Mail Stop 4561
June 20,
2005
Michael V. Shustek
President and Chief Executive Officer
Vestin Realty Trust II, Inc.
8379 West Sunset Road
Las Vegas, NV 89113
Re: Vestin Realty Trust II, Inc.
Registration Statement on Form S-4
Filed May 20, 2005
File No. 333-125121
Dear Mr. Shustek:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note that Vestin Realty Trust I, Inc. has also filed a Form
S-4
with respect to its proposed conversion to a REIT. As indicated
in
our letter dated June 9, 2005, we will monitor that registration
statement for compliance, where applicable, with this comment
letter.
2. We note that Vestin Fund II terminated its offering in 2004.
Please tell us why you have not removed from registration by means
of
post-effective amendment any of the securities that were
registered
that remained unsold at the termination of the offering. Refer to
undertaking 4 of your registration statement 333-52484.
3. Please provide us with your analysis of the application of Rule
13e-3 to the proposed transactions. If you intend to rely on an
exemption from the rule, please tell us how you will satisfy the
conditions of the exemption.
4. It appears that the proposed transaction may constitute a roll-
up
transaction that would be subject to Subpart 900 of Regulation S-
K.
Please provide all the disclosure and other relevant information
required by Subpart 900 or provide us with an analysis as to why
you
do not believe that the proposed transaction constitutes a roll-up
transaction.
5. We disclosure on page 20 of the prospectus and a press article
dated March 28, 2005, which indicate that prior to filing the
registration statement you conducted meetings with your investors
to
test the waters for the proposed REIT conversion. Please provide
us
a detailed analysis of whether these discussions were offers of
your
securities and how these discussions were consistent with Section
5
of the Securities Act.
6. Throughout the prospectus you provide information on redemption
requests through 2016. It appears that the requests are spread
out
over so many years because of the 10% limit on aggregate
redemptions
and the $100,000 individual limit. Since this information is
provided to support your decision to provide immediate liquidity
to
these and other investors who would like to dispose of their
investment, please disclose the number of unit holders who have
requested redemption, the percentage of total unit holders that
this
represents, the total amount of requests outstanding and the
percentage of fund capital accounts that this represents. This
will
provide investors more insight into the desire of your unitholders
for liquidity. Also, please clarify the effect of the proposed
transactions on unitholders who have already requested redemption
7. Please advise us how the redemption program for Fund II is
consistent with the rules relating to issuer tender offers. Refer
to
Rule 13e-4 under the Exchange Act.
8. Please confirm that you will file with the Commission all
materials used to aid in the solicitation of proxies. Please
provide
us with copies of these materials and indicate the date they were
first used. Please provide us with forms of the proxy cards.
9. Please provide us with any pictures, graphics or artwork that
will
be used in the prospectus.
Prospectus Cover Page
10. Please revise the last bullet risk factor to state that the
amount received may also be less than the amount that would be
received in connection with a liquidation of the fund.
Questions and Answers About the REIT Conversion and Merger, page v
11. You currently repeat a significant amount of information in
both
your Q&A and summary. For purposes of eliminating redundancies
and
grouping like information together, please view your Q&A and
summary
as one section and revise accordingly.
12. Wherever you state that you "anticipate" that shares of the
REIT
will trade on NASDAQ, please revise to state that you have applied
for such a listing. In each instance, please disclose that
listing
is a condition to the consummation of the transaction.
13. Please include a Q&A or a section in the summary that
discloses
the benefits to the manager of this transaction. In particular,
please disclose that the proposed transaction is likely to result
in
greater fees for the manager than maintaining the status quo,
since
your portfolio will not continue to be reduced by redemptions, and
will certainly result in greater fees than if you decided to
provide
unitholders liquidity by liquidating the portfolio.
Q: Why are we proposing the REIT conversion?, page v
14. Please explain briefly here, and in detail in your MD&A, how
you
expect to materially increase the availability of assets for
investments through this conversion. Quantify your current
reserves
and disclose your plans for use of leverage. If this does not
amount
to a material portion of your assets, please reconsider this
disclosure.
Q: What happens in the REIT conversion?
Other Important Restructuring Transactions, page vi
15. Please disclose the value of the assets to be transferred to
your
TRSs, including the value as a percentage of the total fund.
Q: What is proposed?, page v
Q: Will our business operations change after the REIT conversion?,
page vi
16. We note your disclosure that you plan to operate your business
as
it is currently conducted. You terminated your offering in 2004.
Please disclose whether you intend to raise additional equity and,
if
so, the manner in which you intend to do so.
17. Please advise us how the REIT restrictions comport with your
statement that conversion to a REIT will require no change in your
investment policies, objectives or operations.
Q: What are the material terms of the management agreement with
Vestin Mortgage?, page vi
18. Please disclose any material differences between the new
management agreement and your existing operating agreement that
relate to the relationship between the company and the manager,
including changes in the fee structure. In addition, please
disclose
the most recent fees earned by Vestin Mortgage in connection with
Vestin Fund II, and indicate whether you expect fees to remain
relatively stable upon conversion. Also, please disclose any
termination penalties or payments.
Q: Will Vestin Realty Trust make distributions in the future?,
page
vii
19. Here and throughout the prospectus, please refrain from using
the
term "dividends" since the payment of dividends implies the
existence
of current and accumulated earnings and profits. Since the
company
has never operated as a REIT, there is no assurance it will have
current or accumulated earnings and profits, and the distributions
made to stockholders may constitute, in part, a return of capital.
Instead, please use the term "distributions."
20. Please revise to clarify that in order to maintain its status
as
a REIT, Vestin Realty Trust may be required to make distributions
in
excess of available cash. Disclose how you will fund such
distributions and disclose that such distributions would represent
a
return of capital to investors.
Q. Are there risks I should consider in deciding whether to vote
for
the merger proposal?, page viii
21. Please expand this section to summarize the most material
merger-
related risks. A cross-reference to your risk factors is not
sufficient. Please consider presenting in a bullet point format.
Among other things, you should discuss:
* the risk that an investor will receive less upon a sale of
Vestin
Realty Trust common stock that it would upon a redemption or
liquidation of its units;
* the market risk of shares of Vestin Realty Trust common stock
considering the potential liquidation of the company in 2020 and
your
growth strategy;
* the risks of failure to maintain qualification as a REIT;
* the increased cost of operating as a listed company; and
* the conflicts of interest of your manager.
Summary of the Proxy Statement/Prospectus, page 1
22. Please include an organizational chart depicting the
management
and interrelationship of all affiliated entities both before and
after the proposed merger, including any taxable REIT
subsidiaries.
The REIT Conversion, page 1
23. Please advise us whether there are state law limitations on
your
ability to defer the merger for an unlimited time, but still rely
on
your unitholders` approval.
Conflicts of Interest, page 3
24. Please include a brief discussion of each of the following, to
the extent applicable:
* that the management agreement was negotiated by related parties
and
may not reflect terms as advantageous as those subject to an arm`s
length agreement;
* that your manager has full discretion in determining whether to
sell a loan to you or to another fund or to a third party;
* that your manager has no obligation to provide you with any
particular opportunities or even a pro rata share of opportunities
afforded to other funds that it manages; and
* that your manager receives fees based on the size and number of
borrower transactions regardless of the performance of the assets
it
sells to you, which could reduce its incentive to perform due
diligence on these loans.
Also, please revise your risk factors section to provide a
discussion
of the risks associated with these additional conflicts of
interest.
Conditions to the Merger, page 4
25. Please indicate whether your manager has the power to waive
any
of these conditions, including the listing of the shares on
NASDAQ.
Risk Factors, page 7
26. Many of your risk headings fail to state the actual risk.
Please
revise accordingly.
Risks and Effects of the Merger and REIT conversion, page 7
27. Please include a risk factor relating to the potential
negative
impact on the share price of Vestin Realty Trust common stock in
light of the potential liquidation of the company in 2020 and your
growth strategy.
28. Please include a risk factor relating to the increased costs
of
operating as a listed company.
We cannot assure you that we will have access to funds to meet our
distribution and tax obligations, page 8
29. We note the disclosure stating that you could be required to
borrow funds to meet the REIT distribution requirements. Please
expand this risk factor or provide a separate risk factor to
address
the tax effect on investors resulting from distributions that
constitute a return of capital.
Risks Related to Our Business, page 8
30. We note your disclosure that you believe that the SEC`s
informal
inquiry into Vestin Group is negatively impacting your operations.
Please include a risk factor discussing the SEC`s action.
We will rely on our manager to manage..., page 8
31. Please disclose that your manager has no fiduciary obligations
to
your investors, is not required to devote its employees full time
to
your business interests and, if true, may in fact devote time to
business interests competitive to your own. Finally, please make
it
clear that your manager will be paid fees based on the amount of
assets under management regardless of performance.
We depend on key personnel, page 8
32. Please revise to identify key personnel other than Mr.
Shustek.
Also, please indicate whether any of these personnel are subject
to
employment, non-competition or confidentiality agreements or key-
man
insurance for your benefit.
Defaults on our mortgage loans will decrease our revenues and your
distributions, page 9
33. Please also disclose your non-performing assets as a
percentage
of your total portfolio. In addition, please disclose your
current
default rate (as opposed to merely the amount of non-performing
assets in your portfolio) and explain the financial impact of
defaults in more detail. Please indicate whether you believe
default
rates will accelerate in the current rising interest rate
environment. Finally, please disclose your actual weighted
average
LTV ratios and your historical delinquency rates.
Our underwriting standards..., page 9
34. Please disclose what kind of facts may be missed in your
accelerated due diligence process.
We typically make "balloon payment" loans..., page 10
35. Please disclose that all your current loans have balloon
payments.
A prolonged economic slowdown..., page 11
36. Please disclose the potential impact of increasing interest
rates
on the refinance market. In addition, please quantify the
percentage
of your loans in the last fiscal year that were originations and
the
percentage that were refinancings.
Our manager will face conflicts of interest arising from our fee
structure, page 12
37. Please revise the risk factor to clarify that your manager`s
due
diligence may be compromised by the management fee structure,
since
the manager will receive fees regardless of the performance of the
asset. Also, with respect to post-closing agreements that lead to
follow-on fees for your managers, please identify such agreements
with more specificity and make clear that this may encourage your
manager to take greater risks at your expense, such as refinancing
or
extending a loan that might more effectively be foreclosed. In
addition, please disclose the amounts and types of fees paid to
the
manager in the last fiscal year.
Risk of Ownership of Our Common Stock, page 15
Our charter documents and Maryland law..., page 15
38. In your discussion of your stockholder`s rights plan, please
revise the disclosure to identify the risks of the plan.
Voting and Proxies, page 18
39. Please include the disclosure required by Item 1 of Schedule
14A
and Rule 14a-5(e) relating to shareholder proposals.
Merger Proposal, page 20
Background of the REIT Conversion, page 20
40. Please significantly expand your disclosure relating to your
discussions with unitholders. In particular, please disclose the
number of meetings held with unitholders, the dates of such
meetings
and the number of unitholders and percentage of outstanding
represented at such meetings. Please disclose whether alternative
transactions were proposed in or considered at these meetings.
41. Please significantly expand your disclosure relating to your
consultations with broker-dealers and your financial advisors. In
particular, please disclose whether these parties provided advice
as
to the premium or discount to NAV at which the shares would trade
and
the ability of the market to support the share price in the face
of
anticipated sales by current unitholders. Please disclose whether
any financial advisors were engaged for the purpose of evaluating
the
proposed transaction. In addition, please provide us any reports
or
analyses provided to the board by these and other advisors.
42. Please disclose whether or not you conducted a liquidation
analysis and, if not, why not.
Our Reasons for the REIT Conversion, page 20
43. Please include more detailed disclosure on the negative
factors
considered by the board.
Terms of the Merger, page 22
44. Please revise the introductory language to eliminate the
statement that the summary is not complete. You must provide a
complete summary of the material terms of the merger. Please make
conforming changes to the introductory paragraph in other sections
of
the prospectus, as applicable.
45. Please revise your discussion of the interests of the
directors
and executive officers of your manager to specify the benefits to
such persons as a result of this transaction. In particular,
please
disclose that the transaction will preserve their ability to
generate
fees from the loan portfolio.
Accounting Treatment of the Merger, page 24
46. Please explain to us your basis in accounting for the merger
as a
purchase of Fund II by the registrant. It appears that the
accounting acquirer would be Vestin Fund II, LLC. Please
reference
all applicable accounting literature you utilized in determining
this
was the appropriate accounting treatment. See paragraph 17 of
SFAS
141.
Management Agreement, page 25
Compensation, page 28
47. With respect to each of the fees paid to the manager,
including
fees paid by borrowers on loans that were transferred to the fund,
please disclose the actual amounts paid in the last fiscal year.
48. The annual asset management fee has been based on aggregate
capital contributions. Assuming the conversion is consummated,
please disclose how the fee will be calculated going forward. In
addition, since there will no longer be redemptions and since it
is
not clear whether you will begin raising additional equity, please
include disclosure on whether the asset management fee may change
from year to year. In particular, please address whether the loss
of
principal from defaulting loans will decrease the asset management
fee.
49. We note your disclosure that no foreclosed properties will be
sold to the manager or its affiliates unless approved by a
majority
of your unaffiliated directors. Please disclose whether such
approvals have been granted in the past and, if so, whether or not
the manager received administrative fees in connection with these
foreclosures.
50. Please revise the description of the loan assumption and
reconveyance fee to disclose the average amount or percentage of
such
fees, based on local market conditions.
51. Please expand your description of fees paid by borrowers to
clarify how these fees differ from the fees paid by Fund II under
the
terms of the operating agreement.
Market Price Information and Dividend and Distribution Policy,
page
30
52. Please disclose the fund`s historical distributions per unit.
Business, page 31
53. Please revise this section to include additional detail
regarding
your current loan portfolio. In particular, please include
disclosure on delinquency rates, loan foreclosures and geographic
diversification.
54. Please disclose your business plan for the remainder of the
fiscal year. In particular, please disclose whether you intend to
grow your existing portfolio through equity offerings or leverage.
Refer to Item 101 of Regulation S-K.
55. We note that your target loan-to-value ratio is approximately
70%. Please disclose your current loan-to-value ratio.
56. In your discussion of the terms of your mortgage loans on page
33, please disclose the current average maturity of your
portfolio.
Types of Loans We Invest In, page 35
57. Please include an introductory table showing the percentage of
your portfolio represented by each type of loan.
Competition, page 38
58. Please expand your disclosure to address the current
competitive
conditions of your markets. We note relevant disclosure on page
61.
Employees, page 39
59. Please clarify in the disclosure whether you will have any
employees after the REIT conversion.
Matters Involving Our Company, page 40
60. Please describe the factual basis alleged to underlie Desert
Land`s complaint and the SEC inquiry. Also, please clarify the
relief sought by Desert Land. Refer to Item 103 of Regulation S-
K.
How We Protect Our Rights As A Lender, page 41
61. In certain instances, such as your discussion of environmental
risk and "acceleration on default" clauses, the disclosure is
presented on a forward-looking basis. Please expand the
disclosure
where appropriate to address your historical practices and current
portfolio.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
General, page 59
62. This section should present an analysis of the company`s
business
as seen through the eyes of management, including known trends,
demands and commitments that may impact future financial condition
or
operating performance. Please expand your introductory disclosure
to
provide an analysis of these issues and other items which
management
believes may have a material impact on your future financial
condition or operating performance. For example, please discuss
recent declines in your net income, increases in your non-
performing
assets, the anticipated impact of the current interest rate
environment, increasing competition, your proposed change to a
listed
REIT and any other material trends. For additional guidance,
refer
to Commission Release No. 33-8350 (Dec. 19, 2003).
Critical Accounting Policies, page 59
63. Your disclosure of critical accounting estimates lacks any
quantitative analysis to provide the reader with insight to the
sensitivity certain estimates may have to changes in assumptions
and
the related impact on your financial condition and results of
operations. For example, it appears that changes in assumptions
related to your allowance for loan losses could have a material
impact on the financial statements. Please revise your disclosure
accordingly and refer to SEC Release 33-8350.
Results of Operations, page 60
64. Please disclose your weighted average maturity for each period
presented.
Nine Months Ended March 31, 2005
Net Income, page 62
65. Please revise to expand your disclosure of the reasons why net
income has decreased from $25 million to $9 million during the
nine
months ended March 31, 2005. You have only discussed a portion of
the overall decrease. Please discuss your significant reduction
in
revenues for the period and fully explain this reduction and what
you
expect going forward and how you are planning to deal with your
reduced revenues. For reference see Item 303 of Regulation S-K.
Distributions to Members, page 62
66. Please explain to us why there was only $249,000 of
distributions
that represented a return of capital for income tax purposes when
distributions exceeded net income by over $6 million.
Liquidity and Capital Resources, page 66
67. Please expand this section to address liquidity and capital
resource issues assuming you consummate the proposed transaction.
In
particular, please address any plans to grow your portfolio and
your
plans to finance such growth. Please address the limitations
imposed
by the REIT distribution requirements on your ability to grow your
portfolio through internally generated cash.
68. Please advise us whether your ownership of the cemetery and
mortuary, including the operating businesses, is permitted under
the
REIT rules.
69. You indicate that at March 31, 2005 you had $10.1 million in
cash, $1 million in certificates of deposit and $24.7 million in
marketable securities, but on page F-13 you indicate that the
bonds
(referred to as marketable securities above) are non-performing,
that
you will explore initiating foreclosure proceedings on them, and
that
as of March 31, 2005 they are no longer treated as marketable
securities. In your next amendment, please reconcile this
difference, and revise your discussion of liquidity to address
your
working capital situation and to explain how you plan to meet
short
term liquidity needs. For example, address how you will repay
requests for redemption which for calendar year 2006 significantly
exceed your available cash and certificate of deposit balances at
March 31, 2005.
Related Party Transactions, page 68
70. Please expand the disclosure to provide information about each
transaction since the beginning of your last fiscal year. Also,
please name each related person with an interest in the
transaction,
indicate that person`s relationship to Vestin Realty Trust or Fund
II
and the nature of each person`s interest in the transaction. If
known, please separately disclose the amount of each person`s
interest in the transaction. Refer to Item 404 of Regulation S-K.
71. Please identify the law firm in which your secretary has an
equity interest.
Quantitative and Qualitative Disclosures About Market Risk, page
69
72. Please expand your disclosure to disclose quantitative
information about market risk in accordance with one of the
disclosure alternatives provided in Item 305(a) of Regulation S-K.
73. Please expand your disclosure related to the tax-free income
securities on page 70 to disclose their status as of March 31,
2005
as non-performing and to disclose your plans to initiate
foreclosure
proceedings.
Removal/ Withdrawal of Managers/ Directors, page 84
74. Please disclose that the shareholders of Vestin Realty Trust
would have the ability to terminate the management agreement.
Material United States Federal Income Tax Consequences, page 96
75. We note that, as a condition to the merger, you must receive
opinions regarding the tax treatment of the merger and your
ability
to qualify as a REIT. Please confirm that you will receive
opinions
regarding these tax matters prior to the effective date of the
registration statement, and that you will file the opinions as
exhibits to the registration statement. Revise the disclosure
here
and in the summary to reflect the fact that you have received the
opinions.
76. Please include disclosure relating to the impact of the
shareholder rights plan on your ability to qualify as a REIT.
77. Please include disclosure relating to the impact of
foreclosures
of cemeteries and other properties that are operating businesses
on
your REIT status. To the extent these types of properties raise
REIT
qualification issues, please quantify the amount of your portfolio
that is represented by mortgages on these types of properties.
Unaudited Financial Statements
Note C - Investments in Mortgage Loans, page F-9
78. Please disclose the following with respect to loan that was
restructured during the nine months ended March 31, 2005:
* the amount of impairment that was recognized on this loan:
* the amount of interest income included in net income for the
nine
months ended March 31, 2005;
* the amount of interest income excluded from net income for the
nine
months ended March 31, 2005;
* the amount of commitments, if any, to lend additional funds to
debtors owing receivables whose terms have been modified in
troubled
debt restructurings; and
* whether the loan is now current.
Note D - Investment in Local Agency Bonds, page F-13
79. Please revise to clarify whether or not these bonds will still
be
classified as available for sale subsequent to March 31, 2005.
Additionally, disclose whether the unrealized loss represents
other
than temporary impairment of the bonds.
Note E - Related Party Transactions, page F-13
80. Please explain to us the business purpose of the Manager
purchasing the rights to future judgments associated with the
parcels
in Austin and Cedar Park, Texas. In what amount were the personal
guarantees associated with the loans?
Audited Financial Statements
Financial Statements, pages F-21 - F-25
81. Please amend your filing to include audited financial
statements
for the year ended June 30, 2002. In addition, this would require
you to provide the report of your previous auditors, which issued
a
report on the transition period ending June 30, 2002 and the
twelve
months ended December 31, 2001. Also, you need to revise to
include
financial statements for the twelve months ended December 31,
2001.
For reference see Rule 3-02 of Regulation S-X.
Statements of Cash Flows, page F-25
82. Please tell us how loans funded through secured borrowings are
a
non-cash investing and financing activity.
83. Please explain to us the nature of the balance of loans
rewritten
with the same or similar property as collateral. Please address
whether or not these amounts are related to troubled debt
restructurings as defined in SFAS 15.
Note A - Summary of Significant Accounting Policies
Investments in Mortgage Loans, page F-26
84. We note that you sold approximately $163 million in loans to
third parties during the last two fiscal years ended with no
corresponding gains or losses. Please explain to us and in your
next
amendment why you sell them in this manner (from a business
perspective) and why none of these resulted in any gain or loss.
Discuss how you value these loans and the corresponding accounting
which results in no gain or loss recognized. Discuss how you
value
loans to related parties, or if the same, discuss why you believe
this valuation is appropriate.
85. Confirm to us whether or not you use the practice of loan
splitting. Provide specific details of this practice if you do.
Real Estate Held for Sale, page F-27
86. Please expand your disclosure in you next amendment to
disclose
your criteria for accounting for these properties as held for
sale,
and whether that treatment is in accordance with paragraph 30 of
SFAS
144. Additionally, in your response to us, please tell us whether
or
not any depreciation has been recorded on any of these properties.
87. Please disclose what method of accounting you apply for real
estate sales transactions where the sale has not been consummated
as
described in paragraphs 6-12 of SFAS 66. Refer to Appendix B of
SFAS
66. For each of the properties sold, please disclose the
following:
* the relevant terms that have prevented you from recognizing the
sale under SFAS 66,
* the amounts received from the purchasers as an initial
investment
and where this liability is recorded on your balance sheets,
* the amount of gain or loss that has not been recognized, and
* the approximate date you anticipate consummation of the sale in
accordance with SFAS 66.
88. Please disclose your accounting policy for reporting
operations
related to assets held for sale as discontinued operations. Refer
to
paragraph 42 of SFAS 144.
Secured Borrowings, page F-27
89. Please expand your disclosure to help the reader understand
your
business purpose for entering into these transactions. Please
disclose whether or not the cash you receive from the investors is
typically greater than the value of the mortgages invested in?
Fair Value of Financial Instruments, page F-28
90. In your next amendment, please disclose your best estimate of
the
fair value of investments in mortgage loans and assets under
secured
borrowing.
Note C - Investment in Mortgage Loans, page F-31
91. Disclose your policy for recognizing interest income on
impaired
loans, including how cash receipts are recorded.
92. Disclose how the Manager arrived at $2.5 million as a general
allowance for loan losses. What is the basis for this amount?
Additionally, provide greater detail on the process the Manager
uses
to determine the value of the collateral is sufficient to protect
the
company against further losses. If the Manager uses appraisals in
its evaluation, indicate the age of appraisals used, and whether
these appraisals are based on the collateral as-is or on the post-
construction value of the property. If the latter, please
indicate
the stage of completion for these projects.
93. Revise your rollforward of the allowance for loan losses to
tie
in to the amounts reported in your income statements.
94. Please disclose the following with respect to the $15.2
million
note that was restructured in 2003:
* the amount of impairment that was recognized on this loan:
* the amount of interest income included in net income for the
year
ended June 30, 2004;
* the amount of commitments, if any, to lend additional funds to
debtors owing receivables whose terms have been modified in
troubled
debt restructurings; and
* whether the loan is now current.
Note I - Revenue Related to the Sale of Real Estate, page F-36
95. Please expand your disclosure to provide additional detail
about
the transaction that led to your recognition of $2.3 million in
finder`s fee income. In addition, please disclose the following:
* your ownership interest in the property that was sold, if any;
* the actual services that were performed by Vestin Fund II, LLC
that
led to the generation of revenue; and
* the services that were performed by Vestin Fund I, LLC in the
transaction and the basis for the allocation of the revenue
between
Fund I and Fund II.
Note N - Selected Quarterly Financial Data, page F-38
96. It appears the information disclosed for the fourth quarter
and
year ended June 30, 2004 is erroneously the same as for the same
periods in the prior year. Please revise in your next amendment.
Part II. Information Not Required in Prospectus
Item 22. Undertakings
97. Please advise us why you have included undertaking (a). It
does
not appear that you are incorporating Exchange Act filings.
Exhibits
98. Please file copies of your legal and tax opinions or provide
us
with drafts of these opinions so that we have an opportunity to
review them.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Eric McPhee at (202) 551-3693 or Dan Gordon,
Branch Chief, at (202) 551-3486 if you have questions regarding
comments on the financial statements and related matters. Please
contact Michael McTiernan, Special Counsel, at (202) 551-3852, or
me
at (202) 551-3780 with any other questions.
Sincerely,
Karen J. Garnett
Assistant Director
cc: Hillel T. Cohn
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Michael V. Shustek
Vestin Realty Trust II, Inc.
June 20, 2005
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