Wellsford Real Properties, Inc. (AMEX:WRP) announced today that its
net assets in liquidation at June 30, 2006 aggregated $55,844,106
or $8.63 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 and $53,383,604 or $8.25 per share at March
31, 2006. At June 30, 2006, WRP had total assets of $113,536,539
which was comprised primarily of real estate assets under
development of $49,236,994, investments in joint ventures of
$20,453,074, cash of $38,769,364 and restricted cash and
investments of $3,050,473. Total liabilities and minority interests
of $57,692,433 at June 30, 2006 was comprised of the reserve for
estimated costs during the period of liquidation of $21,627,367,
mortgage notes and construction loans payable of $24,422,172, the
reserve for option cancellations of $2,241,846 and construction
payables, other accruals and liabilities of $7,985,464. The
$725,308 decrease in net assets in liquidation from December 31,
2005 to June 30, 2006 is primarily attributable to the recording of
a $4,226,938 provision upon the adoption by WRP's Board of
Directors of modifications in the terms of WRP's stock option plans
during the first quarter of 2006. The provision resulted from the
modification during the first quarter of 2006 to allow for cash
payments that would be made to option holders, at their election,
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. This liability has been reduced by $1,317,505 ($0.21 per
share) during the three months ended June 30, 2006 to reflect the
decrease in the market price of WRP's common stock during such
period. At each quarter end, an increase to WRP's stock price would
result in a decline in net assets in liquidation, whereas a decline
in the stock price (as occurred to the stock price from March 31,
2006 of $7.91 per share to June 30, 2006 of $7.07 per share) would
increase WRP's net assets in liquidation. These decreases were
offset by (i) the net increase in value of real estate assets under
development of $1,353,297 which results primarily from changes in
the net realizable value estimates including the shortening of the
discount period due to the passage of time and sales of condominium
units and homes and (ii) operating income of $830,848 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. WRP reported revenues of $4,037,315
and $8,338,820 and net income of $2,969,122 and $178,160, or $0.46
and $0.03 per basic and diluted share for the three and six months
ended June 30, 2005, respectively. Remaining Activities, Assets and
Investments At June 30, 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 41 Gold Peak units were sold by
June 30, 2006 and 70 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 WRP. Sales commenced in June 2006 and
one home was sold by June 30, 2006. At June 30, 2006, four 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 $55,844,106, or $8.63 per share on June 30,
2006. This amount presents development projects at estimated net
realizable values 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 reserves for future estimated
general and administrative expenses and other costs and for cash
payments on outstanding stock options during the liquidation. There
can be no assurance that these estimated values will be realized or
that future expenses and other costs will not be greater than
recorded estimated amounts. 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 WRP 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. WRP'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 and
the registration statement on Form S-8 filed with the SEC on June
7, 2006: 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 or 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 estimate 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 uncertainty as to the
ultimate liability for option cancellations and its effect on
reported net assets in liquidation as such amount is impacted by
the decisions of the option holders and changes in WRP's market
price for its common stock; 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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