Exhibit 99.1
Vestin Realty Mortgage II, Inc. Reports Results for
The Twelve Months Ended December 31, 2006
LAS VEGAS - March 15, 2007 - 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 twelve months ended December 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. On December 17, 2006, each shareholder received an additional 0.3 shares of common stock for each share they owned at the time. The Company commenced trading on May 1, 2006 on the Nasdaq National Market under the symbol VRTB.
For the twelve months ended December 31, 2006, revenues were $23.5 million. Net income for the twelve months ended December 31, 2006 was $15.9 million or $0.41 per weighted average common share, which has been adjusted for the 30% stock dividend to shareholders on December 17, 2006. Net income for the 12 months included a net gain on the sale of “real estate held for sale” of $1.5 million, a $2.3 million gain on sale of “real estate held for sale-seller financed” and a non-cash loan loss provision of $5.5 million that was recorded in the quarter ended March 31, 2006, prior to the merger. The loan loss provision was entirely 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 Rightstar collateral. In January 2007, we filed a petition, which is still pending, with the Supreme Court of Hawaii seeking relief from restrictions placed by the District Court on our right to foreclose.
In commenting on the results of operations for the year ended December 31, 2006, Michael V. Shustek, Chairman of the Board and CEO said, “We are extremely proud of our performance during 2006. From April 1, 2006 through December 31, 2006, the Company declared cash dividends to its shareholders of $16.3 million, which is equal to $0.42 per share based on the weighted average number of shares.
As of December 31, 2006 the shareholder’s equity was $7.17 per common share, which reflects the 30% stock dividend paid to shareholders on December 17, 2006. We had $17.1 million of cash and cash equivalents on our balance sheet with only $13.8 million of borrowings.”
Mr. Shustek also stated, “During 2006, the Company sold six real estate properties that it acquired through foreclosure for a net gain of $1.5 million. At December 31, 2006 the Company owned two foreclosed real estate properties, one of which was acquired in December 2006. Both of these properties are under contract to be sold in 2007. In addition, during 2006, the Company recorded the sale of one of its “real estate held for sale-seller financing” properties when the financing was paid in full, and realized a gain of $2.3 million.”
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 December 31, 2006, Vestin Realty Mortgage II, Inc. 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 $2.0 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.
CONTACT:
| Vestin Realty Mortgage II, Inc. |
| John Alderfer |
| 702-227-0965 |
| |
(SUCCESSOR TO VESTIN FUND II, LLC) | |
| | |
CONSOLIDATED BALANCE SHEETS | |
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ASSETS | |
| | |
| | | December 31, 2006 | | December 31, 2005 | |
| | | | | | |
| Assets | | | | | | | |
| Cash | | $ | 16,841,000 | | $ | 39,633,000 | |
| Certificates of deposit | | | 250,000 | | | 1,000,000 | |
| Investment in marketable securities | | | -- | | | 7,260,000 | |
| Investment in marketable securities - related party | | | 2,087,000 | | | -- | |
| Interest and other receivables, net of allowance of $160,000 at December 31, 2006 and $693,000 at December 31, 2005 | | | 2,709,000 | | | 3,079,000 | |
| Note receivable, net of allowance of $2,000,000 at December 31, 2006 and $2,158,000 at December 31, 2005 | | | 282,000 | | | 810,000 | |
| Real estate held for sale | | | 30,079,000 | | | 38,639,000 | |
| Real estate held for sale - seller financed | | | 14,774,000 | | | 22,887,000 | |
| Investment in real estate loans, net of allowance for loan losses of $9,828,000 at December 31, 2006 and $4,724,000 at December 31, 2005 | | | 221,849,000 | | | 227,875,000 | |
| Due from Manager - related party | | | -- | | | 325,000 | |
| Due from Vestin Originations - related party | | | 31,000 | | | -- | |
| Assets under secured borrowings | | | 13,796,000 | | | 19,754,000 | |
| Other assets | | | 344,000 | | | 687,000 | |
| | | | | | | | |
| Total assets | | $ | 303,042,000 | | $ | 361,949,000 | |
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LIABILITIES, STOCKHOLDERS' EQUITY & MEMBERS' EQUITY |
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| Liabilities | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 687,000 | | $ | 306,000 | |
| Secured borrowings | | | 13,796,000 | | | 19,754,000 | |
| Note payable | | | 27,000 | | | 25,884,000 | |
| Deposit liability | | | 5,514,000 | | | 865,000 | |
| Unearned revenue | | | 454,000 | | | -- | |
| Dividend payable | | | 4,078,000 | | | -- | |
| | | | | | | | |
| Total liabilities | | | 24,556,000 | | | 46,809,000 | |
| | | | | | | | |
| Commitments and Contingences | | | | | | | |
| | | | | | | | |
| Members’ equity - authorized 50,000,000 units at $10 per unit, 32,937,162 units issued and outstanding at December 31, 2005 | | | -- | | | 315,122,000 | |
| 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; 38,839,710 shares issued and outstanding at December 31, 2006 | | | 4,000 | | | -- | |
| Additional paid in capital | | | 277,853,000 | | | -- | |
| Retained earnings | | | 1,242,000 | | | -- | |
| Accumulated other comprehensive income (loss) | | | (613,000 | ) | | 18,000 | |
| | | | | | | | |
| Total stockholders' equity & members' equity | | | 278,486,000 | | | 315,140,000 | |
| | | | | | | | |
| Total liabilities and stockholders' equity & members’ equity | | $ | 303,042,000 | | $ | 361,949,000 | |
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(SUCCESSOR TO VESTIN FUND II, LLC) | |
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CONSOLIDATED STATEMENTS OF INCOME | |
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| | | For the Twelve Months Ended | | For the Six Months Ended | | For the Six Months Ended | | For the Year Ended | | For the Year Ended | |
| | | 12/31/2006 | | 12/31/2005 | | 12/31/2004 | | 6/30/2005 | | 6/30/2004 | |
| | | | | | | (Unaudited) | | | | | |
Revenues | | | | | | | | | | | | | | | | |
| Interest income from investment in real estate loans | | $ | 21,718,000 | | $ | 11,301,000 | | $ | 14,388,000 | | $ | 25,301,000 | | $ | 38,825,000 | |
| Adjustment to allowance for loan losses | | | -- | | | | | | -- | | | 41,000 | | | -- | |
| Gain on sale marketable securities | | | 21,000 | | | 203,000 | | | -- | | | -- | | | -- | |
| Dividend income - related party | | | 72,000 | | | -- | | | -- | | | -- | | | -- | |
| Interest income from banking institutions | | | 1,333,000 | | | 287,000 | | | 249,000 | | | 409,000 | | | 365,000 | |
| Other income | | | 335,000 | | | 437,000 | | | 1,562,000 | | | 2,207,000 | | | 1,946,000 | |
| Total revenues | | | 23,479,000 | | | 12,228,000 | | | 16,199,000 | | | 27,958,000 | | | 41,136,000 | |
| | | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | |
| Management fees - related party | | | 1,096,000 | | | 546,000 | | | 515,000 | | | 1,060,000 | | | 1,025,000 | |
| Provision for loan loss | | | 5,500,000 | | | -- | | | 167,000 | | | 2,775,000 | | | 2,605,000 | |
| Interest expense | | | 1,446,000 | | | 412,000 | | | 2,441,000 | | | 3,526,000 | | | 5,681,000 | |
| Professional fees | | | 1,219,000 | | | 116,000 | | | 154,000 | | | 996,000 | | | 626,000 | |
| Professional fees - related party | | | 88,000 | | | 127,000 | | | 108,000 | | | 206,000 | | | 50,000 | |
| Provision of doubtful accounts related to receivable | | | 329,000 | | | 183,000 | | | -- | | | -- | | | 80,000 | |
| Other | | | 946,000 | | | 130,000 | | | 25,000 | | | 167,000 | | | 102,000 | |
| Total operating expenses | | | 10,624,000 | | | 1,514,000 | | | 3,410,000 | | | 8,730,000 | | | 10,169,000 | |
| | | | | | | | | | | | | | | | | |
Income from Operations | | | 12,855,000 | | | 10,714,000 | | | 12,789,000 | | | 19,228,000 | | | 30,967,000 | |
| | | | | | | | | | | | | | | | | |
Income from real estate held for sale | | | | | | | | | | | | | | | | |
| Revenue related to real estate held for sale | | | 4,101,000 | | | 2,311,000 | | | -- | | | -- | | | 2,333,000 | |
| Net gain (loss) on sale of real estate held for sale | | | 1,517,000 | | | 47,000 | | | 758,000 | | | (172,000 | ) | | -- | |
| Gain on sale of real estate held for sale - seller financed | | | 2,293,000 | | | 1,079,000 | | | -- | | | -- | | | -- | |
| Expenses related to real estate held for sale | | | (4,915,000 | ) | | (3,607,000 | ) | | (1,538,000 | ) | | (2,784,000 | ) | | (1,559,000 | ) |
| Write downs on real estate held for sale | | | -- | | | -- | | | (123,000 | ) | | (7,384,000 | ) | | (10,000 | ) |
| Total income (loss) from real estate held for sale | | | 2,996,000 | | | (170,000 | ) | | (903,000 | ) | | (10,340,000 | ) | | 764,000 | |
| | | | | | | | | | | | | | | | | |
| Income before provision for income taxes | | | 15,851,000 | | | 10,544,000 | | | 11,886,000 | | | 8,888,000 | | | 31,731,000 | |
| | | | | | | | | | | | | | | | | |
| Provision for income taxes | | | -- | | | -- | | | -- | | | -- | | | -- | |
| | | | | | | | | | | | | | | | | |
NET INCOME | | $ | 15,851,000 | | $ | 10,544,000 | | $ | 11,886,000 | | $ | 8,888,000 | | $ | 31,731,000 | |
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| Basic and diluted earnings per common weighted average share / membership unit | | $ | 0.41 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Dividends declared per common share / cash distributions per membership unit | | $ | 0.58 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income per weighted average membership unit | | | | | $ | 0.25 | | $ | 0.25 | | $ | 0.20 | | $ | 0.66 | |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares / membership units | | | 38,832,458 | | | 42,747,725 | | | 47,756,928 | | | 45,188,004 | | | 47,729,256 | |
