1185 Avenue of the Americas
New York, NY 10036
NEW YORK, August 31, 2007: Reis, Inc. (AMEX:WRP)("Reis" or the "Company") announced its results for the second quarter ending June 30, 2007 and the filing of the related Quarterly Report on Form 10-Q with the SEC. On May 30, 2007 Reis Inc., a privately held real estate information company ("Private Reis"), merged with Wellsford Real Properties, Inc. ("Wellsford"). The combined entity has adopted the corporate name of Reis, Inc. to reflect the fact that the post-merger business will be predominantly commercial real estate information and analytics.
This is the Company's first filing as a combined entity and presents financial information for its two operating segments: the information business which we refer to as Reis Services, and the Residential Development Activities, the primary business previously conducted by Wellsford. The Company utilizes segment reporting to assist stockholders in analyzing the two separate businesses. For more information regarding Reis's products, visit www.reis.com.
For the first six months of 2007, pro forma revenue for the combined entity totaled $24.5 million. Reis subscription revenues totaled $10.9 million, representing an 18.0% increase over the same period a year ago. Sales of residential units totaled $13.6 million for the first six months of 2007.
For June 2007, the first full month after the merger, consolidated net income was $835,000. Management uses EBITDA to monitor and assess the Company's performance and believes it is helpful to investors in understanding the Company's business. For June 2007, EBITDA for Reis Services totaled $688,000, representing a 36.7% margin. Annual renewal rates, an important measure of customer satisfaction, continue to average 94%.
At June 30, 2007, Reis had consolidated assets of $152.3 million including $24.6 million of cash, liabilities and minority interests of $71.5 million and stockholders' equity of $80.8 million. Wellsford's primary operating activities immediately prior to the merger were the development, construction and sale of three residential projects and its approximate 23% ownership interest in Private Reis. Currently, real estate assets, net of debt, represent $11.9 million (or 14.7%) of stockholders' equity.
As of August 10, 2007, as a result of the merger and the exercise of various employee stock options, the Company had 10,984,517 common shares outstanding. Officers and directors of Reis own approximately 26% of common shares outstanding.
Lloyd Lynford, President and CEO of the Company stated, "We are pleased that Reis Services, after 27 years as a privately-held concern, has completed its transition to a public company. We believe this transformation will permit us to attract and retain superior sales and senior management talent, thereby enhancing our ability to grow organically as well as through acquisitions. A recent example of our organic growth was our introduction in May 2007 of a 52 market expansion of our apartment product offering, followed by August's launch of 35 additional apartment markets, bringing the total number of apartment markets we cover to 169. We believe we track substantially more apartment markets than any other real estate information firm and we have plans to expand our office and retail market coverage in the near future."
Management believes that the Company's building-level proprietary database, which contains information relating to 20 billion square feet of commercial real estate, supports comprehensive geographic and property-type coverage and represents a competitive advantage and may discourage competition. On a quarterly basis, Reis updates over 14,000 neighborhood and city level reports that provide historical trends, current observations and five-year forecasts on all key real estate market indicators. These updates reflect all property, city, and neighborhood data gathered over the previous 90 days.
"We have been receiving inquiries asking what, if any, has been the impact of the current volatility in the residential mortgage market upon the Company," said Mr. Lynford. "During prior periods of economic and commercial real estate market volatility, we have experienced an increase in demand for current market information as well as for our portfolio products as mortgage lenders place greater emphasis on assessing portfolio risk. In addition, with last month's announcement by The Federal Reserve Board relating to the implementation of the Basel II accords in the United States and the computation of risk-based capital requirements, lenders will undergo increased scrutiny by regulators. Our products and services greatly assist our clients in measuring both portfolio risk and capital adequacy."
Effective with the consummation of the merger, the Company terminated the liquidation accounting basis previously used by Wellsford and returned to going concern accounting beginning June 1, 2007. In subsequent quarterly reports, the Company will continue to measure performance in terms of subscription renewals, revenues, net income and EBITDA.
Management intends to initiate conference calls for the benefit of existing and prospective stockholders, stock analysts, and other interested parties upon release of its third quarter 2007 operating results. The date and time of the calls will be announced. The Company will not provide quarterly guidance information.
Residential Development Activities
At June 30, 2007, the Company's residential development activities and other investments were comprised primarily of the following:
The 259 unit Gold Peak condominium development in Highlands Ranch, Colorado ("Gold Peak"). Sales commenced in January 2006 and 143 Gold Peak units were sold by June 30, 2007.
The following table presents Gold Peak and East Lyme sales information for the respective periods:
Reconciliation of Net Income to EBITDA
EBITDA is defined as earnings before interest, taxes, amortization and depreciation. Although EBITDA is not a measure of performance calculated in accordance with GAAP, senior management uses EBITDA to measure operational and management performance. Management believes that EBITDA is an appropriate metric that may be used by investors as a supplemental financial measure to be considered in addition to the reported GAAP basis financial information to assist investors in evaluating and understanding business from year to year or period to period, as applicable, and that EBITDA provides the reader with the ability to understand our operational performance while isolating non-cash charges, such as depreciation and amortization expenses and stock based compensation, as well as other non-operating items, such as interest income, interest expense and income taxes. Management also believes that disclosing EBITDA will provide better comparability to other companies in Reis Services's type of business. However, investors should not consider this measure in isolation or as a substitute for net income, operating income, or any other measure for determining operating performance that is calculated in accordance with GAAP. In addition, because EBITDA is not calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of EBITDA to the most comparable GAAP financial measure, net income, follows for the period June 1, 2007 to June 30, 2007:
Cautionary Statement Regarding Forward-Looking Statements
The Company makes forward-looking statements in this press release. These forward-looking statements relate to the Company's outlook or expectations for earnings, revenues, expenses, asset quality, or other future financial or business performance, strategies or expectations, or the impact of legal, regulatory or supervisory matters on the Company's business operations or performance. Specifically, forward-looking statements may include:
statements relating to the benefits of the merger with Private Reis;
statements relating to future business prospects, revenue, income and cash flows; and
statements preceded by, followed by or that include the words "estimate," "plan," "project," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions.
These statements reflect management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made certain assumptions. Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:
expected benefits from the merger with Private Reis may not be fully realized or at all;
revenues following the merger with Private Reis may be lower than expected;
the possibility of litigation arising as a result of terminating the plan of liquidation;
adverse changes in the real estate industry and the markets in which the Company will operate;
the inability to retain and increase the number of customers of the post-merger company;
inability to attract and retain sales and senior management personnel;
difficulties in protecting the security, confidentiality, integrity and reliability of the data of the post-merger company;
legal and regulatory issues;
inability to grow through acquisitions;
changes in accounting policies or practices; and
the risk factors listed under "Item 1A. Risk Factors" in the Company's annual report on Form 10-K, which was filed with the SEC on March 29, 2007 and, as amended, on April 30, 2007, and those listed under "Risk Factors" in the Company's registration statement on Form S-4, which was initially filed with the SEC on December 28, 2006 and, as amended, on March 9, 2007, April 11, 2007 and April 30, 2007.
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Mark P. Cantaluppi
Vice President, Chief Financial Officer