Exhibit 99.1
Vestin Realty Mortgage II, Inc. Reports Third Quarter and
Nine Month Results for Fiscal Year 2006
LAS VEGAS - June 7, 2006 - Vestin Realty Mortgage II, Inc. (Nasdaq: VRTB) a real estate investment trust (REIT) today announced results of operations in a 10-K filing for the third quarter and nine months ended March 31, 2006. Vestin Realty Mortgage II, Inc. (“the Company”) was organized in January 2006 as a Maryland corporation for the sole purpose of effecting a merger with Vestin Fund II, LLC. On March 31, 2006, Vestin Fund II, LLC (“Fund II”) merged into Vestin Realty Mortgage II, Inc. and the members of Fund II received one share of Vestin Realty Mortgage II, Inc.’s common stock for each membership unit they owned in Fund II. The Company commenced trading on May 1, 2006 on the Nasdaq National Market as VRTB. The following information relates to Vestin Realty Mortgage II, Inc. as the successor to Fund II.
For the quarter ended March 31, 2006, revenues increased 28.8% to $7.6 million from the $5.9 million recorded for the quarter ended March 31, 2005. Net loss for the quarter ended March 31, 2006 was $(1.7) million or $(0.06) per weighted average membership unit, compared to a loss of $(2.9) million or $(0.09) per weighted average membership unit, for the same period in 2005. The loss for the third quarter 2006 was attributable to a non-cash loan loss provision of $5.5 million related to the Rightstar, Inc. loan, which is currently the subject of legal action whereby Vestin Realty Mortgage II, Inc. along with Vestin Realty Mortgage I, Inc. is attempting to foreclose on the collateral. The loss for the third quarter of 2005 was attributable to the write down of real estate held for sale.
Revenues for the nine months ended March 31, 2006 were $23.2 million, compared to $22.9 million reported for the same period in 2005. Net income for the nine months ended March 31, 2006 was $8.8 million or $0.28 per weighted average membership unit, compared to $9.0 million or $0.25 per weighted average membership unit for the nine months ended March 31, 2005.
In commenting on the third quarter and nine months ended March 31, 2006, Mike Shustek, CEO stated, “The loss for the third quarter of fiscal 2006 related entirely to an additional non-cash loan loss provision of $5.5 million, or $0.19 per share, that we recorded related to the Rightstar loan. The Company owns a $17.3 million principal portion of an aggregate total $32.3 million first mortgage, secured by 4 cemeteries and 8 mortuaries owned by Rightstar International in Hawaii. The Company’s net book value of the Rightstar loan, net of loan loss provisions, is $7.1 million. Rightstar is currently being operated by a court appointed receiver and we have filed litigation against the State of Hawaii to allow the foreclosure to be completed. We do not anticipate any further losses related to the Rightstar loan. Also, in anticipation of the merger into Vestin Realty Mortgage II, Inc., Fund II paid in March 2006 the distribution that would have normally been paid in April 2006. This resulted in four cash distributions being paid in the quarter ended March 31, 2006, which had a downward effect of approximately $0.06 per unit on our equity. Member’s (now shareholders) equity at March 31, 2006 was $277.6 million or $9.30 per share. Going forward, Vestin Realty Mortgage II, Inc. intends to declare dividends on a quarterly basis, about 30 days following the end of each calendar quarter.
Mr. Shustek added, “The Rightstar loan is our only loan in default. We were pleased to resolve the Mid-State Raceway (Vernon Downs) foreclosure without any loss to the Company on May 1, 2006. We also anticipate making substantial headway during the next two quarters in disposing of our real estate held for sale. All three of our apartment properties have reached occupancy in excess of 90% and have generated good buyer interest”.
About Vestin Realty Mortgage II, Inc.
Vestin Realty Mortgage II, Inc. is a real estate investment trust (“REIT”) that invests in short term secured loans to commercial borrowers. As of March 31, 2006, the fund had assets of over $300 million. Vestin Realty Mortgage II, Inc. is managed by Vestin Mortgage, Inc., which is a subsidiary of Vestin Group, Inc., a well-known asset management, real estate lending and financial service company. Since 1995, Vestin Mortgage Inc.’s mortgage activities have facilitated more than $1.8 billion in lending transactions.
Forward-Looking Statements
Certain information discussed in this press release may constitute forward-looking statements within the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to unpredictable and unanticipated risks, trends and uncertainties, such as the Company’s inability to accurately forecast its operating results; the Company’s potential inability to achieve profitability or generate positive cash flow; the availability of financing; and others risks associated with the Company’s business. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
VESTIN REALTY MORTGAGE II, INC. FINANCIAL RESULTS
VESTIN REALTY MORTGAGE II, INC. | |
(SUCCESSOR TO VESTIN FUND II, LLC) | |
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BALANCE SHEETS |
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ASSETS |
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| | | | March 31, 2006 | | | June 30, 2005 | |
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| Cash | | $ | 17,820,000 | | $ | 10,566,000 | |
| Certificates of deposit | | | 700,000 | | | 1,000,000 | |
| Investment in marketable securities | | | -- | | | 15,701,000 | |
| Interest and other receivables | | | 3,434,000 | | | 3,234,000 | |
| Due from Fund I | | | -- | | | 1,560,000 | |
| Note receivable, net of allowance of $2,096,000 at March 31, 2006 and $2,247,000 at June 30, 2005 | | | 810,000 | | | 328,000 | |
| Real estate held for sale | | | 38,426,000 | | | 51,222,000 | |
| Real estate held for sale - seller financed | | | 22,887,000 | | | 12,631,000 | |
| Investment in real estate loans, net of allowance for loan losses of $10,734,000 at March 31, 2006 and $5,234,000 at June 30, 2005 | | | 212,928,000 | | | 217,553,000 | |
| Assets under secured borrowings | | | 11,611,000 | | | 25,655,000 | |
| Other Assets | | | 63,000 | | | 20,000 | |
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| Total assets | | $ | 308,679,000 | | $ | 339,470,000 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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| Liabilities | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 631,000 | | $ | 1,148,000 | |
| Due to Fund Manager | | | 250,000 | | | 214,000 | |
| Due to Vestin Group | | | -- | | | 1,000 | |
| Notes Payable | | | 17,200,000 | | | -- | |
| Secured borrowings | | | 11,611,000 | | | 25,655,000 | |
| Deposit liability | | | 1,365,000 | | | 1,372,000 | |
| Total liabilities | | | 31,057,000 | | | 28,390,000 | |
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| Stockholders' equity - | | | | | | | |
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | | | -- | | | -- | |
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 29,838,442 shares issued at March 31, 2006 | | | 3,000 | | | -- | |
| Capital in excess of par | | | 277,619,000 | | | -- | |
| Members’ equity - Authorized 50,000,000 units at $10 per unit, 32,810,551 member units issued and outstanding at June 30, 2005 | | | -- | | | 311,080,000 | |
| Total equity | | | 277,622,000 | | | 311,080,000 | |
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| Total liabilities and stockholders' equity | | $ | 308,679,000 | | $ | 339,470,000 | |
VESTIN REALTY MORTGAGE II, INC. | |
(SUCCESSOR TO VESTIN FUND II, LLC) | |
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STATEMENTS OF OPERATIONS | |
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| | | FOR THE NINE MONTH TRANSITION PERIOD ENDED | | FOR THE NINE MONTHS ENDED | | FOR THE YEAR ENDED | |
| | | March 31, 2006 | | March 31, 2005 | | June 30, 2005 | | June 30, 2004 | |
| | | | | (UNAUDITED) | | | | | |
Revenues | | | | | | | | | |
| Interest income from investment in real estate loans | | $ | 17,135,000 | | $ | 19,660,000 | | $ | 25,301,000 | | $ | 38,825,000 | |
| Adjustment to allowance for loan losses | | | -- | | | 159,000 | | | 41,000 | | | -- | |
| Gain on sale of real estate held for sale | | | 1,186,000 | | | 759,000 | | | 759,000 | | | -- | |
| Revenue related to the sale of real estate | | | -- | | | -- | | | -- | | | 2,333,000 | |
| Gain on sale marketable securities | | | 224,000 | | | -- | | | -- | | | -- | |
| Income related to real estate held for sale | | | 3,722,000 | | | -- | | | -- | | | -- | |
| Other income | | | 979,000 | | | 2,297,000 | | | 2,616,000 | | | 2,311,000 | |
| Total revenues | | | 23,246,000 | | | 22,875,000 | | | 28,717,000 | | | 43,469,000 | |
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Operating expenses | | | | | | | | | | | | | |
| Management fees - related party | | | 820,000 | | | 787,000 | | | 1,060,000 | | | 1,025,000 | |
| Provision for loan losses | | | 5,500,000 | | | 167,000 | | | 2,775,000 | | | 2,605,000 | |
| Interest expense | | | 1,282,000 | | | 3,011,000 | | | 3,526,000 | | | 5,681,000 | |
| Loss on sale of real estate held for sale | | | -- | | | 829,000 | | | 829,000 | | | - | |
| Write down on real estate held for sale | | | -- | | | 6,257,000 | | | 7,486,000 | | | 10,000 | |
| Expenses related to real estate held for sale | | | 5,978,000 | | | 2,291,000 | | | 2,784,000 | | | 1,559,000 | |
| Professional fees | | | 309,000 | | | 245,000 | | | 996,000 | | | 626,000 | |
| Professional fees - related parties | | | 195,000 | | | 163,000 | | | 206,000 | | | 50,000 | |
| Other | | | 328,000 | | | 121,000 | | | 167,000 | | | 182,000 | |
| Total operating expenses | | | 14,412,000 | | | 13,871,000 | | | 19,829,000 | | | 11,738,000 | |
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NET INCOME | | $ | 8,834,000 | | $ | 9,004,000 | | $ | 8,888,000 | | $ | 31,731,000 | |
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| Net income allocated to members | | $ | 8,834,000 | | $ | 9,004,000 | | $ | 8,888,000 | | $ | 31,731,000 | |
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| Net income allocated to members per weighted average membership units | | $ | 0.28 | | $ | 0.25 | | $ | 0.26 | | $ | 0.86 | |
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| Weighted average membership units | | | 31,914,713 | | | 35,417,916 | | | 34,760,003 | | | 36,714,812 | |
CONTACT: Strategic Growth International Inc.
Richard E. Cooper 212-838-1444
Rcooper@sgi-ir.com
Or
Vestin Realty Mortgage II, Inc.
John Alderfer 702-227-0965
Source: Vestin Realty Mortgage II, Inc.
