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NEW YORK CITY-Tarragon Realty Investors Inc.’s revenues rose 14% to $31.8 million, versus $27.8 million in the prior-year period. For the six months, housing sales were down 2% to $14.8 million, but that figure rose 87% to $11.1 million in the second quarter, with closings at three communities. The company is currently estimating fiscal 2003 revenues of $135-140 million.

“The Tarragon story continues to evolve rapidly,” said president and CEO William S. Friedman during the company’s conference call on second quarter results. “Stay tuned for future developments.” One those future developments is the proposed Metropolitan condominium high-rise at the northwestern corner of US 41 and Gulfstream in Sarasota, FL. With 450,000 sf of saleable space in front of the Ritz-Carlton Hotel, Tarragon anticipates that the project will eventually bring in $225 million.

“We’ve received municipal approvals for a zoning change and expect to break ground early next year and want to make a West Coast impact,” Friedman said.

Another future development is the company’s For Sale Housing Division, which has a development and construction pipeline of more than $1.3 billion in homes expected to be completed and sold over the next four years.

“Because of the long lead time for most of our communities, we incur significant overhead, sales and marketing costs long before we recognize any sales revenue. All of the $2.6 million in additional overhead incurred in the first two quarters this year related to staffing up to handle the increased activity we foresee,” Friedman said. “Based upon contracts and reservations at Venetian Bay, Pine Crest and Tuscany on the Intracoastal, we expect greater sales in the second half of the year and, accordingly, we are reaffirming our previously stated guidance for revenues and earnings.” Tarragon is also looking at some projects in Upstate New York.

The company reported a net loss allocable to common stockholders of $5.2 million, or $0.44 loss per share, which includes depreciation and amortization of $8.7 million, compared to a net loss allocable to common of $5.4 million, or $0.44 loss per share, for the second quarter of 2002, which included depreciation and amortization of $7.9 million.

For the six-month period, revenues were $57 million, which included a loss of $0.9 million from unconsolidated affiliates, down from revenues of $66.2 million in the prior period, which included $9.7 million in gains on sales from unconsolidated affiliates. The six-month net was a loss allocable to common of $4.1 million, or $0.35 loss per share, including depreciation and amortization of $15.9 million, versus a net profit allocable to common of $3.0 million, or $0.25 per share, in the prior period, which included depreciation and amortization of $14.6 million. Friedman also noted that the second-quarter and six-month losses were lower than the non-cash depreciation and amortization charges for the same periods. Depreciation and amortization in the first half of 2003 increased by $1.8 million due to completion of several development properties and write- offs of deferred borrowing costs in connection with loan refinancings.

Same-store Investment Division net operating income fell 6% from the prior quarter, to $11.2 million, and fell 4% for the six-month period, to $22.5 million, due mostly to increased marketing, leasing and weather-related expenses. Investment Division same-store funds from operations declined 12% for the quarter, to $3.9 million, and fell 5% for the six-month period to $8.6 million, due primarily to higher write-offs of deferred borrowing costs and prepayment penalties related to refinancings.

Tarragon has a current backlog of 320 contracts and reservations, representing over $170 million in sales.

It’s been a busy summer for Tarragon, which controls approximately 16,000 apartments and 1.5 million sf of commercial space, valued at more than $1 billion. First, the company closed on a $104 million first mortgage pool financing with GE Real Estate, secured by seven apartment properties in Texas, Tennessee and Florida. In late June, it purchased Tuscany on the Intracoastal, a recently completed 286-unit luxury apartment community on the water in Boynton Beach, FL, for $45.5 million from Altman Development Co. And in July, Tarragon acquired Guardian Equities Inc. based in Orlando, FL, and a controlling interest in nine affiliated investment and development partnerships, from Guardian founder and national real estate developer Alan Ginsburg.

Earlier this year, Tarragon made a number of executive appointments to expand activities in it three divisions–investment, development and for-sale housing. While Tarragon maintains its core emphasis with concentrations in Florida, Connecticut and Texas, the company is making inroads into new market areas including New Jersey.

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