1185 Avenue of the Americas
New York, NY 10036
NEW YORK, May 11, 2007: Wellsford Real Properties, Inc. (AMEX:WRP) announced today that its net assets in liquidation at March 31, 2007 aggregated $57,504,451, or $8.65 per share, based upon 6,646,378 common shares outstanding, compared to $57,595,561, or $8.67 per share, at December 31, 2006 based upon 6,646,738 common shares outstanding.
At March 31, 2007, WRP had total assets of $105,379,499, which was comprised primarily of real estate assets under development of $37,832,269, investment in Reis, Inc. ("Reis") of $20,000,000, cash of $39,304,567, restricted cash of $2,992,241 and deferred merger costs of $3,753,598. Total liabilities and minority interests of $47,875,048 at March 31, 2007 was comprised of the reserve for estimated costs during the period of liquidation of $17,447,143, mortgage notes and construction loans payable of $17,984,678, the reserve for option cancellations of $3,063,778 and construction payables, other accruals and liabilities and minority interests aggregating $9,379,449.
During the three months ended March 31, 2007, net assets in liquidation decreased $91,110. This decrease is primarily attributable to (1) a decrease in real estate assets under development of $132,937, which resulted from the net effect of sales of condominiums and homes and value adjustments to the development projects and (2) an increase in the option cancellation reserve of $430,370 which reflects the changes in the market price of WRP's common stock between March 31, 2007 and December 31, 2006, offset by operating income of $472,197, which primarily represents interest income earned from cash and cash equivalents.
During the three months ended March 31, 2006, net assets in liquidation decreased $3,185,810. This decrease 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 announced in November 2005 that its stockholders had ratified 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. If the Merger with Reis (as described below) is consummated and the Plan is terminated, then WRP will change from the liquidation basis of accounting to the going concern basis of accounting upon the effective termination of the Plan.
Remaining Activities, Assets and Investments
At March 31, 2007, WRP's remaining activities, assets and investments were comprised primarily of the following:
Merger with Reis
On October 11, 2006, WRP announced that it had entered into a definitive merger agreement to acquire Reis (the "Merger"). The Merger was approved by the independent members of WRP's Board of Directors on that date. Reis stockholders, excluding Wellsford Capital, a wholly-owned subsidiary of WRP, will receive, in the aggregate, approximately $34,579,414 in cash and 4,237,673 shares of newly issued common stock of WRP which, for purposes of the Merger, has been established at $8.16 per share, resulting in an implied equity value for Reis of approximately $90,000,000.
The rules of the American Stock Exchange (the "AMEX") require WRP's stockholders to approve the issuance of shares of common stock of WRP to Reis stockholders, since such an issuance would be greater than 20% of the WRP common shares currently outstanding. The transaction, which is also subject to the approval of Reis's stockholders, regulatory approvals and other customary closing conditions, is expected to close in the second quarter of 2007. The definitive joint proxy statement/prospectus of Wellsford and Reis was filed with the Securities and Exchange Commission ("SEC") on May 2, 2007 and mailing to stockholders commenced on May 3, 2007. WRP's annual stockholders' meeting will be held on May 30, 2007.
If the Merger is consummated, WRP will terminate its previously adopted Plan, but will continue with its residential development and sales activities related to its real estate assets over a period of years.
The cash portion of the Merger consideration is to be funded by a loan extended to Reis by a financial institution aggregating $27,000,000, of which $25,000,000 may be used to pay the cash portion of the Merger consideration and the payment of related Merger costs and the remaining $2,000,000 may be utilized for Reis's working capital needs. The remainder of the Merger consideration and transaction costs will be funded with cash from Reis and WRP. On the consummation of the Merger, WRP will have approximately 10,700,000 shares of common stock outstanding and will change its corporate name to Reis, Inc. Following the consummation of the Merger, current Reis stockholders will own approximately 38% of WRP. If the Merger is consummated, WRP estimates that $1.15 of the $14.00 per share liquidating distribution made on December 14, 2005 will be recharacterized as taxable dividend income.
There can be no assurance that Reis's stockholders will vote to approve the Merger and adopt the Merger agreement or that WRP's stockholders will vote to issue shares of WRP's common stock in connection with the Merger. Furthermore, there can be no assurance following a vote in favor of the Merger and such issuance of WRP's common stock that the Merger will be consummated.
For additional information regarding WRP's financial position and activities during the first quarter of 2007, please see the financial statements and management's discussion and analysis of financial condition and results of operations as presented in the March 31, 2007 Form 10-Q filed with the SEC on May 11, 2007.
Cautionary Statement Regarding Forward-Looking Statements
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. These forward-looking statements relate to WRP'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 WRP's business operations or performance. Specifically, forward-looking statements may include:
These statements reflect WRP's 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, WRP's management has made assumptions regarding, among other things, the determination of estimated net realizable value for its assets and the determination of estimated settlement amounts for its liabilities and general economic conditions.
Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause WRP's actual results to differ include:
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, WRP 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
Wellsford Real Properties, Inc.
Vice President, Chief Financial Officer