Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 12-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | Vestin Realty Mortgage I, Inc. | |
Entity Central Index Key | 1328300 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,380,278 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $4,459,000 | $1,395,000 |
Investment in marketable securities - related party | 1,059,000 | 1,126,000 |
Investment in MVP Advisor, net of allowance of $2,125,000 as of March 31, 2015 and $1,425,000 as of December 31, 2014 | ||
Investment in equity method investee - held for sale | 6,946,000 | 6,932,000 |
Interest and other receivables | 4,000 | 6,000 |
Notes receivable, net of allowance of $643,000 at March 31, 2015 and $650,000 at December 31, 2014 | ||
Investments in real estate and fixed assets | ||
Land and improvements | 1,741,000 | 1,741,000 |
Building and improvements | 2,450,000 | 2,450,000 |
Furniture and fixtures | 19,000 | 14,000 |
Total investments in real estate and fixed assets | 4,210,000 | 4,205,000 |
Accumulated depreciation | -151,000 | -120,000 |
Total investments in real estate and fixed assets, net | 4,059,000 | 4,085,000 |
Loan fees | 63,000 | 67,000 |
Investment in real estate loans | 3,100,000 | 7,063,000 |
Prepaid expenses - related party | 135,000 | |
Other assets | 110,000 | 122,000 |
Total assets | 19,935,000 | 20,796,000 |
Liabilities | ||
Accounts payable and accrued liabilities | 65,000 | 115,000 |
Due to related parties | 26,000 | 30,000 |
Notes payable | 2,231,000 | 2,260,000 |
Total liabilities | 2,322,000 | 2,405,000 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, $0.0001 par value; 25,000,000 shares authorized; 1,380,278 shares issued and outstanding at March 31, 2015 and December 31, 2014 | 1,000 | 1,000 |
Additional paid-in capital | 59,725,000 | 59,725,000 |
Accumulated deficit | -42,036,000 | -41,335,000 |
Accumulated other comprehensive income | -77,000 | |
Total stockholders equity | 17,613,000 | 18,391,000 |
Total liabilities and stockholders' equity | 19,935,000 | 20,796,000 |
Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | ||
Treasury Stock [Member] | ||
Stockholders' equity | ||
Treasury stock, at cost, no shares at March 31, 2015 and December 31, 2014 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Investment in MVP Advisor, allowance | $2,125,000 | $1,425,000 |
Notes Receivable, allowance | $643,000 | $650,000 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 25,000,000 | 25,000,000 |
Common Stock, shares issued | 1,380,278 | 1,380,278 |
Common Stock, shares outstanding | 1,380,278 | 1,380,278 |
Preferred Stock [Member] | ||
Preferred Stock, par value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares oustanding | 0 | 0 |
Treasury Stock [Member] | ||
Treasury Stock, shares | 0 | 0 |
Consolidated_Statements_Of_Ope
Consolidated Statements Of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues | ||
Interest income from investment in real estate loans | $125,000 | $81,000 |
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable | 8,000 | |
Rental revenue | 183,000 | 174,000 |
Total revenues | 316,000 | 255,000 |
Operating expenses | ||
Management fees - related party | 69,000 | 69,000 |
Payroll | 9,000 | 15,000 |
Impairment MVP Realty Advisors | 700,000 | 411,000 |
Acquisition expense | 1,000 | |
Operations and maintenance | 44,000 | 79,000 |
Depreciation | 34,000 | |
Professional fees | 116,000 | 84,000 |
Insurance | 50,000 | 53,000 |
Consulting | 23,000 | 25,000 |
Other | 41,000 | 27,000 |
Total operating expenses | 1,086,000 | 764,000 |
Loss from operations | -770,000 | -509,000 |
Non-operating income (loss) | ||
Gain on sale of marketable securities | 1,000 | |
Dividend income | 10,000 | 9,000 |
Interest expense | -28,000 | |
Gain related to recovery from settlement with loan guarantor | 102,000 | |
Total other non-operating income (loss), net | -18,000 | 112,000 |
Provision for income taxes | ||
Loss from continuing operations | -788,000 | -397,000 |
Discontinued operations, net of income taxes | ||
Net loss on sale of real estate held for sale | -5,000 | |
Income from investment in equity method investee | 96,000 | 43,000 |
Expenses related to real estate held for sale | -9,000 | -44,000 |
Total income (loss) from discontinued operations | 87,000 | -6,000 |
Net loss | -701,000 | -403,000 |
Net income attributable to non-controlling interest - related parties | 21,000 | |
Net loss attributable to common stockholders | ($701,000) | ($424,000) |
Basic and diluted income (loss) per weighted average common share | ||
Continuing operations | ($0.57) | ($0.28) |
Discontinued operations | $0.06 | ($0.02) |
Total basic and diluted loss per weighted average common share | ($0.51) | ($0.30) |
Dividends declared per common share | ||
Weighted average common shares | 1,380,278 | 1,428,164 |
Consolidated_Statement_Of_Othe
Consolidated Statement Of Other Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | ($701,000) | ($403,000) |
Unrealized holding gain (loss) on available-for-sale securities - related parties | 77,000 | -141,000 |
Comprehensive loss | -624,000 | -544,000 |
Less: net income attributable to noncontrolling interest - related party | -21,000 | |
Comprehensive loss attributable to Vestin Realty Mortgage I, Inc. | ($624,000) | ($565,000) |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | ($701,000) | ($403,000) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 34,000 | |
Gain related to recovery of allowance for doubtful notes receivable | -8,000 | |
Gain on sale of marketable securities | -1,000 | |
Amortization | 4,000 | |
Recognized gain on sale of HFS | -23,000 | |
Income from equity method investee held for sale | -96,000 | -43,000 |
Loss from sale of investment in equity method investee | 5,000 | |
Dividend from MVP REIT (DRIP Shares) | -10,000 | -9,000 |
Impairment on MVP Realty Advisors | 700,000 | 411,000 |
Change in operating assets and liabilities: | ||
Interest and other receivables | 2,000 | 1,000 |
Due to/from related parties | -4,000 | 91,000 |
Prepaid expense - related party | -135,000 | |
Assets held for sale, net of liabilities | -80,000 | |
Other assets | 12,000 | 31,000 |
Accounts payable and accrued liabilities | -50,000 | 61,000 |
Net cash provided by (used in) operating activities | -252,000 | 41,000 |
Cash flows from investing activities: | ||
Investments in real estate loans | -1,263,000 | -2,298,000 |
Proceeds from loan payoffs | 4,593,000 | 1,304,000 |
Sale of investments in real estate loans | ||
VRM II | 200,000 | |
Third parties | 433,000 | 250,000 |
Purchase of fixed assets | -8,000 | |
Proceeds from investment in equity method investee held for sale | 1,157,000 | |
Proceeds from sale of investment in equity method investee held for sale | 686,000 | |
Proceeds from sale of marketable securities | 13,000 | |
Proceeds from distributions from investment in equity method investee | 82,000 | |
Investment in MVP Realty Advisors | -700,000 | -411,000 |
Proceeds from notes receivable | 8,000 | |
Net cash provided by investing activities | 3,345,000 | 701,000 |
Cash flows from financing activities: | ||
Principal payments on notes payable | -29,000 | -18,000 |
Net cash used in financing activities | -29,000 | -18,000 |
NET CHANGE IN CASH | 3,064,000 | 724,000 |
Cash and cash equivalents, beginning of period | 1,395,000 | 7,588,000 |
Cash and cash equivalents, end of period | 4,459,000 | 8,312,000 |
Supplemental disclosures of cash flows information: | ||
Interest expense | 28,000 | |
Non-cash investing and financing activities: | ||
Unrealized gain (loss) on marketable securities - related party | ($77,000) | ($141,000) |
Organization
Organization | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | NOTE A — ORGANIZATION |
Vestin Realty Mortgage I, Inc. (“VRM I”, the “Company”, “we”, “us”, or “our”) formerly Vestin Fund I, LLC (“Fund I”) invests in loans secured by real estate through deeds of trust or mortgages (hereafter referred to collectively as “deeds of trust” and as defined in our management agreement (“Management Agreement”) as “Mortgage Assets”). In addition we invest in, acquire, manage or sell real property and acquire entities involved in the ownership or management of real property. We commenced operations in December 1999. References in this report to the “Company,” “we,” “us,” or “our” refer to Fund I with respect to the period prior to April 1, 2006 and to VRM I with respect to the period commencing on May 1, 2006. | |
We operated as a real estate investment trust (“REIT”) through December 31, 2011. We are not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor are we subject to any regulation thereunder. As a REIT, we were required to have a December 31 fiscal year end. We announced on March 28, 2012 that we have terminated our election to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), effective for the tax year ending December 31, 2012. Under the Code, we will not be able to make a new election to be taxed as a REIT during the four years following December 31, 2012. Pursuant to our charter, upon the determination by the Board of Directors that we should no longer qualify as a REIT, the restrictions on transfer and ownership of shares set forth in Article VII of our charter ceased to be in effect and, accordingly, shares of the Company’s stock will no longer be subject to such restrictions. In connection with the termination of our REIT status, we also amended our stockholders’ rights plan to provide that a stockholder, other than Michael Shustek, may own up to 20% of outstanding shares of common stock, and that Michael Shustek may own up to 35% of outstanding shares of common stock. | |
Michael Shustek owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, which is our manager (the “manager” or “Vestin Mortgage”). On January 7, 2011, Vestin Mortgage converted from a corporation to a limited liability company. The business of brokerage and placement of real estate loans have been performed by affiliated or non-affiliated mortgage brokers, including Advant Mortgage, LLC (“MVP Mortgage”), a licensed Nevada mortgage broker, which is indirectly wholly owned by Mr. Shustek. | |
Pursuant to a management agreement, our manager is responsible for managing our operations and implementing our business strategies on a day-to-day basis. Consequently, our operating results are dependent to a significant extent upon our manager’s ability and performance in managing our operations and servicing our assets. | |
Vestin Mortgage is also the manager of Vestin Realty Mortgage II, Inc. (“VRM II”), as the successor by merger to Vestin Fund II, LLC (“Fund II”) and Vestin Fund III, LLC (“Fund III”). VRM II has investment objectives similar to ours, and Fund III is in the process of an orderly liquidation of its assets. | |
During April 2009, we entered into an accounting services agreement with Strategix Solutions, a Nevada limited liability company, for the provision of accounting and financial reporting services. Strategix Solutions also provides accounting and financial reporting services to VRM II and Fund III. Our CFO and other members of our accounting staff are employees of Strategix Solutions. Strategix Solutions is owned by our CFO, Ms. Gress. As used herein, “management” means our manager, its executive officers and the individuals at Strategix Solutions who perform accounting and financial reporting services on our behalf. | |
In December 2013, we acquired a 40% interest in MVP Realty Advisors, LLC (“MVP Advisor”), the manager of MVP REIT, Inc., pursuant to a membership interest transfer agreement, dated as of December 19, 2013, between MVP Capital Partners, LLC (“MVP Capital”) and us. Pursuant to the transfer agreement, we did not pay any up-front consideration for the acquired interest but will be responsible for our proportionate share of future expenses of MVP Advisor. In recognition of MVP Capital’s substantial investment in MVP Advisor for which MVP Capital received no up-front consideration, the transfer agreement further provides that once we and VRM II have been repaid in full for any capital contributions to MVP Advisor or for any expenses advanced on MVP Advisor’s behalf (“Capital Investment”), and once we and VRM II have received an annualized return on our Capital Investment of 7.5%, then MVP Capital will receive one-third of the net profits of MVP Advisor. This acquisition was approved by the independent members of our Board of Directors. MVP REIT is a SEC-registered, non-traded REIT that seeks to invest predominantly in parking facilities located throughout the United States and loans secured by real estate as its core assets. |
Summary_Of_Significant_Account
Summary Of Significant Accounting Policies | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
Summary Of Significant Accounting Policies | NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | |||
The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included. The information included in this Form 10-Q should be read in conjunction with information included in the 2014 annual report filed on Form 10-K. | |||
Management Estimates | |||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Impairment of Long Lived Assets | |||
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income. | |||
Derivative Instruments | |||
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. | |||
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. | |||
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. | |||
Investments in Real Estate and Fixed Assets | |||
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). | |||
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. | |||
Cash and Cash Equivalents | |||
Cash and cash equivalents include interest-bearing and non-interest-bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less. | |||
Revenue Recognition | |||
Interest is recognized as revenue on performing loans when earned according to the terms of the loans, using the effective interest method. We do not accrue interest income on loans once they are determined to be non-performing. A loan is non-performing when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due. Cash receipts will be allocated to interest income, except when such payments are specifically designated by the terms of the loan as principal reduction. Interest is fully allowed for on impaired loans and is recognized on a cash basis method. | |||
All leases are accounted for as non-cancelable operating leases. We recognize rental revenue on a straight-line basis over the term of the lease. Rental income related to the leases is recognized on an accrual basis in accordance with the terms of the leases. Advanced receipts of rental income are deferred and classified as liabilities until earned. | |||
Reclassifications | |||
Certain amounts in the 2014 consolidated financial statements regarding investment in equity method investee have been reclassified to conform to the March 31, 2015 presentation. Additionally, commencing April 1, 2014, our investment in VREO XXV, LLC is considered held for use. | |||
Investments in Real Estate Loans | |||
We may, from time to time, acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party. | |||
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated when new appraisals are received or when management’s assessment of the value has changed, to reflect subsequent changes in value estimates. Original appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower. | |||
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral. | |||
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (“TDR”) as defined by Accounting Standards Codification (“ASC”) 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected. | |||
Allowance for Loan Losses | |||
We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Our manager’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are added back to the allowance and included as income. | |||
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. We and our manager generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry we perform will not reveal all material facts pertaining to a borrower and the security. | |||
Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that have and may continue to cause significant changes in our estimated allowance include, but are not limited to: | |||
· | 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. | ||
Discontinued Operations | |||
We have reclassified for all periods presented in the accompanying consolidated statements of operations, the amounts related to discontinued operations and real estate held for sale, in accordance with the applicable accounting criteria. In addition, the assets and liabilities related to the discontinued operations are reported separately in the accompanying consolidated balance sheets as real estate held for sale, assets held for sale, and liabilities related to assets held for sale. | |||
Real Estate Owned Held for Sale | |||
Real estate held for sale (“REO”) includes real estate acquired through foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property's estimated fair value, less estimated costs to sell, with fair value based on appraisals and knowledge of local market conditions. While pursuing foreclosure actions, we seek to identify potential purchasers of such property. We seek to sell properties acquired through foreclosure as quickly as circumstances permit, taking into account current economic conditions. The carrying values of REO are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers. | |||
Management classifies REO when the following criteria are met: | |||
· | 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. | ||
Classification of Operating Results from Real Estate Held for Sale | |||
Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to REO are separately identified in the accompanying consolidated statements of operations. | |||
Secured Borrowings | |||
Secured borrowings provide an additional source of capital for our lending activity. Secured borrowings allow us to increase the diversification of our loan portfolio and to invest in loans that we might not otherwise invest in. We do not receive any fees for entering into secured borrowing arrangements; however, we may receive revenue for any differential of the interest spread, if applicable. Loans in which unaffiliated investors have participated through inter-creditor agreements (“Inter-creditor Agreements”) are accounted for as secured borrowings. | |||
The Inter-creditor Agreements provide us additional funding sources for real estate loans whereby an unaffiliated investor (the “Investor”) may participate on a non-pari-passu basis in certain real estate loans with us and/or VRM II (collectively, the “Lead Lenders”). In the event of borrower non-performance, the Inter-creditor Agreements generally provide that the Lead Lenders must repay the Investor’s loan amount either by (i) continuing to remit to the Investor the interest due on the participated loan amount; (ii) substituting an alternative loan acceptable to the Investor; or (iii) repurchasing the participation from the Investor for the outstanding balance plus accrued interest. | |||
Additionally, an Investor may participate in certain loans with the Lead Lenders through Participation Agreements. In the event of borrower non-performance, the Participation Agreement may allow the Investor to be repaid up to the amount of the Investor’s investment prior to the Lead Lender being repaid. Real estate loan financing under the Participation Agreements are also accounted for as a secured borrowing. We do not receive any revenues for entering into secured borrowing arrangements. | |||
Investment in Marketable Securities and Investment in Marketable Securities – Related Party | |||
Investment in marketable securities and investment in marketable securities– related party consists of stock in VRM II and MVP REIT. The securities are stated at fair value as determined by the closing market price as of March 31, 2015 and December 31, 2014. All securities are classified as available-for-sale. | |||
We are required to evaluate our available-for-sale investment for other-than-temporary impairment charges. We will determine when an investment is considered impaired (i.e., decline in fair value below its amortized cost), and evaluate whether the impairment is other-than-temporary (i.e., investment value will not be recovered over its remaining life). If the impairment is considered other-than-temporary, we will recognize an impairment loss equal to the difference between the investment’s basis and its fair value. | |||
According to the SEC Staff Accounting Bulletin, Topic 5: Miscellaneous Accounting, M - Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities, there are numerous factors to be considered in such an evaluation and their relative significance will vary from case to case. The following are a few examples of the factors that, individually or in combination, indicate that a decline is other than temporary and that a write-down of the carrying value is required: | |||
· | The length of the time and the extent to which the market value has been less than cost; | ||
· | The financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; or | ||
· | The intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. | ||
Basic and Diluted Earnings Per Common Share | |||
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. We had no outstanding common share equivalents during the periods ended March 31, 2015 and December 31, 2014. | |||
Common Stock Dividends | |||
During June 2008, our Board of Directors decided to suspend the payment of dividends. Our Board of Directors will closely monitor our operating results in order to determine when dividends should be reinstated; however, we do not expect our Board or Directors to reinstate dividends in the foreseeable future. | |||
Treasury Stock | |||
On February 21, 2008, our Board of Directors authorized the repurchase of up to $5 million worth of our common stock. Depending upon market conditions, shares may be repurchased from time to time at prevailing market prices through open market or privately negotiated transactions. We are not obligated to purchase any shares. Subject to applicable securities laws, including SEC Rule 10b-18, repurchases may be made at such times and in such amounts, as our management deems appropriate. The repurchases will be funded from our available cash. Under the Maryland General Corporation Law, shares of its own stock acquired by a corporation constitute authorized but unissued shares. | |||
Segments | |||
We are currently authorized to operate two reportable segments, investments in real estate loans and investments in real property. As of March 31, 2015, the Company operates both segments. | |||
Our objective is to invest approximately 97% of our assets in real estate loans and real estate investments, while maintaining approximately 3% as a working capital cash reserve. | |||
Advertising Costs | |||
Advertising costs incurred in the normal course of operations are expensed as incurred. The Company had no advertising expense for the three months ended March 31, 2015. | |||
Principles of Consolidation | |||
Our consolidated financial statements include the accounts of VRM I and VREO XXV, LLC, in which we have a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. | |||
Business Combinations | |||
In December 2007, the Financial Accounting Standards Board (FASB) revised the authoritative guidance for business combinations, establishing principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired (including goodwill), the liabilities assumed, and any noncontrolling interest in the acquiree. Subsequently, on April 1, 2009, the FASB amended and clarified certain aspects of its authoritative guidance on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. We apply the FASB authoritative guidance to all business combinations for which the acquisition date is on or after January 1, 2009, and to certain future income tax effects related to our prior business combinations, should they arise. | |||
Non-controlling Interests | |||
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. | |||
Income Taxes | |||
The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | |||
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes. | |||
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Financial_Instruments_And_Conc
Financial Instruments And Concentrations Of Credit Risk | 3 Months Ended |
Mar. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Financial Instruments And Concentrations Of Credit Risk | NOTE C — FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK |
Financial instruments consist of cash, interest and other receivables, notes receivable, accounts payable and accrued liabilities, due to/from related parties and notes payable. The carrying values of these instruments approximate their fair values due to their short-term nature. Marketable securities and marketable securities – related party and investment in real estate loans are further described in Note J – Fair Value. | |
Financial instruments with concentration of credit and market risk include cash, interest and other receivables, marketable securities and marketable securities- related party, notes receivable, accounts payable and accrued liabilities, due to/from related parties, notes payable, and loans secured by deeds of trust. | |
We maintain cash deposit accounts and certificates of deposit which, at times, may exceed federally-insured limits. To date, we have not experienced any losses. As of March 31, 2015 and 2014 we had approximately $3.9 and $7.8 million, respectively, in funds in excess of the federally-insured limits. | |
As of March 31, 2015, 100% of our loans were in Nevada, compared to 29% and 71% of our loans in California, and Nevada at December 31, 2014, respectively. As a result of this geographical concentration of our real estate loans, the continuation of depressed conditions in certain of the local real estate markets in these states has had a material adverse effect on us. | |
As of March 31, 2015 and December 31, 2014, all of our loans were loans in which we participated with other lenders, most of whom are our affiliates. | |
As of March 31, 2015, the aggregate amount of loans to our three largest borrowers represented approximately 96% of our total investment in real estate loans. These real estate loans consisted of two commercial loans secured by property located in Nevada and one construction loan secured by property located in Nevada. All are first lien positions with interest rates between 7.00% and 8.00%, and an aggregate outstanding balance of approximately $3 million. As of March 31, 2015, all three of our largest loans were considered performing. | |
The success of a borrower’s ability to repay its real estate loan obligation in a large lump-sum payment may be dependent upon the borrower’s ability to refinance the obligation or otherwise raise a substantial amount of cash. With the weakened economy, credit continues to be difficult to obtain and as such, many of our borrowers who develop and sell commercial real estate projects have been unable to complete their projects, obtain takeout financing or have been otherwise adversely impacted. In addition, an increase in interest rates over the loan rate applicable at origination of the loan may have an adverse effect on our borrower’s ability to refinance. | |
Common Guarantors | |
As of March 31, 2015 and December 31, 2014, there were two loans, totaling approximately $1.1 million, representing approximately 35.7% and 15.7%, respectively, of our portfolio’s total value, which had a common guarantor. | |
For additional information regarding the above loans, see Note D – Investments In Real Estate Loans. |
Investments_In_Real_Estate_Loa
Investments In Real Estate Loans | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Real Estate [Abstract] | |||||||||||||
Investments In Real Estate Loans | NOTE D — INVESTMENTS IN REAL ESTATE LOANS | ||||||||||||
As of March 31, 2015 and December 31, 2014, all of our loans provided for interest only payments with a “balloon” payment of principal payable and any accrued interest payable in full at the end of the term. | |||||||||||||
In addition, we may invest in real estate loans that require borrowers to maintain interest reserves funded from the principal amount of the loan for a period of time. At March 31, 2015 and December 31, 2014, we had no investment in real estate loans that had interest reserves. | |||||||||||||
Loan Portfolio | |||||||||||||
As of March 31, 2015, we had five available real estate loan products consisting of commercial, construction, acquisition and development, land and residential. The effective interest rates on all product categories range from 7.0% to 8.0% which includes performing loans that are being fully or partially accrued and will be payable at maturity. Revenue by product will fluctuate based upon relative balances during the period. | |||||||||||||
Investments in real estate loans as of March 31, 2015, were as follows: | |||||||||||||
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 | 3 | $ | 2,937,000 | 7.38% | 94.74% | 49.41% | |||||||
Construction | 1 | 163,000 | 8.00% | 5.26% | 0.29% | ||||||||
Total | 4 | $ | 3,100,000 | 7.41% | 100.00% | 47.09% | |||||||
Investments in real estate loans as of December 31, 2014 were as follows: | |||||||||||||
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 | 5 | $ | 5,043,000 | 7.60% | 71.40% | 51.35% | |||||||
Land | 1 | 2,020,000 | 9.00% | 28.60% | 67.63% | ||||||||
Total | 6 | $ | 7,063,000 | 8.00% | 100.00% | 56.00% | |||||||
* | Please see Balance Sheet Reconciliation below. | ||||||||||||
The “Weighted Average Interest Rate” as shown above is based on the contractual terms of the loans for the entire portfolio including non-performing loans. The weighted average interest rate on performing loans only, as of March 31, 2015 and December 31, 2014, was 7.41% and 8.00%, respectively. Please see “Asset Quality and Loan Reserves” below for further information regarding performing and non-performing loans. | |||||||||||||
Loan-to-value ratios are generally based on the most recent appraisals and may not reflect subsequent changes in value and include allowances for loan losses. Recognition of allowance for loan losses will result in a maximum loan-to-value ratio of 100% per loan. | |||||||||||||
The following is a schedule of priority of real estate loans as of March 31, 2015 and December 31, 2014. | |||||||||||||
Number of Loans | 31-Mar-15 | Portfolio | Number of Loans | December 31, 2014 Balance * | Portfolio | ||||||||
Loan Type | Balance * | Percentage | Percentage | ||||||||||
First deeds of trust | 4 | $ | 3,100,000 | 100.00% | 6 | $ | 7,063,000 | 100.00% | |||||
Second deeds of trust | -- | -- | -- | -- | -- | -- | |||||||
Total | 4 | $ | 3,100,000 | 100.00% | 6 | $ | 7,063,000 | 100.00% | |||||
* | Please see Balance Sheet Reconciliation below. | ||||||||||||
The following is a schedule of contractual maturities of investments in real estate loans as of March 31, 2015: | |||||||||||||
Non-performing | $ | -- | |||||||||||
January 2015 – March 2015 | -- | ||||||||||||
April 2015 – June 2015 | 2,937,000 | ||||||||||||
Thereafter | 163,000 | ||||||||||||
Total | $ | 3,100,000 | |||||||||||
The following is a schedule by geographic location of investments in real estate loans as of March 31, 2015 and December 31, 2014: | |||||||||||||
March 31, 2015 Balance * | Portfolio Percentage | December 31, 2014 Balance * | Portfolio Percentage | ||||||||||
California | $ | -- | -- | $ | 2,020,000 | 28.60% | |||||||
Nevada | 3,100,000 | 100% | 5,043,000 | 71.40% | |||||||||
Total | $ | 3,100,000 | 100.00% | $ | 7,063,000 | 100.00% | |||||||
* | Please see Balance Sheet Reconciliation below. | ||||||||||||
Balance Sheet Reconciliation | |||||||||||||
The following table reconciles the balance of the loan portfolio to the amount shown on the accompanying Consolidated Balance Sheets. | |||||||||||||
31-Mar-15 | 31-Dec-14 | ||||||||||||
Balance per loan portfolio | $ | 3,100,000 | $ | 7,063,000 | |||||||||
Less: | |||||||||||||
Allowance for loan losses | -- | - | |||||||||||
Balance per consolidated balance sheets | $ | 3,100,000 | $ | 7,063,000 | |||||||||
Non-Performing Loans | |||||||||||||
As of March 31, 2015 and December 31, 2014, we had no loans considered non-performing (i.e., based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due). | |||||||||||||
Asset Quality and Loan Reserves | |||||||||||||
Losses may occur from investing in real estate loans. The amount of losses will vary as the loan portfolio is affected by changing economic conditions and the financial condition of borrowers. | |||||||||||||
The conclusion that a real estate loan is uncollectible or that collectability is doubtful is a matter of judgment. On a quarterly basis, our manager evaluates our real estate loan portfolio for impairment. The fact that a loan is temporarily past due does not necessarily mean that the loan is non-performing. Rather, all relevant circumstances are considered by our manager to determine impairment and the need for specific reserves. Such evaluation, which includes a review of all loans on which full collectability may not be reasonably assured, considers among other matters: | |||||||||||||
· | 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. | ||||||||||||
Based upon this evaluation, a determination is made as to whether the allowance for loan losses is adequate to cover any potential losses on an individual loan basis; we do not have a general allowance for loan losses. Additions to the allowance for loan losses are made by charges to the provision for loan loss. | |||||||||||||
As of March 31, 2015 and December 31, 2014, our ratio of total allowance for loan losses to total loans with an allowance for loan loss is 0%. | |||||||||||||
Our manager evaluated our loans and, based on current estimates with respect to the value of the underlying collateral, believes that such collateral is sufficient to protect us against further losses of principal. However, such estimates could change or the value of the underlying real estate could decline. Our manager will continue to evaluate our loans in order to determine if any other allowance for loan losses should be recorded. | |||||||||||||
Specific Reserve Allowances | |||||||||||||
As of March 31, 2015 and December 31, 2014, we had no specific reserve allowance. | |||||||||||||
Extensions | |||||||||||||
As of March 31, 2015 and December 31, 2014, our manager had granted extensions on one and three outstanding loans, totaling approximately $4.7 and $10.9 million, respectively, of which our portion was approximately $1.9 and $3.5 million, respectively, pursuant to the terms of the original loan agreements, which permit extensions by mutual consent, or as part of a TDR. Such extensions are generally provided on loans where the original term was 12 months or less and where a borrower requires additional time to complete a construction project or negotiate take-out financing. Our manager generally grants extensions when a borrower is in compliance with the material terms of the loan, including, but not limited to the borrower’s obligation to make interest payments on the loan. In addition, if circumstances warrant, our manager may extend a loan that is in default as part of a work out plan to collect interest and/or principal. |
Investment_In_Equity_Method_In
Investment In Equity Method Investee And Note Receivable From MVP Realty Advisors | 3 Months Ended |
Mar. 31, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment In Equity Method Investee And Note Receivable From MVP Realty Advisors | NOTE E — INVESTMENT IN EQUITY METHOD INVESTEE AND NOTE RECEIVABLE FROM MVP REALTY ADVISORS |
MVP Realty Advisors | |
As of March 31, 2015 we have made loans of approximately $2,125,000 to MVP Advisor, the manager of MVP REIT. We believe MVP Advisor has the opportunity to generate fees for the services it will render to MVP REIT. However, MVP REIT is currently seeking to raise funds through its initial public offering and the fees paid to date to MVP Advisor have not been significant. We may not realize interest income from the loan to MVP Advisor until it is able to generate sufficient fees to service the interest on our loan. We have not forgiven the balance due from MVP Advisor; however the decision by MVP Advisor to forgive certain amounts creates uncertainty as to when we will be repaid the amounts loaned to MVP Advisor. Based on this uncertainty, we have determined to fully impair the balance of this investment and note receivable. During the three months ended March 31, 2015, we impaired approximately $700,000 of the amounts loaned to MVP Advisor. During the three months ended March 31, 2014, we impaired approximately $411,000 of the amounts loaned to MVP Advisor. |
Investment_In_Marketable_Secur
Investment In Marketable Securities - Related Party | 3 Months Ended |
Mar. 31, 2015 | |
Investment In Marketable Securities - Related Party | |
Investment In Marketable Securities - Related Party | NOTE F — INVESTMENT IN MARKETABLE SECURITIES – RELATED PARTY |
In February 2014, VRM II effected a 1 for 4 reverse split of its common stock. All share and per share information in the consolidated financial statements and accompanying notes have been adjusted to retroactively reflect the 1 for 4 reverse stock split. | |
As of March 31, 2015 and December 31, 2014, we owned 134,270 shares of VRM II’s common stock, representing approximately 5.20% of the total outstanding shares. The closing price of VRM II’s common stock on March 31, 2015, was $3.47 per share. | |
During the three months ended March 31, 2015, the trading price for VRM II’s common stock ranged from $2.76 to $4.82 per share. At December 31, 2014, our manager evaluated the near-term prospects of VRM II in relation to the severity and duration of the unrealized loss. Based on that evaluation and current market conditions, we have determined there was an other-than-temporary impairment on our investment in VRM II as of December 31, 2014. We realized a loss on our investment to its fair value of $4.04 per share as of December 31, 2014, totaling approximately $0.5 million and recognizing an impairment of approximately $0.1 million. | |
As of March 31, 2015 and December 31, 2014, we owned 67,532 and 66,379 shares of common stock, respectively, of MVP REIT. The shares are recorded on our balance sheet valued at $594,000 and $584,000, respectively. Such amount was determined based upon the offer price for such shares in MVP REIT’s pending public offering. During the three months ended March 31, 2015 we received 1,153 shares through MVP REIT’s distribution reinvestment program. |
Real_Estate_Owned_Held_For_Sal
Real Estate Owned Held For Sale | 3 Months Ended |
Mar. 31, 2015 | |
Real Estate [Abstract] | |
Real Estate Owned Held For Sale | NOTE G — REAL ESTATE OWNED HELD FOR SALE |
At March 31, 2015 and December 31, 2014 we held one property with no total carrying value, which was acquired through foreclosure and recorded as investment in REO. Our REO are accounted for at the lower of cost or fair value less costs to sell with fair value based on appraisals and knowledge of local market conditions. We seek to sell properties acquired through foreclosure as quickly as circumstances permit taking into account current economic conditions. | |
As of March 31, 2015 our REO property consisted of raw land on which there were no operations. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE H — RELATED PARTY TRANSACTIONS |
From time to time, we may acquire or sell investments in real estate loans from/to our manager or other related parties. Pursuant to the terms of our Management Agreement, such acquisitions and sales are made without any mark up or mark down. No gain or loss is recorded on these transactions, as it is not our intent to make a profit on the purchase or sale of such investments. The purpose is generally to diversify our portfolio by syndicating loans and real estate investments, thereby providing us with additional capital to make additional loans and investments in real estate. | |
Transactions with the Manager | |
Our manager is entitled to receive from us an annual management fee of up to 0.25% of our aggregate capital contributions received by us and Fund I from the sale of shares or membership units, paid monthly. The amount of management fees paid to our manager for the three months ended March 31, 2015 and 2014 was $69,000 for each period. | |
As of March 31, 2015 and December 31, 2014, our manager owned 25,000 of our common shares, representing approximately 1.8% of our total outstanding common stock. For the three months ended March 31, 2015 and 2014, we declared no dividends payable to our manager. | |
Accounting services | |
During the three months ended March 31, 2015 and 2014, Accounting Solutions, an entity owned by Ms. Gress, the Company’s Chief Financial Officer, received fees of approximately $15,000 and $10,000, respectively, for accounting services. | |
During the three months ended March 31, 2015 and 2014, Strategix Solutions, an entity owned by Ms. Gress, the Company’s Chief Financial Officer, received fees of approximately $27,000 and $19,500, respectively, for accounting services. | |
Transactions with Other Related Parties | |
As of March 31, 2015 and December 31, 2014, we owned 134,270 common shares of VRM II, representing approximately 5.20% of their total outstanding common stock. For the three months ended March 31, 2015 and 2014 we recognized no dividend income from VRM II. | |
As of March 31, 2015 and December 31, 2014, VRM II owned 134,545 of our common shares, approximately 9.74% of our total outstanding common stock. For the three months ended March 31, 2015 and 2014, we declared no dividends payable to VRM II. | |
As of March 31, 2015 and December 31, 2014 we owned 67,532 and 66,379, respectively, of MVP REIT common stock. During the three months ended March 31, 2015 we received 1,153 shares through MVP REIT’s distribution reinvestment program. For the three months ended March 31, 2015 and 2014 we recognized $10,000 and $9,000, respectively, in dividend income. | |
As of March 31, 2015 and December 31, 2014, we owned a 40% interest in MVP Advisor, the advisor of MVP REIT and MVP REIT II, Inc. | |
We have made loans of approximately $2,125,000 to MVP Advisor, the manager of MVP REIT. We believe MVP Advisor has the opportunity to generate fees for the services it will render to MVP REIT. However, MVP REIT is currently seeking to raise funds through its initial public offering and the fees paid to date to MVP Advisor have not been significant. We may not realize interest income from the loan to MVP Advisor until it is able to generate sufficient fees to service the interest on our loan. We have not forgiven the balance due from MVP Advisor; however the decision by MVP Advisor to forgive certain amounts creates uncertainty as to when we will be repaid the amounts loaned to MVP Advisor. Based on this uncertainty, we have determined to fully impair the balance of this investment and note receivable. During the three months ended March 31, 2015 and 2014, we impaired approximately $700,000 and $411,000 of the amounts loaned MVP Advisor. | |
As of March 31, 2015 and December 31, 2014 we owed VRM II approximately $26,000 and $30,000. | |
During the three months ended March 31, 2015, we sold approximately $0.2 million in real estate loans to VRM II. |
Notes_Payable
Notes Payable | 3 Months Ended | ||
Mar. 31, 2015 | |||
Payables and Accruals [Abstract] | |||
Notes Payable | NOTE I — NOTES PAYABLE | ||
During July 2014, VREO XXV issued a promissory note to Mohave State Bank for $2.3 million. This note bears an annual interest rate of 5.0%, is secured by property and is payable in monthly principal and interest payments of approximately $13,000, with a lump sum payment of approximately $2.0 million due at maturity in July of 2019. | |||
As of March 31, 2015, future principal payments on the notes payable are as follows: | |||
2015 | $ | 36,000 | |
2016 | 50,000 | ||
2017 | 53,000 | ||
2018 | 56,000 | ||
2019 | 2,036,000 | ||
Thereafter | -- | ||
Total | $ | 2,231,000 |
Fair_Value
Fair Value | 3 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||
Fair Value | NOTE J — FAIR VALUE | |||||||||||
As of March 31, 2015, financial assets and liabilities utilizing Level 1 inputs included investment in marketable securities and marketable securities - related party. We had no assets or liabilities utilizing Level 2 inputs, and assets and liabilities utilizing Level 3 inputs included investments in real estate loans and investments in equity method investees held for sale. | ||||||||||||
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, our degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability will be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. | ||||||||||||
Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that are current as of the measurement date, including during periods of market dislocation, such as the recent illiquidity in the auction rate securities market. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition may cause our financial instruments to be reclassified from Level 1 to Level 2 or Level 3 and/or vice versa. | ||||||||||||
Our valuation techniques will be consistent with at least one of the three possible approaches: the market approach, income approach and/or cost approach. Our Level 1 inputs are based on the market approach and consist primarily of quoted prices for identical items on active securities exchanges. Our Level 2 inputs are primarily based on the market approach of quoted prices in active markets or current transactions in inactive markets for the same or similar collateral that do not require significant adjustment based on unobservable inputs. Our Level 3 inputs are primarily based on the income and cost approaches, specifically, discounted cash flow analyses, which utilize significant inputs based on our estimates and assumptions. | ||||||||||||
The following tables present the valuation of our financial assets as of March 31, 2015 and December 31, 2014, measured at fair value on a recurring basis by input levels: | ||||||||||||
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 | Carrying Value on Balance Sheet at 03/31/15 | ||||||||
at 03/31/15 | ||||||||||||
Assets | ||||||||||||
Investment in equity method investee held for sale | $ | -- | $ | -- | $ | 6,946,000 | $ | 6,946,000 | $ | 6,946,000 | ||
Investment in marketable securities - related party | $ | 1,059,000 | $ | -- | $ | -- | $ | 1,059,000 | $ | 1,059,000 | ||
Investment in real estate loans | $ | -- | $ | -- | $ | 3,099,000 | $ | 3,099,000 | $ | 3,100,000 | ||
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 12/31/14 | Carrying Value on Balance Sheet at 12/31/14 | ||||||||
Assets | ||||||||||||
Investment in equity method investee – held for sale | $ | -- | $ | -- | $ | 6,932,000 | $ | 6,932,000 | $ | 6,932,000 | ||
Investment in marketable securities - related party | $ | 1,126,000 | $ | -- | $ | -- | $ | 1,126,000 | $ | 1,126,000 | ||
Investment in real estate loans | $ | -- | $ | -- | $ | 7,063,000 | $ | 7,063,000 | $ | 7,063,000 | ||
The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2015 to March 31, 2015. There were no liabilities measured at fair value on a recurring basis using significant unobservable inputs as of January 1, 2015 to March 31, 2015. | ||||||||||||
Investment in real estate loans | ||||||||||||
Balance on January 1, 2015 | $ | 7,063,000 | ||||||||||
Purchase and additions of assets | ||||||||||||
New mortgage loans and mortgage loans bought | 1,263,000 | |||||||||||
Sales, pay downs and reduction of assets | ||||||||||||
Collections of principal and sales of investment in real estate loans | -4,593,000 | |||||||||||
Sale of assets to affiliate and third parties | -633,000 | |||||||||||
Temporary change in estimated fair value based on future cash flows | -1,000 | |||||||||||
Balance on March 31, 2015, net of temporary valuation adjustment | $ | 3,099,000 | ||||||||||
Investment in equity method investee – held for sale | ||||||||||||
Balance on January 1, 2015 | $ | 6,932,000 | ||||||||||
Distributions from investment in equity method investee held for sale | -82,000 | |||||||||||
Income from investment in equity method investee held for sale | 96,000 | |||||||||||
Balance on March 31, 2015, net of temporary valuation adjustment | $ | 6,946,000 | ||||||||||
The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2014 to December 31, 2014: | ||||||||||||
Investment in real estate loans | ||||||||||||
Balance on January 1, 2014 | $ | 3,353,000 | ||||||||||
Purchase and additions of assets | ||||||||||||
New mortgage loans and mortgage loans bought | 4,106,000 | |||||||||||
Purchase from affiliate | 2,823,000 | |||||||||||
Purchase from third party | 600,000 | |||||||||||
Sales, pay downs and reduction of assets | ||||||||||||
Collections of principal and sales of investment in real estate loans | -2,838,000 | |||||||||||
Sale of assets to third parties | -992,000 | |||||||||||
Temporary change in estimated fair value based on future cash flows | 11,000 | |||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | 7,063,000 | ||||||||||
Investment in equity method investee | ||||||||||||
Balance on January 1, 2014 | $ | -- | ||||||||||
Investment in equity method investee | 6,932,000 | |||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | 6,932,000 | ||||||||||
Investment in equity method investee – held for sale | ||||||||||||
Balance on January 1, 2014 | $ | 4,515,000 | ||||||||||
Sale of investment in equity method investee held for sale | -4,515,000 | |||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | -- |
Segment_Information
Segment Information | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Segment Reporting [Abstract] | ||||||
Segment Information | NOTE K — SEGMENT INFORMATION | |||||
Company management reviews financial and operating performance in the following two separate operating segments: (1) investment in real estate loans and (2) investments in real property. Selling, general and administrative expenses, primarily consisting of compensation of employees, seminar expense, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities. | ||||||
The following are certain financial data for the Company’s operating segments for the periods: | ||||||
For three months | ||||||
March 31, | ||||||
2015 | 2014 | |||||
Revenues | ||||||
Investment in real estate loans | $ | 133,000 | $ | 81,000 | ||
Rental revenue | 183,000 | 174,000 | ||||
Total revenues | 316,000 | 255,000 | ||||
Operating expenses | ||||||
Investment in real estate loans | $ | 69,000 | $ | 69,000 | ||
Investment in real property | 78,000 | 79,000 | ||||
Corporate activities | 939,000 | 616,000 | ||||
Total expenses | $ | 1,086,000 | $ | 764,000 | ||
March 31, 2015 | 31-Dec-14 | |||||
Total Assets | ||||||
Investment in real estate loans | $ | 3,104,000 | $ | 7,069,000 | ||
Investment in real property | 11,068,000 | 11,084,000 | ||||
Corporate assets | 5,763,000 | 2,643,000 | ||||
Total assets | $ | 19,935,000 | $ | 20,796,000 |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | NOTE L — RECENT ACCOUNTING PRONOUNCEMENTS |
No new accounting pronouncements have been defined that would materially impact our financial statements. |
Legal_Matters_Involving_The_Ma
Legal Matters Involving The Manager | 3 Months Ended |
Mar. 31, 2015 | |
Legal Matters Involving Manager | |
Legal Matters Involving The Manager | NOTE M — LEGAL MATTERS INVOLVING THE MANAGER |
The United States Securities and Exchange Commission (the “Commission”), conducted an investigation of certain matters related to us, our manager, Vestin Capital, VRM II, and Fund III. We fully cooperated during the course of the investigation. On September 27, 2006, the investigation was resolved through the entry of an Administrative Order by the Commission (the “Order”). Our manager, Vestin Mortgage and its Chief Executive Officer, Michael Shustek, as well as Vestin Capital (collectively, the “Respondents”), consented to the entry of the Order without admitting or denying the findings therein. | |
In the Order, the Commission found that the Respondents violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 through the use of certain slide presentations in connection with the sale of units in Fund III and in our predecessor, Vestin Fund II, LLC. The Respondents consented to the entry of a cease and desist order, the payment by Mr. Shustek of a fine of $100,000 and Mr. Shustek’s suspension from association with any broker or dealer for a period of six months, which expired in March 2007. In addition, the Respondents agreed to implement certain undertakings with respect to future sales of securities. We are not a party to the Order. | |
Other than the matters described in Note N – Legal Matters Involving The Company below, our manager believes that it is not a party to any pending legal or arbitration proceedings that would have a material adverse effect on our manager’s financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on the manager’s net income in any particular period. |
Legal_Matters_Involving_The_Co
Legal Matters Involving The Company | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure Text Block Supplement [Abstract] | |
Legal Matters Involving The Company | NOTE N — LEGAL MATTERS INVOLVING THE COMPANY |
On February 7, 2012, we, VRM II and Fund III entered into a Deed in Lieu Agreement with a borrower in lieu of the foreclosure of our subordinated secured loan which had matured on December 31, 2011, with a principal balance, net of allowance for loan loss, of approximately $9.9 million, of which our portion was approximately $0.1 million. Pursuant to the Deed in Lieu Agreement, our subsidiary 1701 Commerce, LLC (“1701 Commerce”) received a deed to the secured property operated as the Sheraton Hotel and Spa Fort Worth, Texas (the “Hotel”). On March 26, 2012, 1701 Commerce filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Texas, Ft. Worth Division, to seek relief from a pending foreclosure of the Hotel by the senior mortgage lien holder and to preserve and protect 1701 Commerce’s equity and the interests of other Hotel creditors. Due to the uncertainty and disputes involving the Hotel, we recorded this investment as Other Real Estate Owned on our balance sheet until August 23, 2012. The Hotel was sold on July 17, 2013 for the sum of $49,300,000. The net proceeds of the sale and the cash on hand as of the date of the sale were used to pay all 1701 Commerce creditors 100% of their claim plus interest, with the balance distributed to us and our two partners, VRM II and Fund III. On February 4, 2015, the court entered its final decree closing the case. | |
We hold an interest of approximately 8%, VRM II holds an interest of approximately 90% and Fund III holds an interest of approximately 2% in 1701 Commerce. | |
In addition to the matters described above, we are involved in a number of other legal proceedings concerning matters arising in the ordinary course of our business activities. We believe we have meritorious defenses to each of these actions and intend to defend them vigorously. Other than the matters described above, we believe that we are not a party to any pending legal or arbitration proceedings that would have a material adverse effect on our financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on our operations in any particular period. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE O — SUBSEQUENT EVENTS |
The following subsequent events have been evaluated through the date of this filing with the SEC. |
Summary_Of_Significant_Account1
Summary Of Significant Accounting Policies (Policies) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
Basis of Presentation | Basis of Presentation | ||
The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included. The information included in this Form 10-Q should be read in conjunction with information included in the 2014 annual report filed on Form 10-K. | |||
Management Estimates | Management Estimates | ||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Impairment of Long Lived Assets | Impairment of Long Lived Assets | ||
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income. | |||
Derivative Instruments | Derivative Instruments | ||
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. | |||
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. | |||
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. | |||
Investments in Real Estate and Fixed Assets | Investments in Real Estate and Fixed Assets | ||
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). | |||
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. | |||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||
Cash and cash equivalents include interest-bearing and non-interest-bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less. | |||
Revenue Recognition | Revenue Recognition | ||
Interest is recognized as revenue on performing loans when earned according to the terms of the loans, using the effective interest method. We do not accrue interest income on loans once they are determined to be non-performing. A loan is non-performing when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due. Cash receipts will be allocated to interest income, except when such payments are specifically designated by the terms of the loan as principal reduction. Interest is fully allowed for on impaired loans and is recognized on a cash basis method. | |||
All leases are accounted for as non-cancelable operating leases. We recognize rental revenue on a straight-line basis over the term of the lease. Rental income related to the leases is recognized on an accrual basis in accordance with the terms of the leases. Advanced receipts of rental income are deferred and classified as liabilities until earned. | |||
Reclassifications | Reclassifications | ||
Certain amounts in the 2014 consolidated financial statements regarding investment in equity method investee have been reclassified to conform to the March 31, 2015 presentation. Additionally, commencing April 1, 2014, our investment in VREO XXV, LLC is considered held for use. | |||
Investments in Real Estate Loans | Investments in Real Estate Loans | ||
We may, from time to time, acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party. | |||
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated when new appraisals are received or when management’s assessment of the value has changed, to reflect subsequent changes in value estimates. Original appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower. | |||
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral. | |||
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (“TDR”) as defined by Accounting Standards Codification (“ASC”) 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected. | |||
Allowance for Loan Losses | Allowance for Loan Losses | ||
We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Our manager’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are added back to the allowance and included as income. | |||
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. We and our manager generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry we perform will not reveal all material facts pertaining to a borrower and the security. | |||
Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that have and may continue to cause significant changes in our estimated allowance include, but are not limited to: | |||
· | 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. | ||
Discontinued Operations | Discontinued Operations | ||
We have reclassified for all periods presented in the accompanying consolidated statements of operations, the amounts related to discontinued operations and real estate held for sale, in accordance with the applicable accounting criteria. In addition, the assets and liabilities related to the discontinued operations are reported separately in the accompanying consolidated balance sheets as real estate held for sale, assets held for sale, and liabilities related to assets held for sale. | |||
Real Estate Owned Held for Sale | Real Estate Owned Held for Sale | ||
Real estate held for sale (“REO”) includes real estate acquired through foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property's estimated fair value, less estimated costs to sell, with fair value based on appraisals and knowledge of local market conditions. While pursuing foreclosure actions, we seek to identify potential purchasers of such property. We seek to sell properties acquired through foreclosure as quickly as circumstances permit, taking into account current economic conditions. The carrying values of REO are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers. | |||
Management classifies REO when the following criteria are met: | |||
· | 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. | ||
Classification of Operating Results from Real Estate Held for Sale | Classification of Operating Results from Real Estate Held for Sale | ||
Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to REO are separately identified in the accompanying consolidated statements of operations. | |||
Secured Borrowings | Secured Borrowings | ||
Secured borrowings provide an additional source of capital for our lending activity. Secured borrowings allow us to increase the diversification of our loan portfolio and to invest in loans that we might not otherwise invest in. We do not receive any fees for entering into secured borrowing arrangements; however, we may receive revenue for any differential of the interest spread, if applicable. Loans in which unaffiliated investors have participated through inter-creditor agreements (“Inter-creditor Agreements”) are accounted for as secured borrowings. | |||
The Inter-creditor Agreements provide us additional funding sources for real estate loans whereby an unaffiliated investor (the “Investor”) may participate on a non-pari-passu basis in certain real estate loans with us and/or VRM II (collectively, the “Lead Lenders”). In the event of borrower non-performance, the Inter-creditor Agreements generally provide that the Lead Lenders must repay the Investor’s loan amount either by (i) continuing to remit to the Investor the interest due on the participated loan amount; (ii) substituting an alternative loan acceptable to the Investor; or (iii) repurchasing the participation from the Investor for the outstanding balance plus accrued interest. | |||
Additionally, an Investor may participate in certain loans with the Lead Lenders through Participation Agreements. In the event of borrower non-performance, the Participation Agreement may allow the Investor to be repaid up to the amount of the Investor’s investment prior to the Lead Lender being repaid. Real estate loan financing under the Participation Agreements are also accounted for as a secured borrowing. We do not receive any revenues for entering into secured borrowing arrangements. | |||
Investment in Marketable Securities and Investment in Marketable Securities - Related Party | Investment in Marketable Securities and Investment in Marketable Securities – Related Party | ||
Investment in marketable securities and investment in marketable securities– related party consists of stock in VRM II and MVP REIT. The securities are stated at fair value as determined by the closing market price as of March 31, 2015 and December 31, 2014. All securities are classified as available-for-sale. | |||
We are required to evaluate our available-for-sale investment for other-than-temporary impairment charges. We will determine when an investment is considered impaired (i.e., decline in fair value below its amortized cost), and evaluate whether the impairment is other-than-temporary (i.e., investment value will not be recovered over its remaining life). If the impairment is considered other-than-temporary, we will recognize an impairment loss equal to the difference between the investment’s basis and its fair value. | |||
According to the SEC Staff Accounting Bulletin, Topic 5: Miscellaneous Accounting, M - Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities, there are numerous factors to be considered in such an evaluation and their relative significance will vary from case to case. The following are a few examples of the factors that, individually or in combination, indicate that a decline is other than temporary and that a write-down of the carrying value is required: | |||
· | The length of the time and the extent to which the market value has been less than cost; | ||
· | The financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; or | ||
· | The intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. | ||
Basic and Diluted Earnings Per Common Share | Basic and Diluted Earnings Per Common Share | ||
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. We had no outstanding common share equivalents during the periods ended March 31, 2015 and December 31, 2014. | |||
Common Stock Dividends | Common Stock Dividends | ||
During June 2008, our Board of Directors decided to suspend the payment of dividends. Our Board of Directors will closely monitor our operating results in order to determine when dividends should be reinstated; however, we do not expect our Board or Directors to reinstate dividends in the foreseeable future. | |||
Treasury Stock | Treasury Stock | ||
On February 21, 2008, our Board of Directors authorized the repurchase of up to $5 million worth of our common stock. Depending upon market conditions, shares may be repurchased from time to time at prevailing market prices through open market or privately negotiated transactions. We are not obligated to purchase any shares. Subject to applicable securities laws, including SEC Rule 10b-18, repurchases may be made at such times and in such amounts, as our management deems appropriate. The repurchases will be funded from our available cash. Under the Maryland General Corporation Law, shares of its own stock acquired by a corporation constitute authorized but unissued shares. | |||
Segments | Segments | ||
We are currently authorized to operate two reportable segments, investments in real estate loans and investments in real property. As of March 31, 2015, the Company operates both segments. | |||
Our objective is to invest approximately 97% of our assets in real estate loans and real estate investments, while maintaining approximately 3% as a working capital cash reserve. | |||
Advertising Costs | Advertising Costs | ||
Advertising costs incurred in the normal course of operations are expensed as incurred. The Company had no advertising expense for the three months ended March 31, 2015. | |||
Principles of Consolidation | Principles of Consolidation | ||
Our consolidated financial statements include the accounts of VRM I and VREO XXV, LLC, in which we have a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. | |||
Business Combinations | Business Combinations | ||
In December 2007, the Financial Accounting Standards Board (FASB) revised the authoritative guidance for business combinations, establishing principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired (including goodwill), the liabilities assumed, and any noncontrolling interest in the acquiree. Subsequently, on April 1, 2009, the FASB amended and clarified certain aspects of its authoritative guidance on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. We apply the FASB authoritative guidance to all business combinations for which the acquisition date is on or after January 1, 2009, and to certain future income tax effects related to our prior business combinations, should they arise. | |||
Non-controlling Interests | Non-controlling Interests | ||
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. | |||
Income Taxes | Income Taxes | ||
The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | |||
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes. | |||
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Investments_In_Real_Estate_Loa1
Investments In Real Estate Loans (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||||||||
Real Estate [Abstract] | ||||||||||||||||||||||||
Investments in Real Estate Loans | Loan Type | Number of Loans | Balance * | Weighted Average Interest Rate | Portfolio Percentage | Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses | 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 | 3 | $ | 2,937,000 | 7.38% | 94.74% | 49.41% | Commercial | 5 | $ | 5,043,000 | 7.60% | 71.40% | 51.35% | |||||||||||
Construction | 1 | 163,000 | 8.00% | 5.26% | 0.29% | Land | 1 | 2,020,000 | 9.00% | 28.60% | 67.63% | |||||||||||||
Total | 4 | $ | 3,100,000 | 7.41% | 100.00% | 47.09% | Total | 6 | $ | 7,063,000 | 8.00% | 100.00% | 56.00% | |||||||||||
Schedule Of Priority Of Real Estate Loans | Number of Loans | 31-Mar-15 | Portfolio | Number of Loans | December 31, 2014 Balance * | Portfolio | ||||||||||||||||||
Loan Type | Balance * | Percentage | Percentage | |||||||||||||||||||||
First deeds of trust | 4 | $ | 3,100,000 | 100.00% | 6 | $ | 7,063,000 | 100.00% | ||||||||||||||||
Second deeds of trust | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
Total | 4 | $ | 3,100,000 | 100.00% | 6 | $ | 7,063,000 | 100.00% | ||||||||||||||||
Investments Classified by Contractual Maturity Date | Non-performing | $ | -- | |||||||||||||||||||||
January 2015 – March 2015 | -- | |||||||||||||||||||||||
April 2015 – June 2015 | 2,937,000 | |||||||||||||||||||||||
Thereafter | 163,000 | |||||||||||||||||||||||
Total | $ | 3,100,000 | ||||||||||||||||||||||
Schedule of Real Estate Loans By Geographic Location | March 31, 2015 Balance * | Portfolio Percentage | December 31, 2014 Balance * | Portfolio Percentage | ||||||||||||||||||||
California | $ | -- | -- | $ | 2,020,000 | 28.60% | ||||||||||||||||||
Nevada | 3,100,000 | 100% | 5,043,000 | 71.40% | ||||||||||||||||||||
Total | $ | 3,100,000 | 100.00% | $ | 7,063,000 | 100.00% | ||||||||||||||||||
Reconciliation Of Portfolio To Balance Sheet | 31-Mar-15 | 31-Dec-14 | ||||||||||||||||||||||
Balance per loan portfolio | $ | 3,100,000 | $ | 7,063,000 | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||
Allowance for loan losses | -- | - | ||||||||||||||||||||||
Balance per consolidated balance sheets | $ | 3,100,000 | $ | 7,063,000 |
Notes_Payable_Tables
Notes Payable (Tables) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Payables and Accruals [Abstract] | |||
Future Principal Payments On The Notes Payable | 2015 | $ | 36,000 |
2016 | 50,000 | ||
2017 | 53,000 | ||
2018 | 56,000 | ||
2019 | 2,036,000 | ||
Thereafter | -- | ||
Total | $ | 2,231,000 |
Fair_Value_Tables
Fair Value (Tables) | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||||||||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | ||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | Fair Value Measurements at Reporting Date Using | 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 | Carrying Value on Balance Sheet at 03/31/15 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at 12/31/14 | Carrying Value on Balance Sheet at 12/31/14 | |||||||||||||||||
at 03/31/15 | ||||||||||||||||||||||||||
Assets | Assets | |||||||||||||||||||||||||
Investment in equity method investee held for sale | $ | -- | $ | -- | $ | 6,946,000 | $ | 6,946,000 | $ | 6,946,000 | Investment in equity method investee – held for sale | $ | -- | $ | -- | $ | 6,932,000 | $ | 6,932,000 | $ | 6,932,000 | |||||
Investment in marketable securities - related party | $ | 1,059,000 | $ | -- | $ | -- | $ | 1,059,000 | $ | 1,059,000 | Investment in marketable securities - related party | $ | 1,126,000 | $ | -- | $ | -- | $ | 1,126,000 | $ | 1,126,000 | |||||
Investment in real estate loans | $ | -- | $ | -- | $ | 3,099,000 | $ | 3,099,000 | $ | 3,100,000 | Investment in real estate loans | $ | -- | $ | -- | $ | 7,063,000 | $ | 7,063,000 | $ | 7,063,000 | |||||
Investment in real estate loans [Member] | ||||||||||||||||||||||||||
Fair Value, Changes in Assets and Liabilities on Recurring Basis, Unobservable Input Reconciliation | Investment in real estate loans | Investment in real estate loans | ||||||||||||||||||||||||
Balance on January 1, 2014 | $ | 3,353,000 | Balance on January 1, 2015 | $ | 7,063,000 | |||||||||||||||||||||
Purchase and additions of assets | Purchase and additions of assets | |||||||||||||||||||||||||
New mortgage loans and mortgage loans bought | 4,106,000 | New mortgage loans and mortgage loans bought | 1,263,000 | |||||||||||||||||||||||
Purchase from affiliate | 2,823,000 | Sales, pay downs and reduction of assets | ||||||||||||||||||||||||
Purchase from third party | 600,000 | Collections of principal and sales of investment in real estate loans | -4,593,000 | |||||||||||||||||||||||
Sales, pay downs and reduction of assets | Sale of assets to affiliate and third parties | -633,000 | ||||||||||||||||||||||||
Collections of principal and sales of investment in real estate loans | -2,838,000 | Temporary change in estimated fair value based on future cash flows | -1,000 | |||||||||||||||||||||||
Sale of assets to third parties | -992,000 | |||||||||||||||||||||||||
Temporary change in estimated fair value based on future cash flows | 11,000 | Balance on March 31, 2015, net of temporary valuation adjustment | $ | 3,099,000 | ||||||||||||||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | 7,063,000 | ||||||||||||||||||||||||
Investment in equity method investee [Member] | ||||||||||||||||||||||||||
Fair Value, Changes in Assets and Liabilities on Recurring Basis, Unobservable Input Reconciliation | Investment in equity method investee | |||||||||||||||||||||||||
Balance on January 1, 2014 | $ | -- | ||||||||||||||||||||||||
Investment in equity method investee | 6,932,000 | |||||||||||||||||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | 6,932,000 | ||||||||||||||||||||||||
Investment in equity method investee held for sale [Member] | ||||||||||||||||||||||||||
Fair Value, Changes in Assets and Liabilities on Recurring Basis, Unobservable Input Reconciliation | Investment in equity method investee – held for sale | Investment in equity method investee – held for sale | ||||||||||||||||||||||||
Balance on January 1, 2014 | $ | 4,515,000 | Balance on January 1, 2015 | $ | 6,932,000 | |||||||||||||||||||||
Sale of investment in equity method investee held for sale | -4,515,000 | Distributions from investment in equity method investee held for sale | -82,000 | |||||||||||||||||||||||
Income from investment in equity method investee held for sale | 96,000 | |||||||||||||||||||||||||
Balance on December 31, 2014, net of temporary valuation adjustment | $ | -- | ||||||||||||||||||||||||
Balance on March 31, 2015, net of temporary valuation adjustment | $ | 6,946,000 |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Segment Reporting [Abstract] | ||||||
Schedule Of Investment In Real Estate Loans And Investments In Real Property | For three months | |||||
March 31, | ||||||
2015 | 2014 | |||||
Revenues | ||||||
Investment in real estate loans | $ | 133,000 | $ | 81,000 | ||
Rental revenue | 183,000 | 174,000 | ||||
Total revenues | 316,000 | 255,000 | ||||
Operating expenses | ||||||
Investment in real estate loans | $ | 69,000 | $ | 69,000 | ||
Investment in real property | 78,000 | 79,000 | ||||
Corporate activities | 939,000 | 616,000 | ||||
Total expenses | $ | 1,086,000 | $ | 764,000 | ||
March 31, 2015 | 31-Dec-14 | |||||
Total Assets | ||||||
Investment in real estate loans | $ | 3,104,000 | $ | 7,069,000 | ||
Investment in real property | 11,068,000 | 11,084,000 | ||||
Corporate assets | 5,763,000 | 2,643,000 | ||||
Total assets | $ | 19,935,000 | $ | 20,796,000 |
Investments_In_Real_Estate_Loa2
Investments In Real Estate Loans (Detail) - Investments in Real Estate Loans (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Loans | 4 | 6 |
Balance | $3,100,000 | $7,063,000 |
Weighted Average Interest Rate | 7.41% | 8.00% |
Portfolio Percentage | 100.00% | 100.00% |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 47.09% | 56.00% |
Commercial Loans [Member] | ||
Number of Loans | 3 | 5 |
Balance | 2,937,000 | 5,043,000 |
Weighted Average Interest Rate | 7.38% | 7.60% |
Portfolio Percentage | 94.74% | 71.40% |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 49.41% | 51.35% |
Construction Loans [Member] | ||
Number of Loans | 1 | |
Balance | 163,000 | |
Weighted Average Interest Rate | 8.00% | |
Portfolio Percentage | 5.26% | |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 0.29% | |
Land Loan [Member] | ||
Number of Loans | 1 | |
Balance | $2,020,000 | |
Weighted Average Interest Rate | 9.00% | |
Portfolio Percentage | 28.60% | |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 67.63% |
Investments_In_Real_Estate_Loa3
Investments In Real Estate Loans (Detail) - Schedule Of Priority Of Real Estate Loans (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Loans | 4 | 6 |
Balance | $3,100,000 | $7,063,000 |
Portfolio Percentage | 100.00% | 100.00% |
First Deeds Of Trust [Member] | ||
Number of Loans | 4 | 6 |
Balance | 3,100,000 | 7,063,000 |
Portfolio Percentage | 100.00% | 100.00% |
Second Deeds Of Trust [Member] | ||
Number of Loans | 0 | 0 |
Balance | ||
Portfolio Percentage | 100.00% |
Investments_In_Real_Estate_Loa4
Investments In Real Estate Loans (Detail) - Contractual Maturities of Investments in Real Estate Loans (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Balance | $3,100,000 | $7,063,000 |
Non-performing [Member] | ||
Balance | ||
January 2015 - March 2015 [Member] | ||
Balance | ||
April 2015 - June 2015 [Member] | ||
Balance | 2,937,000 | |
Thereafter [Member] | ||
Balance | 163,000 | |
Total [Member] | ||
Balance | $3,100,000 |
Investments_In_Real_Estate_Loa5
Investments In Real Estate Loans (Detail) - Geoographic Location of Investments in Real Estate Loans (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Balance | $3,100,000 | $7,063,000 |
Portfolio Percentage | 100.00% | 100.00% |
California [Member] | ||
Balance | 2,020,000 | |
Portfolio Percentage | 28.60% | |
Nevada [Member] | ||
Balance | $3,100,000 | $5,043,000 |
Portfolio Percentage | 100.00% | 71.40% |
Investments_In_Real_Estate_Loa6
Investments In Real Estate Loans (Detail) - Reconciliation of Balance of Portfolio to Balance Sheet Amounts (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Investments In Real Estate Loans Detail - Reconciliation Of Balance Of Portfolio To Balance Sheet Amounts | ||
Balance per loan portfolio | $3,100,000 | $7,063,000 |
Allowance for loan losses | 0 | 0 |
Balance per consolidated balance sheets | $3,100,000 | $7,063,000 |
Notes_Payable_Detail_Future_Pr
Notes Payable (Detail) - Future Principal Payments On The Notes Payable (USD $) | Mar. 31, 2015 |
2015 [Member] | |
Principal Payments | $65,000 |
2016 [Member] | |
Principal Payments | 50,000 |
2017 [Member] | |
Principal Payments | 53,000 |
2018 [Member] | |
Principal Payments | 56,000 |
2019 [Member] | |
Principal Payments | 2,036,000 |
Thereafter [Member] | |
Principal Payments | |
Total [Member] | |
Principal Payments | $2,260,000 |
Fair_Value_Detail_Valuation_Of
Fair Value (Detail) - Valuation Of Our Financial Assets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Investment in equity method investee held for sale | $6,946,000 | $6,932,000 |
Investment in marketable securities - related party | 1,059,000 | 1,126,000 |
Investment in real estate loans | 3,099,000 | 7,063,000 |
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Investment in equity method investee held for sale | ||
Investment in marketable securities - related party | 1,059,000 | 1,126,000 |
Investment in real estate loans | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Investment in equity method investee held for sale | ||
Investment in marketable securities - related party | ||
Investment in real estate loans | ||
Fair Value, Inputs, Level 3 [Member] | ||
Investment in equity method investee held for sale | 6,946,000 | 6,932,000 |
Investment in marketable securities - related party | ||
Investment in real estate loans | $3,099,000 | $7,063,000 |
Fair_Value_Detail_Changes_in_o
Fair Value (Detail) - Changes in our Financial Assets and Liabilities (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair Value, Changes in Assets and Liabilities on Recurring Basis, Unobservable Input Reconciliation | ||||
Balance, Beginning | $7,063,000 | |||
Sales, pay downs and reduction of assets | ||||
Balance, End, 2015/2014, net of temporary valuation adjustment | 3,100,000 | |||
Investment in equity method investee | 6,946,000 | 6,932,000 | ||
Sale Of Investment In Equity Method Investee Held For Sale | 5,000 | |||
Income from investment in equity method investee held for sale | -96,000 | -43,000 | ||
Investment in real estate loans [Member] | ||||
Fair Value, Changes in Assets and Liabilities on Recurring Basis, Unobservable Input Reconciliation | ||||
Balance, Beginning | 7,063,000 | 3,353,000 | 3,353,000 | |
Purchase and additions of assets | ||||
New mortgage loans and mortgage loans bought | 1,263,000 | 4,106,000 | ||
Purchase from affiliate | 2,823,000 | |||
Purchase from third party | 600,000 | |||
Sales, pay downs and reduction of assets | ||||
Collections of principal and sales of investment in real estate loans | -4,593,000 | -2,838,000 | ||
Sale of assets to affiliate and third parties / Sale of assets to third parties | -633,000 | -992,000 | ||
Temporary change in estimated fair value based on future cash flows | -1,000 | 11,000 | ||
Balance, End, 2015/2014, net of temporary valuation adjustment | 3,099,000 | 7,063,000 | ||
Investment in Equity Method Investee - Held For Sale [Member] | ||||
Sales, pay downs and reduction of assets | ||||
Balance On January 1, 2014/2015 | 4,515,000 | 4,515,000 | ||
Sale Of Investment In Equity Method Investee Held For Sale | -4,515,000 | |||
Distributions from investment in equity method investee held for sale | -82,000 | |||
Income from investment in equity method investee held for sale | 96,000 | |||
Balance On March 31, 2015 and December 31, 2014, Net Of Temporary Valuation Adjustment | 6,946,000 | |||
Investment In Equity Method Investee [Member] | ||||
Sales, pay downs and reduction of assets | ||||
Balance On January 1, 2014/2015 | ||||
Investment in equity method investee | 6,932,000 | |||
Balance On March 31, 2015 and December 31, 2014, Net Of Temporary Valuation Adjustment | $6,932,000 |
Segment_Information_Detail_Fin
Segment Information (Detail) - Financial Data For The Company's Operating Segments (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Revenues | $316,000 | $255,000 | |
Total Assets | 19,935,000 | 20,796,000 | |
Investment in real estate loans [Member] | |||
Revenues | 133,000 | 81,000 | |
Operating expenses | 69,000 | 69,000 | |
Total Assets | 3,104,000 | 7,069,000 | |
Rental Revenue [Member] | |||
Revenues | 183,000 | 174,000 | |
Investment In Real Property [Member] | |||
Operating expenses | 78,000 | 79,000 | |
Total Assets | 11,068,000 | 11,084,000 | |
Corporate Activities [Member] | |||
Operating expenses | 939,000 | 616,000 | |
Total Assets | 5,763,000 | 2,643,000 | |
Total [Member] | |||
Revenues | 316,000 | 255,000 | |
Operating expenses | 1,086,000 | 764,000 | |
Total Assets | $19,935,000 | $20,796,000 |
Organization_Details_Narrative
Organization (Details Narrative) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Commenced Operations | 1-Dec-99 |
Year End | As a REIT, we were required to have a December 31 fiscal year end. |
Summary_Of_Significant_Account2
Summary Of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Treasury Stock Repurchase Program Amount | 5,000,000 |
Real Estate Loans And Real Estate Investments [Member] | |
Concentration Risk Percentage | 97.00% |
Working Capital Cash Reserve [Member] | |
Concentration Risk Percentage | 3.00% |
Financial_Instruments_And_Conc1
Financial Instruments And Concentrations Of Credit Risk (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Cash In Excess Of The Federally Insured Limits | 3,900,000 | $7,800,000 | |
Geographic Concentration Risk [Member] | Nevada [Member] | |||
Concentration of Risk, Loans | 100.00% | 71.00% | |
Geographic Concentration Risk [Member] | California [Member] | |||
Concentration of Risk, Loans | 29.00% | ||
Aggregate Amount of Loans [Member] | |||
Concentration of Risk, Loans | 96.00% | ||
Common Guarantor [Member] | Two Loan [Member] | |||
Concentration of Risk, Loans | 35.70% | 15.70% | |
Loans, Value | 1,100,000 | 1,100,000 |
Investments_In_Real_Estate_Loa7
Investments In Real Estate Loans (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Loan Extensions | 1,900,000 | 3,500,000 |
Minimum [Member] | ||
Real Estate Loans Interest | 7.00% | |
Maximum [Member] | ||
Real Estate Loans Interest | 8.00% | |
Weighted Average [Member] | ||
Real Estate Loans Interest | 7.41% | 8.00% |
Investment_In_Equity_Method_In1
Investment In Equity Method Investee And Note Receivable From MVP Realty Advisors (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Investment in equity method investee | $6,946,000 | $6,932,000 | |
Loans Impaired | 700,000 | 411,000 | |
MVP Advisor [Member] | |||
Investment in equity method investee | 2,125,000 | ||
Loans Impaired | $700,000 | $411,000 |
Investment_In_Marketable_Secur1
Investment In Marketable Securities - Related Party (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Investment Loss | $1,000 | |||
Investment Impairment | 700,000 | 411,000 | ||
Investment in Affiliate | ||||
VRM II [Member] | ||||
Investments in and Advances to Affiliates, Balance, Shares (in Shares) | 134,270 | 134,270 | ||
Percent of Shares Outstanding Owned | 5.20% | 5.20% | ||
Share Price | $3.47 | |||
Investment Loss, per share | $4.04 | |||
Investment Loss | 500,000 | |||
Investment Impairment | 100,000 | |||
MVP REIT [Member] | ||||
Investments in and Advances to Affiliates, Balance, Shares (in Shares) | 67,532 | 66,379 | ||
Investment in Affiliate | $594,000 | $584,000 | ||
Share Distribution Reinvestment Program, Shares Gained | 1,153 | |||
Minimum [Member] | VRM II [Member] | ||||
Share Price | $2.76 | |||
Maximum [Member] | VRM II [Member] | ||||
Share Price | $4.82 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Management fees - related party | $69,000 | $69,000 | |
Common Stock, Dividends, Per Share, Declared (in Dollars per share) | |||
Manager [Member] | |||
Management Fee Percentage of Sale of Membership Units | 0.25% | 0.25% | |
Management fees - related party | 69,000 | 69,000 | |
Common Stock Shares Owned By Manager (in Shares) | 25,000 | 25,000 | |
Percentage of Common Stock Shares Owned By Manager | 1.80% | 1.80% | |
Common Stock, Dividends, Per Share, Declared (in Dollars per share) | |||
Accounting Solutions [Member] | |||
Accounting Services Expense | 15,000 | 10,000 | |
Strategix Solutions [Member] | |||
Accounting Services Expense | 27,000 | 19,500 | |
VRM II [Member] | |||
Common Stock, Dividends, Per Share, Declared (in Dollars per share) | |||
Shares Owned in Related Party | 134,270 | 134,270 | |
Shares Owned in Related Party, Percentage | 0.052 | 0.052 | |
Common Stock Shares Owned By VRM II (in Shares) | 134,545 | 134,545 | |
Percentage of Common Stock Shares Owned By VRM II | 9.74% | 9.74% | |
Accounts Payable, Related Parties | 26,000 | 30,000 | |
Real Estate Loans Sold | 200,000 | ||
MVP REIT [Member] | |||
Dividend Income | 10,000 | 9,000 | |
Shares Owned in Related Party | 67,532 | 66,379 | |
Share Distribution Reinvestment Program, Shares Gained | 1,153 | ||
MVP Advisor [Member] | |||
Shares Owned in Related Party, Percentage | 0.4 | 0.4 | |
Loan to Related Party | 2,125,000 | ||
Loan to Related Party Impairment | $700,000 | $411,000 |
Legal_Matters_Involving_The_Ma1
Legal Matters Involving The Manager (Details Narrative) (USD $) | Sep. 27, 2006 |
Legal Matters Involving Manager | |
Fine | $100,000 |
Legal_Matters_Involving_The_Co1
Legal Matters Involving The Company (Details Narrative) (USD $) | 0 Months Ended |
Feb. 07, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | |
Net Of Allowance For Loan Loss | $9,900,000 |
Net Of Allowance For Loan Loss, Our Portion | $100,000 |