BellaVista
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Capital
Annual Shareholder Meeting
February 25, 2009
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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. 2008 at BellaVista Capital
D. 2008 Financial Review
E. 2009 Outlook
F. Shareholder Liquidity Program
G. Q & A
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Forward-Looking Statements
This presentation 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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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
The BellaVista Team
Name Position
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William Offenberg Chairman & CEO
Jeffrey Black Director & CFO
Patricia Wolf Director & Secretary
Robert Puette Director
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Real Estate Market
> Irresponsible mortgage lending and lack of liquidity in the
credit markets were the major causes in the collapse of
the housing market
> The collapse of Wall Street's investment banking industry
further exacerbated an already extremely weak market.
> A "perfect storm" continues
o Sale prices continue to erode
o Sales velocity remains very slow
o Inventories remain very high, both from normal "For Sale" as
well as a record number of foreclosures.
> Qualified buyers continue to be in a holding pattern
awaiting further price decreases and better interest rates.
> Significant obstacles to recovery remain
o Lack of Liquidity
o Historically very high inventories
o Significant number of foreclosures - to date and yet to come
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
2008 at BellaVista Capital
> Created individual strategy for each REO
property
> Assumed control of three "For Sale" projects
and converted them to Rental Properties
> Maintained a modest portion of portfolio in
monthly-paying deeds of trust to provide some
of the cash flow needed for operations
> Prevailed in the one remaining shareholder
lawsuit.
> Board of Directors continued to meet monthly
o Review all of investments
o Provide management direction and oversight
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
2008 at BellaVista Capital
> Completed restructuring plan
o Closed Palo Alto office
o Eliminated all Bella Vista employees
o Outsourced loan servicing and asset management to
Cupertino Capital at a cost of less than 1% of NRV
o Established an office at Cupertino Capital as part of
our outsourcing agreement
o Director Jeff Black assumed the added role of Chief
Financial Officer
o Chairman of the Board Bill Offenberg assumed the
added role of Chief Executive Officer
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
2008 Portfolio Activity
> Achieved the returns we had projected for two
projects (Redwood City & Tahoe)
> Completed Cummings Park (East Palo Alto)
o Sold the residential condominiums via an auction
o Holding the last 2 retail condominiums to lease and
appreciation
> Recaptured 65% of original investment in
Livermore Village via a sale to City of Livermore.
> Completed and converted 3 "For Sale" projects
to Rental
> Substantially completed the funding and
construction of all remaining investments
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
NRV Revenues - Performing Investments
Year Ended Year Ended
Dec-07 Dec-08
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First Trust Deeds $ 2,611 $ 889
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Subordinated Debt $ 2,116 $ 0
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JV Investments $ 350 $ 2,488
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Direct Investments n/a $ (368)
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Rental, Interest & Other Income n/a $ 389
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Total $ 5,077 $ 3,398
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Per weighted average share $ 0.36 $ 0.29
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In thousands except per share amounts
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Impairments to NRV
JV & Subordinated Investments
> Components of a typical investment
1. A traditional large development & construction loan from a
bank as a first mortgage
2. A smaller investment or loan from BVC (10 - 20% of the first
loan) behind the construction loan in priority
> JV and Subordinated investments can provide a higher
return than a first deed of trust loan but have more risk.
> Most of these investments were made in 2005 and 2006,
18 to 36 months prior to the market collapse.
> As the market and prices collapsed
o Loan-to-value covenants of construction loans were tripped
o Banks demanded additional equity be added or banks would
foreclose
o BVC faced with decision to either add more cash or be
foreclosed out.
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
2008 Impairments
- ------------------- --------------------- --------------------------- ----------
Property Location Type Write Down
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- ------------------- --------------------- --------------------------- ----------
Green Hills San Diego Single Family Project 100%
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Ballantyne San Diego Single Family Project 100%
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Hollister Avenue Santa Barbara Rental & For Sale 100%
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Harper Avenue West Hollywood Condominiums 100%
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Brighton Avenue Modesto Converted to Rentals Partial
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Gilmartin Road Tiburon Luxury Single Family Partial
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Deeds of Trust Mostly California Various -Paid Monthly < 10%
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Impairments to NRV
Year Ended Year Ended
Dec-07 Dec-08
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First Trust Deeds $ -2,093 $ -365
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Subordinated Debt $ -2,197 $ 0
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JV Investments - most originated $ -11,550 $ -8,807
in 2005 & 2006, 18 to 36 months
prior to market implosion)
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Direct Investments $ 0 $ -8,419
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Total $ -15,840 $ -17,591
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Per weighted average share $ -1.13 $ -1.52
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Affect to NRV In thousands except per share amounts
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
NRV Summary
Year Ended Year Ended
Dec-07 Dec-08
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NRV Revenues - from Performing $ 0.36 $ 0.29
Investments
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Impairments $ -1.13 $ -1.52
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Operating Expenses $ -0.13 $ -0.24
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Share Repurchases $ 0.23 $ 0.30
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Change in NRV $ -0.67 $ -1.17
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Beginning NRV $ 4.57 $ 3.90
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Ending NRV $ 3.90 $ 2.73
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Weighted average NRV per share
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Current Portfolio
- --------------------- -------------------- -------------------- ----------------
Property Location Type Status
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Brighton Avenue Modesto Condos Rent & Hold
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Polk Street San Francisco Condos Rent & For Sale
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Hollister Avenue ** Santa Barbara Town Homes Rent & For Sale
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Cummings Park East Palo Alto Commercial Rent & For Sale
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Gilmartin Road Tiburon Luxury SFR For Sale
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Harper Avenue ** West Hollywood Condos For Sale
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Broadway Avenue Oakland Mixed Use For Sale
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MacAurthur Blvd. Oakland Condos For Sale
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Deeds of Trust Mostly California Various Paid Monthly
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** Fully Impaired
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
2009 Focus
Working to Protect Value
> Maximize value of existing investments
o 2 - 4 years to manage and sell
o Existing investments will require capital to fund
operations.
> Prioritize use of capital:
1. Fund operation of properties in portfolio to maximize
value
2. Fund operation of the company
3. Service and payoff debt
4. Fund annual shareholder liquidity program - A Key Focus
> Ensure needed liquidity:
o Sell selected portfolio assets - A Key Focus
o Manage borrowings as needed
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Shareholder Liquidity Program
> Three years ago, under very different market
conditions, our goal was to implement a
shareholder liquidity program in 2009.
> Provide liquidity in the form of stock repurchase
o Deliver cash to shareholders in as tax efficient manner
as possible - as a sale of stock
> Repurchase price would be NRV less a discount
reflecting the then-current market and
associated portfolio risks
> Funded by a portion of income and liquid assets
o Based on then-current portfolio and market conditions
o Subject to sufficient excess capital being available
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Shareholder Liquidity Program
> The program must be delayed until such time as
the Company has sufficient liquidity.
o Liquidity in excess of what is needed for operations
and debt service
> Prioritized uses of capital:
1. Fund operation of properties in portfolio to maximize
value
2. Fund operation of the company
3. Service and payoff debt
4. Fund annual shareholder liquidity program
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Question
Major changes occurred this past year with
BellaVista's management structure.
While we realize the Board is responsible
for oversight, would you please describe
who is managing the day-to-day operations
of the company and our investments?
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> Given the significant downturn in the real estate market, we
transitioned our focus from lending to managing our existing
investments.
> The Board determined that a different skill set would be needed going
forward.
> In October 2007 Mr. Offenberg assumed a more operational role of
Executive Chairman and was tasked with implementing the restructuring.
> The BellaVista employees were transitioned out of the company in an
orderly fashion during fiscal year 2008
> In October 2008
o Mr. Black became the CFO.
o Mr. Offenberg became the CEO
> Transitioned loan servicing and asset management to Cupertino Capital
o The cost of this service is based on a fixed percentage of
current NRV.
> The Board remains very involved in all aspects of the company
> The restructuring
o Better meets the operational needs of the current market
conditions
o Provides significant operational savings and efficiencies.
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Question
Who is Cupertino Capital?
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> Cupertino Capital has been a real estate lender and servicer
of loans for 15 years
> They currently service a loan pool of $128M with over 280
investors
> Dan Shaw is the owner of the company and has been an
advisor to BV since 2006
> Cupertino Capital has extensive experience in private
lending, property management, development, entitlements
and foreclosure and loan work outs.
> Cupertino Capital was retained by BV to service its loan
portfolio in 2008
> Cupertino Capital is paid a fee to manage the BV portfolio
based on a fractional percentage of NRV
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Question
Can the Board make a one- or two-year
projection as it relates to share value?
Do you anticipate taking more impairments
on the existing investments?
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> We believe the current estimates of value are as
reasonable as is possible given the complexity of
estimating property values when there are so few
transactions and buyers.
> We will continue on a regular monthly basis to
closely monitor the portfolio's properties and the
local markets they are in.
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> The mortgage meltdown and real estate market collapse are the
most significant challenge to the economy in eight decades.
> Very difficult to make projections of value with any real
certainty given
o Continued highly constrained credit markets
o Uncertainty related to real impact of the Feds and government
stimulus programs.
> Have and will continue to attempt to anticipate market changes and
take appropriate actions including adjusting our portfolio valuation.
> Anticipating the current liquidity and market conditions:
o Restructured the company
o Stopped making higher-risk equity investments and mezzanine
loans at the end on 2006
o Reduced operating cost by outsourcing loan servicing and asset
management
o Eliminated all full time employees and closed the Palo Alto
office
o Repositioned some properties from "For Sale" to either Rental
or a combination of Rental and "For Sale"
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Question
It was proposed in 2005 that the company
be liquidated.
Should we liquidate the company now?
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> As announced at last year's meeting, we are in the process
of an orderly liquidation of the assets in the portfolio.
> The market melt down that we have experienced over the last
year has slowed our liquidation efforts but not changed our
strategy
> We have developed and implemented a strategy to maximize
the value of each property in order to sell them in a timely
manner
> These strategies include:
o Converting some projects to rentals
o Placing short term financing on some assets that we own
o Investing in small short term deeds of trust for income to
operate the company
> As these strategies are implemented over the next 2 to 4
years, we expect to be able to generate the liquidity
necessary to fund the Shareholder Liquidity Program
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Question
Has the Board been effective in dealing
with the market challenges?
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
Q & A
Answer
> All Board members have been shareholders for many years
o Purchased their shares at $10
o Own over 8% of the outstanding shares
o No Board member has sold any of their shares
> Made significant changes in operations and structure in order to
minimize the impact from the credit and real estate market crises
> Taken defensive measures to preserve value and viability of the
portfolio.
> While there has been a significant decrease in portfolio value
during what is the most severe real estate downturn since the
Depression, the Board has
o Acted decisively
o Assumed added operational responsibilities
o Taken timely actions in the management of projects and
valuations.
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Annual Shareholder Meeting BellaVista
February 25, 2009 Capital
END OF PRESENTATION