1038222--3/29/2007--WELLSFORD_REAL_PROPERTIES

related topics

{loan, real, estate}

{acquisition, growth, future}

{tax, income, asset}

{system, service, information}

{debt, indebtedness, cash}

{stock, price, operating}

{investment, property, distribution}

{cost, regulation, environmental}

{regulation, change, law}

{product, market, service}

{loss, insurance, financial}

{provision, law, control}

{personnel, key, retain}

{property, intellectual, protect}

{competitive, industry, competition}

Wellsford s development and construction activities expose it to risks associated with the sale of residential units. Wellsford could change its intent with regard to the development and sale of its residential development projects. Wellsford may not be able to generate sufficient cash flow to meet its debt service obligations. Some of Wellsford s development projects have incurred, and may incur, debt, in which case a third party lender would be entitled to cash flow generated by such investments until that debt is repaid. The restrictive covenants associated with Wellsford s outstanding indebtedness under construction and development loans may limit Wellsford s ability to operate its business. Increases in interest rates could materially increase Wellsford s interest expense or could reduce Wellsford s revenues. The market for construction and development of real estate is highly competitive. Property ownership through partnerships and joint ventures generally limits Wellsford s control of those investments and entails other risks. Increased insurance costs and reduced insurance coverage may affect Wellsford s results of operations and increase its potential exposure to liability. Wellsford is subject to environmental laws and regulations, and Wellsford s properties may have environmental or other contamination. Wellsford s properties are subject to various Federal, state and local regulatory requirements, such as state and local fire and life safety requirements and the Americans with Disabilities Act. Wellsford s governing documents and Maryland law contain anti-takeover provisions that may discourage acquisition bids or merger proposals, which may adversely affect the market price of Wellsford s common stock. Risk Factors Relating to the Merger The merger represents a significant change in strategy for Wellsford which may be unsuccessful. A portion of the December 14, 2005 cash distribution by Wellsford to its stockholders will be recharacterized as taxable dividend income as a result of the termination of the Plan. Wellsford may be subject to litigation as a result of terminating the Plan. Wellsford s common stock is thinly traded and there may be little or no liquidity for the shares of Wellsford common stock to be issued in connection with the proposed merger. Failure to consummate the merger could negatively impact the stock price of Wellsford, because of, among other things, the disruption in the market that would occur as a result of uncertainties relating to a failure to consummate the merger and resulting in Wellsford incurring significant costs without the benefit of the merger. If Wellsford s stockholders do not approve the issuance of Wellsford common stock in connection with the merger, Wellsford will be required to pay certain of Reis s expenses. If the post-merger company does not realize the anticipated benefits from the merger, Wellsford stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger. The post-merger company s ability to use the net operating loss carryforwards of Wellsford will be subject to limitation and, under certain circumstances, may be eliminated. If the post-merger company is not able to successfully identify or integrate future acquisitions, its business operations and financial condition could be adversely affected, and future acquisitions may divert its management s attention and consume significant resources. Following the consummation of the merger, Wellsford s executive officers and directors will own a significant percentage of Wellsford s stock and will continue to have significant control of the combined company s management and affairs, and they may take actions which adversely affect the trading price of Wellsford s common stock. The Bank Loan documents contain financial and operating restrictions that limit Reis s access to credit. If, following the consummation of the merger, Reis fails to comply with the covenants in the Bank Loan documents, Reis may be required to repay the indebtedness on an accelerated basis. The success of the post-merger company depends on retaining key executive officers and personnel and attracting and retaining capable management and operating personnel. A reverse stock split of Wellsford common stock following the consummation of the merger may have an adverse effect on Wellsford s stock price, market capitalization and liquidity. Risk Factors Relating to Reis Reis must continue to attract and retain customers, and any failure to increase the number of customers or retain existing customers would harm Reis s business. Reis s revenues are concentrated among certain key customers. Reis may be unable to compete successfully with its current or future competitors. Reis may not be able to sustain its revenue growth and future financial performance may be difficult to assess. Reis must continue to obtain information from multiple sources. Reis s revenues, expenses and operating results could be affected by general economic conditions or by changes in commercial real estate markets, which are cyclical. A primary source of new customers for Reis is the commercial real estate professional community, which may be reluctant to adopt Reis s products and services. Reis s success depends on its ability to introduce new or upgraded services or products. If Reis fails to protect confidential information against security breaches, or if customers are reluctant to use products because of privacy concerns, Reis might experience a loss in profitability. Reis s business could be harmed if it is unable to maintain the integrity and reliability of its data. Reis may be unable to enforce or defend its ownership or use of intellectual property. If Reis s website or other services experience system failures or malicious attacks, its customers may be dissatisfied and its operations could be impaired. Reis s internal network infrastructure could be disrupted or penetrated, which could materially impact both its ability to provide services and customers confidence in services. Reis may be subject to regulation of advertising and customer solicitation or other newly-adopted laws and regulations. Reis may be subject to tax audits or other procedures concerning its tax collection policies. Reis s revenue, expenses, operating results and cash flows are subject to fluctuations.

Full 10-K form ▸

1038222--3/29/2007--WELLSFORD_REAL_PROPERTIES_INC