments in real estate ventures.

We use Adjusted EBITDA to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute Adjusted EBITDA consistently using the same methods each period.

We believe Adjusted EBITDA is a useful measure because it permits investors to better understand changes over comparative periods by providing financial results that are unaffected by certain non-cash items that are not considered by management to be indicative of our operational performance.

While we believe that Adjusted EBITDA is useful to investors when evaluating our business, it is not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. Adjusted EBITDA should not be considered in isolation, or as a substitute, for other financial performance measures presented in accordance with GAAP. Adjusted EBITDA may differ from similarly titled measures presented by other companies.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808890156/en/

Investor Contact

Christopher Guthrie

Executive Vice President & Chief Financial Officer

cguthrie@comstock.com

703-230-1292



Media Contact

publicrelations@comstock.com

301-785-6327

Source: Comstock Holding Companies, Inc.

FAQ

What was Comstock's (CHCI) revenue growth in Q2 2024?

Comstock (CHCI) reported a 20% increase in revenue to $10.8 million for Q2 2024.

How much did Comstock's (CHCI) net income increase in Q2 2024?

Comstock's (CHCI) net income increased by 99% to $0.9 million in Q2 2024.

What was the occupancy rate of Comstock's (CHCI) residential managed portfolio in Q2 2024?

Comstock's (CHCI) residential managed portfolio was 97% leased in Q2 2024.

How many new commercial leases did Comstock (CHCI) execute in Q2 2024?

Comstock (CHCI) executed 6 new commercial leases in Q2 2024, representing over 60,000 sqft of office and retail space.

What was the growth in Comstock's (CHCI) Property & Parking Management revenue in Q2 2024?

Comstock (CHCI) reported a 103% increase in recurring fee-based Property & Parking Management revenue in Q2 2024.