EXHIBIT 20.1
BELLAVISTA
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CAPITAL
2008 Shareholder Meeting
February 26, 2008
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MEETING AGENDA
I. Formal Meeting
A. Call to Order
B. Verification of Quorum
C. Election Results
D. Adjournment
II. Shareholder Presentation
A. BellaVista Team
B. Residential Real Estate Market
C. 2007 at BellaVista Capital
D. 2007 Financial Review
E. 2008 Outlook
F. Shareholder Liquidity
G. Q & A
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
FORWARD-LOOKING STATEMENTS
This presentaiton contains forward-looking statements. These include statements
regarding the Company's future financial results, operating results, business
strategies, projected costs and capital expenditures, investment portfolio,
competitive positions, and plans and objectives of management for future
operations. Forward-looking statements may be identified by the use of words
such as "may," "will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "intend," "seek," "target," and "continue," or the
negative of these terms, and include the assumptions that underlie such
statements. The Company's actual results could differ materially from those
expressed or implied in these forward-looking statements as a result of various
risks and uncertainties. All forward-looking statements in this presentation are
based on information available to the Company as of the date hereof and the
Company assumes no obligation to update any such statements.
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
THE BELLAVISTA TEAM
Name Posititon
- ------------------ ---------------------------------
William Offenberg Chairman
Jeffrey Black Director
Patricia Wolf Director, Secretary
Robert Puette Director
Michael Rider Director, President/CFO
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Residential Real Estate Market
> Subprime implosion has caused significant damage and major disruption across
all of the mortgage, credit and real estate markets
o Set off a downward spiral that has spread to other major credit markets:
home equity lines, auto loans, credit cards
o The overall economy is now being impacted: unemployment rate, inflation,
the dollar and consumer confidence
> Public homebuilders contiue to dramatically reduce prices and increase
incentives to move existing inventory
> Spectulators in entry level housing and condo markets came in droves for
"quick flip" profits
o Have been crushed by rapidly falling prices and their own stampede to sell
o Resulting in further price decreases and inventory buildup
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Residential Real Estate Market
> The resulting market weakness has lead to higher than predicted decreases in
pricing and sales rates
> Many entry level buyers no longer qualify
> Qualified buyers are in holding pattern, waiting for further price reductions
and incentives
> Unparalleded loan write downs at all major financial institutions: Citibank,
Merrill Lynch, etc.
> Economists expect a continuation of these trends through 2009
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Residential Real Estate Market
Unit Sales
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2005 2006 2007 % Chg
- --------------------------- ----------- ----------- ----------- -----------
SF Bay 9,347 8,372 5,065 -46%
- --------------------------- ----------- ----------- ----------- -----------
So Cal 28,952 24,209 13,240 -54%
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California 52,800 43,431 25,585 -52%
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Residential Real Estate Market
Median Price
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2005 2006 2007 % Chg
- --------------------------- ----------- ----------- ----------- -----------
SF Bay 609,000 618,000 588,000 -05%
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So Cal 479,000 490,000 425,000 -13%
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California 458,000 472,000 402,000 -15%
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Residential Real Estate Market
Unit Sales
--------------------------------------------------
Dec '05 Dec '06 Dec '07 % Chg
- --------------------------- ----------- ----------- ----------- -----------
Public
Hombuilders $56 $44 $16 -64%
- --------------------------- ----------- ----------- ----------- -----------
Mortgage
Investments $47 $57 $26 -54%
- --------------------------- ----------- ----------- ----------- -----------
Money Center
Banks $44 $50 $34 -32%
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Wall Street
Brokers $67 $94 $75 -20%
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Average stock prices of largest five publicly traded companies in each industry
sector
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
2007 at BellaVista Capital
> Villa Cortona condos all sold resulting in a solid return on investment
> Gilmartin (Marin) single family residence, the final REO property, completed
and now on the market at $6.5M
> Increased liquidity with a new credit line
> Stopped originating new subordinated debt and equity investments by
beginning of 2007
> Shifted portfolio with new loans in:
o First and second deeds of trust with smaller amounts invested per
loan ($400k - $1m)
o Cash flowing commercial properties
> Continued to critically evaluate all investments:
o Take timely actions in project management and valuations
> Prevailed on all claims in major shareholder lawsuit
> Board of Directors continues to meet monthly to provide management
oversight, assistance and review of all investments
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
OPERATING EXPENSES
In thousands except per share amounts
----------- ----------- -----------
Year Ended Year Ended Year Ended
Dec-06 Dec-07 Dec-08*
- ----------------------------------------- ----------- ----------- -----------
Salaries & Benefits $ 599 $ 579 $ 470
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Facilities $ 89 $ 92 $ 38
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Legal & Accounting $ 189 $ 304 $ 234
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Board of Directors & Insurance $ 245 $ 334 $ 338
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General & Administrative $ 88 $ 102 $ 60
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REO & Nonrecurring $ 675 $ 353 $ 575
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Total $ 1,885 $ 1,764 $ 1,715
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Per weighted average share $ 0.13 $ 0.13 $ 0.14
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Projected
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
2007 Portfolio Activity
> 6 Investments paid off - $8.9 million
o 4 First Trust Deeds - $4.9 million
o 2 Subordinated debt - $4.0 million
> 20 Performance Investments - $35.1 million
o 16 First Trust Deeds - $23.4 million
o 3 Subordinated debt - $7.9 million
o 1 Joint Venture Investment - $3.8 million
> 6 Impaired Investments - $8.7 million (impaired by $15.8 million)
o 1 First Trust Deed - $5.5 million
o 1 Subordinated debt - $0
o 4 Joint Venture Investment - $3.2 million
> 1 Real Estate Owned - $5.4 million
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
NRV Revenues - Performing Investments
----------- -----------
Year Ended Year Ended
Dec-06 Dec-07
- ----------------------------------------- ----------- -----------
First Trust Deeds $ 2,198 $ 2,611
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Subordinated Debt $ 1,473 $ 2,116
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JV Investments $ 1,134 $ 350
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Total $ 4,805 $ 5,077
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Per weighted average share $ 0.32 $ 0.36
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In thousands except per share amounts
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Impairments
----------- -----------
Year Ended Year Ended
Dec-06 Dec-07
- ----------------------------------------- ----------- -----------
First Trust Deeds $ 0 $ -2,093
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Subordinated Debt $ 0 $ -2,197
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JV Investments (most originated in 2005,
18 to 24 months prior to market
implosion) $ 0 $ -11,550
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Total $ 0 $ -15,840
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- ----------------------------------------- ----------- -----------
Per weighted average share $ 0.00 $ - 1.13
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Affect to NRV In thousands except per share amounts
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
2007 Impairments
> 4 Complete write-off with no residual value
o 1 Subordinated debt and 3 JV Investments
- Subordinate to large construction loans
- As price and sale rate declined, we were foreclosed out by lender
> 2 Reposititioned Projects
o Condos converted to rental use
- Condo values decreased significantly due to overbuilding/conversion
- Rental market has remained strong and in some areas strengthened
- BVC repositioned project to rental use
- BVC strategy - Rent and Hold
- BVC exit - Sell as rental units with condo use to cash flow investor
- Partial write-off - rental units versus owner occupied
o Condos partially converted to short term rentals
- Locations that have good potential increase in value when market
recovers
- BVC strategy - Operate as hybrid - offer for sale or rent
- Rental income defrays some of the holding costs
- BVC exit - Sell as condos when market improves
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
NRV Summary
- ----------------------------------------------------- ----------- -----------
Year Ended Year Ended
Dec-06 Dec-07
- ----------------------------------------------------- ----------- -----------
NRV Revenues $ 0.32 $ 0.36
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Impairments $ 0.00 $ -1.13
- ----------------------------------------------------- ----------- -----------
Operating Expenses $ -0.13 $ -0.13
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Share Repurchases $ 0.15 $ 0.23
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- ----------------------------------------------------- ----------- -----------
Change in NRV $ 0.34 $ -0.67
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Beginning NRV $ 4.23 $ 4.57
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Ending NRV $ 4.57 $ 3.90
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Weighted average NRV per share
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Current Portfolio
> Investment Type
> Geographical
> Price Point
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
INVESTMENT TYPE
Dec '06 Dec '07
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First Trust Deed 51% 66%
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Subordinated TD 26% 18%
[graphic omitted] -------------------------- -------------- --------------
JV Equity 23% 16%
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Percentage based on NRV
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
GEOGRAPHICAL
Dec '06 Dec '07
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SF Bay 49% 67%
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Central Valley 23% 16%
[graphic omitted] -------------------------- -------------- --------------
Southern CA 19% 12%
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Other 9% 5%
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Percentage based on NRV
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
PRICE POINT
Dec '06 Dec '07
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Under $500,000 50% 47%
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$500,000 - $750,000 26% 36%
[graphic omitted] -------------------------- -------------- --------------
$750,000 - $1 Million 24% 17%
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Percentage based on NRV
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
2008 Outlook
> The residental real estate market is expected to remain very weak through
2009
> Our return expectations for 2008 have been lowered as a number of our high
yield investments have been impaired
> The company is working to protect value
o Manage existing investments with a "rent and hold" strategy where
appropriate
> Focus of new investments
o Deeds of trust with smaller principal amounts $400,000 - $1 million)
o Monthly cash interest payments
o Cash flowing commercial properties
> Expense reduction and restructuring
o Further outsourcing of loan servicing and origination
o Office and staff relocation
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Restructuring 2007 and 2008
> Reassessed protfolio, staffing and infrastructure relative to weakening
market conditions and expectations of continued weakness
> Wrote down investments to reflect market conditions
> Staffing was reduced from 4 to 2 in 3Q 2007
> Board chairman began to function as executive chairman in an operating
capacity in 3Q 2007
> Palo Alto office will be closed in March 2008 and offices will be
consolidated with Cupertino Capital in Los Gatos
> President to transition out in second half of 2008
> All loan origination, servicing and asset management will be outsourced to
Cupertino Capital by end of 2008
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
So ... Why Not Liquidate Now?
> Liquidating today would result in a significant discount from NRV
o Unfinished projects
o Uncertain time horizons
o Continued uncertain market conditions
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Managed Asset Liquidation
> To maximize value of existing investments
o 3 - 5 years to complete and sell
o Capital necessary to complete and manage existing investments
- Repositioned projects
- Performing projects under development
> Retained capital will be invested in deeds of trust until required
> Excess available capital can be used to fund annual shareholder liquidity
program
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Shareholder Liquidity Program
> Two years ago our goal was to implement a shareholder liquidity program in
2009
> Liquidity will be provided in the form of a stock repurchase, subject to
available capital
o Deliver cash to shareholders in a tax efficient manner as a sale of
stock
> Expected January 2009 and annually thereafter
> Allocate a portion of income and liquid assets
o Based on then-current portfolio and market conditions
> Repurchase price will be equal to NRV less a discount that reflects
then-current market and portfolio riskes
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
If you were a shareholder, how would you feel about the performance of
the portfolio?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> Board of Directors are substantial shareholders (959,000 shares = 7.6%)
> NRV drop of 15% must be viewed in light of the real estate market
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
For the last six months we have learned from the media about the sub-prime
mortgage fiasco and the dire position in which it has put financial
institutions. In view of this information, what has the company done to
take a defensive posture so our investment would be protected?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> No new subordinated debt or equity investments since late 2006
> Evaluated each intestment and developed strategies to maximize potential
value
> Wrote down investments to reflect current market realities of lower sales
prices and longer absorption periods
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
Given the decline in share value, how does the board justify the salary
level and bonus arrangement for management for what in essence has been
a four-person company?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> Management team has broad scope of responsibilities including the
sourcing and servicing of loans and asset management
> Compensation packages, including bonuses were reviewed by outside
compensation specialist
> Based on 2007 NRV performance, no bonuses were earned or paid
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
Based on your 2007 results, in appears that you should have liquidated
the company two years ago as proposed by some shareholders. Can you
comment on that?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> In 2004 Jeff Black initiated a shareholder proposal to conduct an
orderly liquidation of the company
> The shareholders voted not to liquidate
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
Why were our subordinated debt and joint venture investments impacted so
severely?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> Subordinated debt and joint venture investments were designed to increase
returns as part of an overall diversified investment strategy
> The unprecedented market decline resulted in large impairments in these
higher risk investments
> The performance of the balance of our portfolio, as well as our response
to various tender offers, has moderated the decline in share value
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Question:
Do you expect to report any further impairments in the portfolio?
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Q & A
Answer:
> We believe we have taken appropriate write downs based on the current
market environment
> The length and depth of the current market downturn cannot be accurately
predicted
> We will continue to monitor investments and will adjust valuations as
appropriate
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
Summary
> Maximize Value
o Sell remaining REO property
o Execute a "rent and hold" strategy for repositioned properties
o Manage completion of performing investments
> Execute 2008 restructuring plan
o Relocate office
o Outsource loan origination, servicing and asset mgt
> Invest retained capital in deeds of trust
> Implement annual shareholder liquidity in January 2009
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL
END OF PRESENTATION
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2008 Shareholder Meeting BellaVista
February 26, 2008 ----------
CAPITAL