July 22, 2005


Dear Shareholders,

We are please to communicate the following important information.

Board of Directors

Given your input at our last shareholders meeting and during the past year, the
BellaVista Capital Board of Directors has made the following changes to the
Board in order to provide increased participation and broader representation for
all stakeholders,

   o     We have increased the number of directors on the board from three to
         five.

   o     Jim Barrington, a director since October 2000, has resigned his
         position in order to allow the company to add three new directors.
         During his term, in addition to his regular Board duties, Jim has
         provided BellaVista with valuable advice and insight on complex
         accounting matters during a period of great change in the rules
         governing public companies. We thank Jim for his service and plan to
         stay in touch as we stay abreast of the changing public accounting
         rules.

   o     Bob Puette is the President of Puette Capital Management, Inc. and
         serves on the boards of six corporations in addition to PCMI. He is
         also one of the largest shareholders of BellaVista today. Bob, who has
         served on the Board of Directors of BellaVista since October 2000 and
         as Chairman since April 2003, will step down as Chairman and will
         change from a Class II director to a Class I director. His continued
         participation on the board will provide excellent continuity for the
         company and support for the three new members of the board of
         directors. We would like to thank Bob for his tireless efforts as
         Chairman and look forward to his continued contributions.

   o     The following individuals have been appointed to the Board of Directors
         to fill vacancies created by Mr. Barrington's resignation and the
         increase in the number of Directors:

         Bill Offenberg joins the Board as a Class III director and Chairman of
         the Board. Mr. Offenberg is a BellaVista shareholder and a partner with
         Morgenthaler Partners, a $2 billion private equity firm, where he
         specializes in recapitalizations and leveraged buyouts. He currently
         serves on the boards of three other companies and brings additional
         governance, operating and organizational experience to our Board.

         Jeff Black joins the Board as a Class II director. Mr. Black is a
         shareholder and a Senior Vice President of Grubb & Ellis, a San Jose
         real estate company. In 27 years as a real estate broker, he has




         concluded real estate transactions in excess of $1 billion. He brings
         significant real estate related experience to the Board.

         Patti Wolf, a shareholder, joins the Board as a Class II director. Ms.
         Wolf is currently Vice Chair of the Board of Trustees for Ottawa
         University where she focuses on strategic planning issues. She is an
         entrepreneur who sold the computer software company she founded to a
         company listed on the NYSE. Her background in organizational growth and
         development as well as her entrepreneurial skills will be particularly
         valuable to our Board.

By increasing the size of the Board we believe we have increased the stakeholder
participation and added significant experience to assist in our strategic
decision-making and investment evaluation processes. These three new members
will inject a fresh perspective. We have added additional real estate experience
as well as entrepreneurial, operational and corporate governance experience. We
believe these changes will strengthen and guide the company as management
continues to execute our business plan.

Annual Meeting

The Board has set October 3, 2005 as the date for this years' Annual Meeting.
The meeting will be held at 10:00 am at the Elks Lodge in Palo Alto. Additional
details will be made available in our proxy materials which will be sent out
prior to the meeting.

Our newly expanded Board of Directors has already begun work on an agenda that
will include a review of operating expenses, management compensation and an
analysis of the success we have had in selling off the nonperforming portfolio
properties. Look forward to future communications as we report our quarterly
results and continue to effect changes to enhance the Company's business and
increase shareholder value.

Sincerely,



Michael Rider                                                 Eric Hanke
President                                                     Vice President