Comstock Homebuilding Companies Announce Quarter And Year-End Operation Results

RESTON, VA -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) (“Comstock” or the “Company”) today announced its results of operations for the three and twelve months ended December 31, 2006. The Company also announced that it had elected to included segment disclosures beginning with its Form 10-K for the year ended December 31, 2006.

The Company will conduct a conference call for interested investors on Monday, March 19, 2007, at 1:00 PM Eastern Daylight Time. During the call the Company will discuss its financial results outlook for 2007 and beyond. The dial-in number for the conference call is 800-418-6860 and the access code is 8454271; the call may also be accessed in the Investor Relations section of the company’s web site at www.comstockhomebuilding.com.

Highlights of Financial Results - Three months ended December 31, 2006 (“the Quarter”):

-- The Company delivered 553 homes in the Quarter at an average per unit
revenue of approximately $228,000 which included 259 units at the Company’s
Carter Lake project and the remaining 30 units at the Company’s Countryside
Condominiums which were both sold to single buyers;

-- The Company generated basic and diluted loss per share for the
Quarter of ($1.79) on shares outstanding of 15.7 million as compared to
basic earnings per share of $0.66 on shares outstanding of 14.0 million and
diluted earnings per share of $0.66 on shares outstanding of 14.0 million
for the three months ended December 31, 2005;

-- Total revenue was $123.3 million for the Quarter with $123.0 million
of revenue from homebuilding (of which $40.0 million was generated from the
sale of Carter Lake and $46.1 million from the Eclipse at Potomac Yard) as
compared to $77.2 million with $75.8 million of revenue derived from
homebuilding for the three months ended December 31, 2005. This represents
a 59.7% increase in total revenue and a 62.3% increase in revenue from
homebuilding over the three months ended December 31, 2005. The revenue
generated in the Quarter related to the sale of the 30 units at Countryside
was not included in revenue from homebuilding based on the ongoing
involvement and profit participation of the Company in the sellout of
units. The revenue will be recognized as the units are delivered through
the marketing and service agreement;

-- Gross profit from all revenue, before impairments and write-offs, was
$8.4 million for the Quarter representing a 6.8% gross margin as compared
to gross profit from all revenue after reclassifying impairments out of
cost of sales - real estate of $22.0 million for the three months ended
December 31, 2005 representing a 28.4% gross margin;

-- During the Quarter, the Company recorded $42.7 million of pre-tax, non-
cash charges for impairments to its assets and write-offs for deposits and
related feasibility costs on option contracts where the Company chose not
to exercise its option to close. By comparison, the Company recorded pre-
tax, non-cash impairment and write-off charges of $1.2 million for the
three months ended December 31, 2005;

-- Operating loss after impairments, write-offs and SG&A was ($45.8)
million for the Quarter representing a (37.1%) operating margin as compared
to operating income of $13.8 million and an operating margin of 17.8% for
the three months ended December 31, 2005. Selling, general and
administrative expenses for the Quarter were $11.5 million representing
9.3% of total revenue as compared to $7.0 million representing 9.0% of
total revenue for the three months ended December 31, 2005;

-- At December 31, 2006 the Company had $295.4 million of senior and
subordinated debt as compared to $340.3 million at September 30, 2006.
This represents a $44.9 million or 13.2% reduction during the Quarter as
compared to September 30, 2006.

Highlights of Financial Results - Twelve months ended December 31, 2006 (“the Year”):
-- The Company delivered 940 homes during the Year at an average per unit
revenue of approximately $259,000;

-- The Company generated basic and diluted loss per share for the Year of
($2.63) on weighted average shares outstanding of 15.1 million as compared
to basic earnings per share of $2.14 on weighted average shares outstanding
of 12.9 million and diluted earnings per share of $2.12 on weighted average
shares outstanding of 13.0 million for the twelve months ended December 31,
2005;

-- Total revenue was $245.9 million for the Year with $240.1 million of
revenue from homebuilding as compared to $224.3 million with $216.3 million
of revenue derived from homebuilding for the twelve months ended December
31, 2005. This represents a 9.6% increase in total revenue and an 11.0%
increase in revenue from homebuilding over the twelve months ended December
31, 2005;

-- Gross profit from all revenue, before impairments and write-offs, was
$29.2 million for the Year representing an 11.9% gross margin as compared
to gross profit from all revenue of $66.6 million for the twelve months
ended December 31, 2005 representing a 29.7% gross margin. The 17.8
percentage point reduction in gross margin was a result of price pressure
on our inventory, elongated inventory hold and sales cycles and rising
interest rates during the course of 2006;

-- During the Year, the Company recorded $57.4 million of pre-tax, non-
cash charges for impairments to its assets and write-offs for deposits and
related feasibility costs on option contracts where the Company chose not
to exercise its option to close. By comparison, the Company recorded pre-
tax, non-cash impairment and write-off charges of $1.2 million for the
twelve months ended December 31, 2005;

-- Operating loss after impairments, write-offs and SG&A was ($65.7)
million for the Year representing a (26.7%) operating margin as compared to
operating income of $42.4 million and an operating margin of 18.9% for the
twelve months ended December 31, 2005. Selling, general and administrative
expenses for the Year were $37.5 million representing 15.3% of total
revenue as compared to $23.0 million representing 10.2% of total revenue
for the twelve months ended December 31, 2005;

-- At December 31, 2006, the Company had $21.3 million of unrestricted
cash on hand and $4.6 million of accounts receivable which are
substantially comprised of settlement proceeds in transit from settlement
attorneys. By comparison, the Company had $42.2 million of unrestricted
cash on hand at December 31, 2005 with $6.4 million of accounts receivable
outstanding;

-- At December 31, 2006 the Company had $39.6 million of consolidated
variable interest entity assets with $37.4 million of consolidated variable
interest entity liabilities representing $2.2 million of non-refundable
deposits posted. By comparison, the Company had $89.9 million of
consolidated variable interest entity assets at December 31, 2005 with
$83.0 million of liabilities or $6.9 million of non-refundable deposits
posted;

-- At December 31, 2006 the Company had $295.4 million of senior and
subordinated debt as compared to $143.0 million at December 31, 2005. The
Company’s debt to capitalization ratio at December 31, 2006 was 70.5% on
shareholder equity of $123.9 million as compared to 49.6% on $145.1 million
at December 31, 2005;

-- Real estate held for development and sale increased 54.9% to $408.7
million on December 31, 2006 as compared to $263.8 million at December 31,
2005.

The Company did not issue quarterly or annual guidance for 2007 and does not intend to on its investor conference call on Monday, March 19, 2007.
“This was a difficult year,” said Christopher Clemente, Chairman and CEO. “We look forward to talking with our investors on March 19th about our 2006 results, our progress on bank facility modifications, status of sales and deliveries at the Eclipse and our strategy for 2007 and beyond.”

About Comstock Homebuilding Companies, Inc.

Established in 1985, Comstock Homebuilding Companies is a diversified real estate development firm with a focus on moderately priced for-sale residential products. Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the greater Washington, D.C., Atlanta, Georgia and Raleigh, North Carolina metropolitan areas. Comstock Homebuilding Companies, Inc. trades on Nasdaq under the symbol CHCI. For more information please visit our web site at http://www.comstockhomebuilding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains “forward-looking” statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “expects,” “projects,” “anticipates,” “estimates,” “believes,” “intends,” “plans,” “should,” “seeks,” and similar expressions, including statements related to Comstock’s expected future financial results and anticipated growth in the Washington, D.C. housing market, are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, economic, market and competitive conditions affecting Comstock and its operations and products, risks and uncertainties relating to the market for real estate generally and in the areas where Comstock has projects, the availability and price of land suitable for development, materials prices, labor costs, interest rates, Comstock’s ability to service its significant debt obligations, fluctuations in operating results, anticipated growth strategies, continuing relationships with affiliates, environmental factors, government regulations, the impact of adverse weather conditions or natural disasters and acts of war or terrorism. Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in the prospectus from Comstock’s initial public offering, as filed with the Securities and Exchange Commission on December 15, 2004. Comstock specifically disclaims any obligation to update or revise any forward- looking statements, whether as a result of new information, future developments or otherwise.

Preliminary Operating Results - Comstock Homebuilding Companies, Inc.


Twelve Months Ended
December 31,
--------------------
2006 2005
--------- ---------
Revenues
Revenue from homebuilding $ 240,093 $ 216,265
Other revenue 5,788 8,040
--------- ---------
Total revenue 245,881 224,305

Expenses
Cost of sales of real estate 211,408 152,886
Cost of sales of other 5,248 3,604
Impairments and write-offs 57,426 1,216
Selling, general and administrative 37,500 24,190
--------- ---------

Operating income (65,701) 42,409
Other (income) expense, net (1,487) (1,450)
--------- ---------

Income before minority interest and equity in
earnings of real estate partnerships (64,214) 43,859
Minority interest 15 30
--------- ---------

Income before equity in earnings of real estate
partnerships (64,229) 43,829
Equity in earnings of real estate partnerships (135) 99
--------- ---------

Total pre tax income (64,364) 43,928
Income Taxes (24,520) 16,366
--------- ---------

Net (loss) income (39,844) 27,562

Basic earnings per share (2.63) 2.14

Basic weighted average shares outstanding 15,148 12,870
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Diluted earnings per share (2.63) 2.12

Diluted weighted average shares outstanding 15,148 13,022
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Preliminary Balance Sheet - Comstock Homebuilding Companies, Inc.


December 31, December 31,
2006 2005
----------- -----------

ASSETS
Cash and cash equivalents $ 21,263 $ 42,167
Restricted cash 12,326 10,800
Receivables 4,555 6,365
Note receivables - 1,250
Due from related parties 4,053 2,899
Real estate held for development and sale 408,744 263,802
Inventory not owned - variable interest
entities 39,634 89,890
Property, plant and equipment 1,948 605
Investment in real estate partnerships (171) (35)
Deferred income tax 10,188 2,545
Other assets 14,889 11,031
----------- -----------
TOTAL ASSETS $ 517,429 $ 431,319
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LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued liabilities 55,680 59,131
Due to related parties 4,740 40
Obligations related to inventory not owned 37,350 83,015
Notes payable 265,403 142,994
Junior subordinated debt 30,000 -
Notes payable--related parties - 663
Deferred income tax - -
----------- -----------
TOTAL LIABILITIES 393,173 285,843
----------- -----------

Minority interest 371 400
----------- -----------

SHAREHOLDERS’ EQUITY
Class A common stock, $0.01 par value,
77,266,500 shares authorized, 14,129,081 and
11,532,442 issued and outstanding 141 115
Class B common stock, $0.01 par value,
2,733,500 shares authorized, 2,733,500 issued
and outstanding 27 27
Additional paid-in capital 147,528 126,461
Treasury Stock, at cost (391,400 Class A
Common Stock) (2,439) -
Retained earnings (accumulated deficit) (21,372) 18,473
----------- -----------
TOTAL SHAREHOLDERS’ EQUITY 123,885 145,076
----------- -----------

----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 517,429 $ 431,319
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