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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Vestin Realty Mortgage II Inc (CE) | USOTC:VRTB | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 3,105.00 | 0.00 | 01:00:00 |
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
VESTIN REALTY MORTGAGE II, INC.
|
(Exact name of registrant as specified in its charter)
|
MARYLAND
|
61-1502451
|
|
(State or Other Jurisdiction of
|
(I.R.S. Employer
|
|
Incorporation or Organization)
|
Identification No.)
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
Page
|
||
Exhibit 31.1
|
||
Exhibit 31.2
|
||
Exhibit 32
|
VESTIN REALTY MORTGAGE II, INC.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
ASSETS
|
||||||||
June 30, 2016
|
December 31, 2015
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
7,676,000
|
$
|
4,228,000
|
||||
Prepaid expenses
|
456,000
|
323,000
|
||||||
Investment in marketable securities - related party
|
448,000
|
137,000
|
||||||
Interest and other receivables
|
283,000
|
42,000
|
||||||
Investment in MVP REIT II
|
327,000
|
325,000
|
||||||
Investments in Delaware Statutory Trusts
|
3,278,000
|
1,800,000
|
||||||
Notes receivable, net of allowance of $1,086,000 and $1,099,000 at June 30, 2016 and December 31, 2015, respectively
|
--
|
--
|
||||||
Investment in real estate loans, net of allowance for loan losses of $2,450,000 at June 30, 2016 and December 31, 2015.
|
4,725,000
|
2,161,000
|
||||||
Fixed assets, net of accumulated depreciation of $2,000 and $1,000 at June 30, 2016 and December 31, 2015, respectively
|
19,000
|
21,000
|
||||||
Due from related parties
|
440,000
|
408,000
|
||||||
Assets held for sale
|
6,000
|
44,545,000
|
||||||
Total assets
|
$
|
17,658,000
|
$
|
53,990,000
|
||||
LIABILITIES AND EQUITY
|
||||||||
Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
450,000
|
$
|
928,000
|
||||
Deferred gain on sale of assets held for sale
|
620,000
|
--
|
||||||
Due to related parties
|
6,809,000
|
5,265,000
|
||||||
Note payable
|
146,000
|
--
|
||||||
Liabilities related to assets held for sale
|
11,000
|
30,306,000
|
||||||
Total liabilities
|
8,036,000
|
36,499,000
|
||||||
Commitments and contingencies
|
||||||||
Equity
|
||||||||
Vestin Realty Mortgage II, Inc. stockholders' equity:
|
||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
--
|
--
|
||||||
Treasury stock, at cost, 0 shares at June 30, 2016 and December 31, 2015
|
--
|
--
|
||||||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 2,421,315 and 2,472,089 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively
|
--
|
--
|
||||||
Additional paid-in capital
|
266,384,000
|
266,576,000
|
||||||
Accumulated deficit
|
(255,307,000
|
)
|
(252,997,000
|
)
|
||||
Accumulated other comprehensive income
|
311,000
|
--
|
||||||
Total Vestin Realty Mortgage II, Inc. stockholders' equity
|
11,388,000
|
13,579,000
|
||||||
Non-controlling interest
|
(1,766,000
|
)
|
3,912,000
|
|||||
Total equity
|
9,622,000
|
17,491,000
|
||||||
Total liabilities and equity
|
$
|
17,658,000
|
$
|
53,990,000
|
For The Three Months
Ended June 30,
|
For The Six Months
Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
||||||||||||||||
Interest income from investment in real estate loans
|
$
|
189,000
|
$
|
466,000
|
$
|
419,000
|
$
|
523,000
|
||||||||
Gain related to pay off of real estate loan, including recovery of allowance for loan loss
|
--
|
--
|
--
|
1,623,000
|
||||||||||||
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable
|
--
|
13,000
|
13,000
|
26,000
|
||||||||||||
Acquisition fee income
|
309,000
|
550,000
|
1,247,000
|
1,302,000
|
||||||||||||
Advisor fee income
|
312,000
|
127,000
|
547,000
|
208,000
|
||||||||||||
Total revenues
|
810,000
|
1,156,000
|
2,226,000
|
3,682,000
|
||||||||||||
Operating expenses
|
||||||||||||||||
Management fees – related party
|
$
|
275,000
|
$
|
273,000
|
$
|
549,000
|
$
|
548,000
|
||||||||
MVP REIT II Organization and offering cost
|
2,000
|
579,000
|
2,000
|
579,000
|
||||||||||||
Wages and benefits
|
602,000
|
931,000
|
1,172,000
|
1,714,000
|
||||||||||||
Interest expense
|
2,000
|
1,000
|
2,000
|
1,000
|
||||||||||||
Acquisition expense
|
--
|
1,000
|
--
|
1,000
|
||||||||||||
Depreciation
|
1,000
|
--
|
2,000
|
--
|
||||||||||||
Professional fees
|
362,000
|
284,000
|
619,000
|
550,000
|
||||||||||||
Seminars
|
406,000
|
420,000
|
722,000
|
696,000
|
||||||||||||
Consulting fees
|
8,000
|
81,000
|
60,000
|
140,000
|
||||||||||||
Insurance
|
47,000
|
65,000
|
111,000
|
130,000
|
||||||||||||
Commissions
|
1,189,000
|
684,000
|
2,093,000
|
1,329,000
|
||||||||||||
Travel
|
366,000
|
317,000
|
375,000
|
592,000
|
||||||||||||
Other
|
70,000
|
230,000
|
518,000
|
294,000
|
||||||||||||
Total operating expenses
|
3,330,000
|
3,866,000
|
6,225,000
|
6,574,000
|
||||||||||||
Loss from operations
|
(2,520,000
|
)
|
(2,710,000
|
)
|
(3,999,000
|
)
|
(2,892,000
|
)
|
||||||||
Non-operating income
|
||||||||||||||||
Other income
|
3,000
|
--
|
5,000
|
--
|
||||||||||||
Recovery from settlement with loan guarantor
|
112,000
|
--
|
261,000
|
--
|
||||||||||||
Dividend income
|
1,000
|
--
|
2,000
|
--
|
||||||||||||
Gain on marketable securities
|
--
|
--
|
--
|
1,000
|
||||||||||||
Total other non-operating income
|
116,000
|
--
|
268,000
|
1,000
|
||||||||||||
Provision for income taxes
|
--
|
--
|
--
|
--
|
||||||||||||
Loss from continuing operations
|
(2,404,000
|
)
|
(2,710,000
|
)
|
(3,731,000
|
)
|
(2,891,000
|
)
|
||||||||
Discontinued operations, net of income taxes
|
||||||||||||||||
Expenses related to real estate owned held for sale
|
(12,000
|
)
|
(90,000
|
)
|
(49,000
|
)
|
(195,000
|
)
|
||||||||
Disposition expense
|
(221,000
|
) |
--
|
(753,000
|
) |
--
|
||||||||||
Loss on sale of assets held for sale
|
(66,000
|
)
|
--
|
(66,000
|
)
|
--
|
||||||||||
Income (loss) from assets held for sale, net of income taxes
|
(680,000
|
)
|
453,000
|
(624,000
|
)
|
663,000
|
||||||||||
Recovery from fully impaired real estate held for sale
|
1,303,000
|
--
|
1,303,000
|
--
|
||||||||||||
Total income (loss) from discontinued operations
|
324,000
|
363,000
|
(189,000
|
468,000
|
||||||||||||
Net loss
|
(2,080,000
|
)
|
(2,347,000
|
)
|
(3,920,000
|
)
|
(2,423,000
|
)
|
||||||||
Net (loss) income attributable to non-controlling interest – related party
|
(1,055,000
|
)
|
(687,000
|
)
|
(1,610,000
|
)
|
(1,416,000
|
)
|
||||||||
Net loss attributable to Vestin Realty Mortgage II, Inc. common stockholders
|
$
|
(1,025,000
|
)
|
$
|
(1,660,000
|
)
|
$
|
(2,310,000
|
)
|
$
|
(1,007,000
|
)
|
||||
Basic and diluted income (loss) per weighted average common share
|
||||||||||||||||
Loss from continuing operations attributable to Vestin Realty Mortgage II, Inc. common stockholders
|
$
|
(0.64
|
)
|
$
|
(0.74
|
)
|
$
|
(0.94
|
)
|
$
|
(0.50
|
)
|
||||
Income (loss) from discontinued operations
|
0.21
|
0.09
|
(0.01
|
) |
0.11
|
|||||||||||
Net loss attributable to Vestin Realty Mortgage II, Inc. common stockholders - basic and diluted loss per weighted average common share
|
$
|
(0.43
|
)
|
$
|
(0.65
|
)
|
$
|
(0.95
|
)
|
$
|
(0.39
|
)
|
||||
Weighted average common shares outstanding, basic and diluted
|
2,410,564
|
2,545,869
|
2,437,272
|
2,559,655
|
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS
(unaudited)
|
||||||||||||||||
For The Three Months
Ended June 30,
|
For The Six Months
Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net loss
|
$
|
(2,080,000
|
)
|
$
|
(2,347,000
|
)
|
$
|
(3,920,000
|
)
|
$
|
(2,423,000
|
)
|
||||
Unrealized holding gain on available-for-sale securities – related party
|
--
|
82,000
|
--
|
90,000
|
||||||||||||
Unrealized holding gain on available-for-sale securities
|
78,000
|
--
|
311,000
|
|||||||||||||
Comprehensive loss
|
(2,002,000
|
)
|
(2,265,000
|
)
|
(3,609,000
|
)
|
(2,333,000
|
)
|
||||||||
Less: net loss attributable to non-controlling interest
|
(1,055,000
|
)
|
(687,000
|
)
|
(1,610,000
|
)
|
(1,416,000
|
)
|
||||||||
Comprehensive loss attributable to Vestin Realty Mortgage II, Inc. common stockholders
|
$
|
(947,000
|
)
|
$
|
(1,578,000
|
)
|
$
|
(1,999,000
|
)
|
$
|
(917,000
|
)
|
VESTIN REALTY MORTGAGE II, INC.
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(UNAUDITED)
|
||||||||
For the Six Months
Ended June 30,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(3,920,000
|
)
|
$
|
(2,423,000
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
2,000
|
--
|
||||||
Recovery of allowance for doubtful notes receivable
|
(13,000
|
)
|
(26,000
|
)
|
||||
Gain on sale of marketable securities
|
--
|
(1,000
|
)
|
|||||
Gain related to recovery of allowance for loan loss
|
--
|
(1,623,000
|
)
|
|||||
Change in operating assets and liabilities:
|
||||||||
Interest and other receivables
|
(241,000
|
)
|
(146,000
|
)
|
||||
Assets held for sale, net of liabilities
|
380,000
|
86,000
|
||||||
Due to/from related parties, net
|
1,512,000
|
1,746,000
|
||||||
Prepaid expenses – related party
|
(133,000
|
)
|
(392,000
|
)
|
||||
Other assets
|
--
|
296,000
|
||||||
Accounts receivable
|
--
|
(221,000
|
)
|
|||||
Accounts payable and accrued liabilities
|
(480,000
|
)
|
134,000
|
|||||
Net cash used in operating activities
|
(2,893,000
|
)
|
(2,570,000
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Investments in real estate loans
|
(5,806,000
|
)
|
(3,228,000
|
)
|
||||
Purchase of investments in real estate loans from third parties
|
--
|
(200,000
|
)
|
|||||
Proceeds from loan payoffs
|
46,000
|
5,946,000
|
||||||
Sale of investments in real estate loans to third parties
|
3,196,000
|
2,317,000
|
||||||
Investment in Delaware Statutory Trust
|
(1,478,000
|
)
|
(2,800,000
|
)
|
||||
Proceeds from notes receivable
|
13,000
|
26,000
|
||||||
Proceeds related to real estate held for sale
|
14,781,000
|
--
|
||||||
Collection from recovery of loan loss
|
--
|
1,623,000
|
||||||
Investments in MVP REIT II
|
--
|
(200,000
|
)
|
|||||
Asset purchase – assets held for sale
|
(172,000
|
)
|
(115,000
|
)
|
||||
Net cash provided by investing activities
|
10,580,000
|
3,369,000
|
||||||
Cash flows from financing activities:
|
||||||||
Principal payments on notes payable
|
(62,000
|
)
|
(43,000
|
)
|
||||
Purchase of treasury stock
|
(192,000
|
)
|
(362,000
|
)
|
||||
Distribution to non-controlling interest entity held for sale
|
(4,068,000
|
)
|
(82,000
|
)
|
||||
Proceeds from note payable
|
208,000
|
166,000
|
||||||
Payments on note payable on assets held for sale
|
(125,000
|
)
|
(144,000
|
)
|
||||
Net cash used in financing activities
|
|
(4,239,000
|
)
|
|
(465,000
|
)
|
||
NET CHANGE IN CASH
|
3,448,000
|
(333,000
|
)
|
|||||
Cash, beginning of period
|
4,228,000
|
7,541,000
|
||||||
Cash, end of period
|
$
|
7,676,000
|
$
|
7,874,000
|
||||
Supplemental disclosures of cash flows information:
|
||||||||
Interest paid
|
$
|
--
|
$
|
2,000
|
||||
Non-cash investing and financing activities:
|
||||||||
Adjustment to notes receivable and related allowance
|
$
|
--
|
$
|
1,600,000
|
||||
Note payable related to prepaid D & O insurance
|
$
|
208,000
|
$
|
166,000
|
||||
Treasury stock received from loan guarantor
|
$
|
112,000
|
$
|
--
|
||||
Unrealized gain on marketable securities - related party
|
$
|
311,000
|
$
|
90,000
|
· | Declines in real estate market conditions, which can cause a decrease in expected market value; |
· | Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes; |
· | Lack of progress on real estate developments after we advance funds. We customarily utilize disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances; |
· | Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed property; and |
· | Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property. |
· | Management commits to a plan to sell the properties; |
· | The property is available for immediate sale in its present condition subject only to terms that are usual and customary; |
· | An active program to locate a buyer and other actions required to complete a sale have been initiated; |
· | The sale of the property is probable; |
· | The property is being actively marketed for sale at a reasonable price; and |
· | Withdrawal or significant modification of the sale is not likely. |
Loan Type
|
Number of Loans
|
Balance *
|
Weighted Average Interest Rate
|
Portfolio Percentage
|
Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses
|
|||||||||||||||
Commercial
|
8
|
$
|
3,956,000
|
12.44
|
%
|
55.14
|
%
|
32.62
|
%
|
|||||||||||
Construction
|
1
|
564,000
|
1.14
|
%
|
7.86
|
%
|
14.07
|
%
|
||||||||||||
Acquisition
|
1
|
2,655,000
|
6.04
|
%
|
37.00
|
%
|
48.90
|
%
|
||||||||||||
Total
|
10
|
$
|
7,175,000
|
10.82
|
%
|
100.00
|
%
|
40.83
|
%
|
Loan Type
|
Number of Loans
|
Balance *
|
Weighted Average Interest Rate
|
Portfolio Percentage
|
Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses
|
|||||||||||||||
Commercial
|
7
|
$
|
4,541,000
|
11.85
|
%
|
98.48
|
%
|
60.14
|
%
|
|||||||||||
Construction
|
1
|
70,000
|
0.12
|
%
|
1.52
|
%
|
0.44
|
%
|
||||||||||||
Total
|
8
|
$
|
4,611,000
|
11.79
|
%
|
100.00
|
%
|
58.61
|
%
|
* | Please see Balance Sheet Reconciliation below. |
Loan Type
|
Number of Loans
|
June 30, 2016
Balance*
|
Portfolio Percentage
|
Number of Loans
|
December 31, 2015 Balance*
|
Portfolio Percentage
|
||||||||||||||||||
First deeds of trust
|
9
|
$
|
7,067,000
|
98.49
|
%
|
8
|
$
|
4,611,000
|
100.00
|
%
|
||||||||||||||
Second deeds of trust
|
1
|
108,000
|
1.51
|
%
|
--
|
--
|
--
|
|||||||||||||||||
Total
|
10
|
$
|
7,175,000
|
100.00
|
%
|
8
|
$
|
4,611,000
|
100.00
|
%
|
* | Please see Balance Sheet Reconciliation below. |
Non-performing and past due loans
|
$
|
2,450,000
|
||
January 2016 –March 2016
|
--
|
|||
April 2016 – June 2016
|
--
|
|||
July 2016 – September 2016
|
108,000
|
|||
October 2016 – December 2016
|
--
|
|||
Thereafter
|
4,617,000
|
|||
Total
|
$
|
7,175,000
|
June 30, 2016 Balance *
|
Portfolio Percentage
|
December 31, 2015 Balance *
|
Portfolio Percentage
|
|||||||||||||
Nevada
|
$
|
4,206,000
|
58.62
|
%
|
$
|
4,295,000
|
93.15
|
%
|
||||||||
California
|
2,655,000
|
37.00
|
%
|
--
|
--
|
|||||||||||
Ohio
|
308,000
|
4.29
|
%
|
310,000
|
6.72
|
%
|
||||||||||
Arizona
|
6,000
|
0.09
|
%
|
6,000
|
0.13
|
%
|
||||||||||
Total
|
$
|
7,175,000
|
100.00
|
%
|
$
|
4,611,000
|
100.00
|
%
|
* | Please see Balance Sheet Reconciliation below. |
June 30, 2016
|
December 31, 2015
|
|||||||
Balance per loan portfolio
|
$
|
7,175,000
|
$
|
4,611,000
|
||||
Less:
|
||||||||
Allowance for loan losses
(a)
|
(2,450,000
|
)
|
(2,450,000
|
)
|
||||
Balance per consolidated balance sheets
|
$
|
4,725,000
|
$
|
2,161,000
|
(a) | Please refer to Specific Reserve Allowance below. |
Loan Type
|
Number of Non-Performing Loans
|
Balance
|
Allowance for Loan Losses
|
Net Balance
|
||||||||||||
Commercial
|
1
|
$
|
2,450,000
|
$
|
(2,450,000
|
)
|
$
|
--
|
||||||||
Total
|
1
|
$
|
2,450,000
|
$
|
(2,450,000
|
)
|
$
|
--
|
· | Prevailing economic conditions; |
· | Historical experience; |
· | The nature and volume of the loan portfolio |
· | The borrowers' financial condition and adverse situations that may affect the borrowers' ability to pay; |
· | Evaluation of industry trends; and |
· | Estimated net realizable value of any underlying collateral in relation to the loan amount. |
June 30, 2016
|
||||||||||||
Balance
|
Allowance for loan losses **
|
Balance, net of allowance
|
||||||||||
Non-performing loans – no related allowance
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||
Non-performing loans – related allowance
|
2,450,000
|
(2,450,000
|
)
|
--
|
||||||||
Subtotal non-performing loans
|
2,450,000
|
(2,450,000
|
)
|
--
|
||||||||
Performing loans – no related allowance
|
4,725,000
|
--
|
4,725,000
|
|||||||||
Performing loans – related allowance
|
--
|
--
|
--
|
|||||||||
Subtotal performing loans
|
4,725,000
|
--
|
4,725,000
|
|||||||||
Total
|
$
|
7,175,000
|
$
|
(2,450,000
|
)
|
$
|
4,725,000
|
As of December 31, 2015
|
||||||||||||
Balance
|
Allowance for loan losses **
|
Balance, net of allowance
|
||||||||||
Non-performing loans – no related allowance
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||
Non-performing loans – related allowance
|
2,450,000
|
(2,450,000
|
)
|
--
|
||||||||
Subtotal non-performing loans
|
2,450,000
|
(2,450,000
|
)
|
--
|
||||||||
Performing loans – no related allowance
|
2,161,000
|
--
|
2,161,000
|
|||||||||
Performing loans – related allowance
|
--
|
--
|
--
|
|||||||||
Subtotal performing loans
|
2,161,000
|
--
|
2,161,000
|
|||||||||
Total
|
$
|
4,611,000
|
$
|
(2,450,000
|
)
|
$
|
2,161,000
|
** | Please refer to Specific Reserve Allowances below. |
For The Three Months Ended June 30, 2016
|
For The Three Months Ended June 30, 2015
|
For The Six Months Ended June 30, 2016
|
For The Six Months Ended June 30, 2015
|
|||||||||||||
Revenue
|
$
|
335,000
|
$
|
1,124,000
|
$
|
943,000
|
$
|
2,299,000
|
||||||||
Revenue eliminated through consolidation
|
--
|
(57,000
|
)
|
|||||||||||||
Expenses
|
(1,015,000
|
)
|
(671,000
|
)
|
(1,510,000
|
)
|
(1,636,000
|
)
|
||||||||
Net income (loss)
|
$
|
(680,000
|
)
|
$
|
453,000
|
$
|
(624,000
|
)
|
$
|
663,000
|
2016
|
$
|
146,000
|
||
2017
|
--
|
|||
2018
|
--
|
|||
2019
|
--
|
|||
2020
|
--
|
|||
Thereafter
|
--
|
|||
Total
|
$
|
146,000
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Balance at 06/30/16
|
Carrying Value on Balance Sheet at 06/30/16
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Investment in marketable securities - related party
|
$
|
575,000
|
$
|
--
|
$
|
--
|
$
|
575,000
|
$
|
575,000
|
||||||||||
Investment in real estate loans
|
$
|
--
|
$
|
--
|
$
|
4,727,000
|
$
|
4,727,000
|
$
|
4,725,000
|
||||||||||
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Balance at 12/31/15
|
Carrying Value on Balance Sheet at 12/31/15
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Investment in marketable securities - related party
|
$
|
262,000
|
$
|
--
|
$
|
--
|
$
|
262,000
|
$
|
262,000
|
||||||||||
Investment in real estate loans
|
$
|
--
|
$
|
--
|
$
|
2,148,000
|
$
|
2,148,000
|
$
|
2,161,000
|
||||||||||
Investment in
real estate loans
|
||||
Balance on January 1, 2016
|
$
|
2,148,000
|
||
Purchase and additions of assets
|
||||
New mortgage loans and mortgage loans acquired
|
5,806,000
|
|||
Purchase from third parties
|
--
|
|||
Sales, pay downs and reduction of assets
|
||||
Collections and settlements of principal and sales of investment in real estate loans
|
(46,000
|
)
|
||
Sale of assets to third parties
|
(3,196,000
|
)
|
||
Temporary change in estimated fair value based on future cash flows
|
15,000
|
|||
Balance on June 30, 2016, net of temporary valuation adjustment
|
$
|
4,727,000
|
Investment in
real estate loans
|
||||
Balance on January 1, 2015
|
$
|
5,167,000
|
||
Purchase and additions of assets
|
||||
New mortgage loans and mortgage loans acquired
|
5,217,000
|
|||
Purchase from third parties
|
200,000
|
|||
Sales, pay downs and reduction of assets
|
||||
Collections and settlements of principal and sales of investment in real estate loans
|
(5,971,000
|
)
|
||
Sale of assets to third parties
|
(2,472,000
|
)
|
||
Temporary change in estimated fair value based on future cash flows
|
7,000
|
|||
Balance on December 31, 2015, net of temporary valuation adjustment
|
$
|
2,148,000
|
For The Three Months
Ended June 30,
|
For The Six Months
Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
||||||||||||||||
Investment in real estate loans
|
$
|
189,000
|
$
|
479,000
|
$
|
432,000
|
$
|
2,172,000
|
||||||||
Investment in real estate management
|
621,000
|
127,000
|
1,794,000
|
208,000
|
||||||||||||
Total revenues
|
810,000
|
1,156,000
|
2,226,000
|
3,682,000
|
||||||||||||
Operating expenses
|
||||||||||||||||
Investment in real estate loans
|
$
|
275,000
|
$
|
273,000
|
$
|
549,000
|
$
|
548,000
|
||||||||
Investment in real property
|
2,000
|
2,000
|
2,000
|
2,000
|
||||||||||||
Investment in real estate management
|
602,000
|
931,000
|
1,172,000
|
1,714,000
|
||||||||||||
Corporate activities
|
2,451,000
|
2,660,000
|
4,502,000
|
4,310,000
|
||||||||||||
Total expenses
|
3,330,000
|
3,866,000
|
6,225,000
|
6,574,000
|
Total Assets
|
June 30, 2016
|
December 31, 2015
|
||||||
Investment in real estate loans
|
$
|
8,286,000
|
$
|
4,203,000
|
||||
Investment in real property held for sale
|
6,000
|
44,545,000
|
||||||
Corporate assets
|
9,366,000
|
5,242,000
|
||||||
Total assets
|
$
|
17,658,000
|
$
|
53,990,000
|
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Total Revenue:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Interest income from investment in real estate loans
|
$
|
189,000
|
$
|
466,000
|
$
|
(277,000
|
)
|
(59
|
%)
|
|||||||
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable
|
--
|
13,000
|
(13,000
|
)
|
(100
|
%)
|
||||||||||
Acquisition fee income
|
309,000
|
550,000
|
(241,000
|
)
|
(44
|
%)
|
||||||||||
Advisor fee
|
312,000
|
127,000
|
185,000
|
146
|
%
|
|||||||||||
Total
|
$
|
810,000
|
$
|
1,156,000
|
$
|
(346,000
|
)
|
(30
|
%)
|
Operating expenses:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Management fees – related party
|
$
|
275,000
|
$
|
273,000
|
$
|
2,000
|
1
|
%
|
||||||||
MVP REIT II organization and offering costs
|
2,000
|
579,000
|
(577,000
|
)
|
(100
|
%)
|
||||||||||
Wages and benefits
|
602,000
|
931,000
|
(329,000
|
)
|
(35
|
%)
|
||||||||||
Interest expense
|
2,000
|
1,000
|
1,000
|
100
|
%
|
|||||||||||
Acquisition expense
|
--
|
1,000
|
(1,000
|
)
|
(100
|
%)
|
||||||||||
Depreciation
|
1,000
|
--
|
1,000
|
100
|
%
|
|||||||||||
Professional fees
|
362,000
|
284,000
|
78,000
|
27
|
%
|
|||||||||||
Seminars
|
406,000
|
420,000
|
(14,000
|
)
|
(3
|
%)
|
||||||||||
Consulting
|
8,000
|
81,000
|
(73,000
|
)
|
(90
|
%)
|
||||||||||
Insurance
|
47,000
|
65,000
|
(18,000
|
)
|
(28
|
%)
|
||||||||||
Commissions
|
1,189,000
|
684,000
|
505,000
|
74
|
%
|
|||||||||||
Travel
|
366,000
|
317,000
|
49,000
|
15
|
%
|
|||||||||||
Other
|
70,000
|
230,000
|
(160,000
|
) |
(70
|
%)
|
||||||||||
Total
|
$
|
3,330,000
|
$
|
3,866,000
|
$
|
(536,000
|
)
|
(14
|
%)
|
Non-operating income:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Other income
|
$
|
3,000
|
$
|
--
|
$
|
3,000
|
100
|
%
|
||||||||
Recovery from settlement with loan guarantor
|
112,000
|
--
|
112,000
|
100
|
%
|
|||||||||||
Dividend Income
|
1,000
|
--
|
1,000
|
100
|
%
|
|||||||||||
Total
|
$
|
116,000
|
$
|
--
|
$
|
116,000
|
100
|
%
|
Discontinued operations, net of income taxes:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Expenses related to real estate owned held for sale
|
$
|
(12,000
|
)
|
$
|
(90,000
|
)
|
$
|
78,000
|
(87
|
%)
|
||||||
Loss on sale of assets held for sale
|
(66,000
|
)
|
--
|
(66,000
|
)
|
(100
|
%)
|
|||||||||
Disposition expense | (221,000 | ) | -- | (221,000 | ) | (100 | %) | |||||||||
Income (loss) from assets held for sale, net of income taxes
|
(680,000
|
)
|
453,000
|
(1,133,000
|
)
|
(250
|
%)
|
|||||||||
Recovery from fully impaired real estate held for sale
|
1,303,000
|
--
|
1,303,000
|
100
|
%
|
|||||||||||
Total
|
$
|
324,000
|
$
|
363,000
|
$
|
(39,000
|
) |
(11
|
%)
|
Total Revenue:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Interest income from investment in real estate loans
|
$
|
419,000
|
$
|
523,000
|
$
|
(104,000
|
)
|
(20
|
%)
|
|||||||
Gain related to pay off of real estate loan, including recovery of allowance for loan loss
|
--
|
1,623,000
|
(1,623,000
|
)
|
(100
|
%)
|
||||||||||
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable
|
13,000
|
26,000
|
(13,000
|
)
|
(50
|
%)
|
||||||||||
Acquisition fee income
|
1,247,000
|
1,302,000
|
(55,000
|
)
|
(4
|
%)
|
||||||||||
Advisor fee
|
547,000
|
208,000
|
339,000
|
163
|
%
|
|||||||||||
Total
|
$
|
2,226,000
|
$
|
3,682,000
|
$
|
(1,456,000
|
)
|
(40
|
%)
|
Operating expenses:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Management fees – related party
|
$
|
549,000
|
$
|
548,000
|
$
|
1,000
|
0.18
|
%
|
||||||||
MVP REIT II organization and offering costs
|
2,000
|
579,000
|
(577,000
|
)
|
99
|
%
|
||||||||||
Wages and benefits
|
1,172,000
|
1,714,000
|
(542,000
|
)
|
(32
|
%)
|
||||||||||
Interest expense
|
2,000
|
1,000
|
1,000
|
100
|
%
|
|||||||||||
Acquisition expense
|
--
|
1,000
|
(1,000
|
)
|
(100
|
%)
|
||||||||||
Depreciation
|
2,000
|
--
|
2,000
|
100
|
%
|
|||||||||||
Professional fees
|
619,000
|
550,000
|
69,000
|
13
|
%
|
|||||||||||
Seminars
|
722,000
|
696,000
|
26,000
|
4
|
%
|
|||||||||||
Consulting
|
60,000
|
140,000
|
(80,000
|
)
|
(57
|
%)
|
||||||||||
Insurance
|
111,000
|
130,000
|
(19,000
|
)
|
(15
|
%)
|
||||||||||
Commissions
|
2,093,000
|
1,329,000
|
764,000
|
57
|
%
|
|||||||||||
Travel
|
375,000
|
592,000
|
(217,000
|
)
|
(37
|
%)
|
||||||||||
Other
|
518,000
|
294,000
|
224,000
|
76
|
%
|
|||||||||||
Total
|
$
|
6,225,000
|
$
|
6,574,000
|
$
|
(349,000
|
) |
(5
|
%)
|
Non-operating income:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Other income
|
$
|
5,000
|
$
|
--
|
$
|
5,000
|
100
|
%
|
||||||||
Recovery from settlement with loan guarantor
|
261,000
|
--
|
261,000
|
100
|
%
|
|||||||||||
Gain on marketable securities
|
--
|
1,000
|
(1,000
|
)
|
(100
|
%)
|
||||||||||
Dividend Income
|
2,000
|
--
|
2,000
|
100
|
%
|
|||||||||||
Total
|
$
|
268,000
|
$
|
1,000
|
$
|
267,000
|
26,700
|
%
|
Discontinued operations, net of income taxes:
|
2016
|
2015
|
$ Change
|
%
Change
|
||||||||||||
Expenses related to real estate owned held for sale
|
$
|
(49,000
|
)
|
$
|
(195,000
|
)
|
$
|
146,000
|
(75
|
%)
|
||||||
Loss on sale of asset held for sale
|
(66,000
|
)
|
--
|
(66,000
|
)
|
(100
|
%)
|
|||||||||
Disposition expense | (753,000 | ) | -- | (753,000 | ) | (100 | %) | |||||||||
Income (loss) from assets held for sale, net of income taxes
|
(624,000
|
)
|
663,000
|
(1,287,000
|
)
|
(194
|
%)
|
|||||||||
Recovery from fully impaired real estate held for sale
|
1,303,000
|
--
|
1,303,000
|
100
|
%
|
|||||||||||
Total
|
$
|
(189,000
|
) |
$
|
468,000
|
$
|
(657,000
|
) |
(141
|
%)
|
Changed Assumption
|
Increase (Decrease) in Interest Income
|
|||
Weighted average interest rate assumption increased by 1.0% or 100 basis points
|
$
|
50,000
|
||
Weighted average interest rate assumption increased by 5.0% or 500 basis points
|
$
|
250,000
|
||
Weighted average interest rate assumption increased by 10.0% or 1,000 basis points
|
$
|
500,000
|
||
Weighted average interest rate assumption decreased by 1.0% or 100 basis points
|
$
|
(50,000
|
)
|
|
Weighted average interest rate assumption decreased by 5.0% or 500 basis points
|
$
|
(250,000
|
)
|
|
Weighted average interest rate assumption decreased by 10.0% or 1,000 basis points
|
$
|
(500,000
|
)
|
Changed Assumption
|
Increase (Decrease) in Allowance for Loan Losses
|
|||
Allowance for loan losses assumption increased by 1.0% of loan portfolio
|
$
|
72,000
|
||
Allowance for loan losses assumption increased by 5.0% of loan portfolio
|
$
|
359,000
|
||
Allowance for loan losses assumption increased by 10.0% of loan portfolio
|
$
|
718,000
|
||
Allowance for loan losses assumption decreased by 1.0% of loan portfolio
|
$
|
(72,000
|
)
|
|
Allowance for loan losses assumption decreased by 5.0% of loan portfolio
|
$
|
(359,000
|
)
|
|
Allowance for loan losses assumption decreased by 10.0% of loan portfolio
|
$
|
(718,000
|
)
|
· | Declines in real estate market conditions that can cause a decrease in expected market value; |
· | Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes; |
· | Lack of progress on real estate developments after we advance funds. We customarily utilize disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances; |
· | Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed upon property; and |
· | Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property. |
ITEM 4. | CONTROLS AND PROCEDURES |
PART II - | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 2. | UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS |
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||||||||
January 1, 2016 – January 31, 2016
|
--
|
$
|
--
|
--
|
$
|
395,615
|
||||||||||
February 1, 2016 – February 28, 2016
|
--
|
--
|
--
|
395,615
|
||||||||||||
March 1, 2016 – March 31, 2016
|
--
|
--
|
--
|
395,615
|
||||||||||||
April 1, 2016 – April 30, 2016
|
--
|
--
|
--
|
395,615
|
||||||||||||
May 1, 2016 – May 31, 2016
|
--
|
--
|
--
|
395,615
|
||||||||||||
June 1, 2016 – June 30, 206
|
22,795
|
2.40
|
22,795
|
341,048
|
||||||||||||
Total as of June 30, 2016
|
22,795
|
$
|
2.40
|
22,795
|
$
|
341,048
|
Vestin Realty Mortgage II, Inc.
|
||
By:
|
/s/ Michael V. Shustek
|
|
Michael V. Shustek
|
||
President and Chief Executive Officer
|
||
Date:
|
August 15, 2015
|
|
By:
|
/s/ Ed Bentzen
|
|
Ed Bentzen
|
||
Chief Financial Officer
|
||
Date:
|
August 15, 2015
|
1 Year Vestin Realty Mortgage II (CE) Chart |
1 Month Vestin Realty Mortgage II (CE) Chart |
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