Vestin Realty Mortgage II Rebounds After Initial Sell-Off

Strategic Insights -

Vestin Realty Mortgage II, created from a mortgage loan fund, has seen a 2.3% rebound on Tuesday from its first day of trading on the Nasdaq National Market, where it had suffered a sell-off. The company's decision to convert the fund into a real estate investment trust (REIT) has allowed it to trade like a stock and pay 90% of its income to shareholders. Investors initially expressed concerns about a possible price drop, but a Vestin spokesman attributed the sell-off to a large number of unit holders requesting liquidation of their holdings.

Key Takeaways:

  • Vestin Realty Mortgage II rebounded 2.3% on Tuesday after its first day of trading on the Nasdaq National Market.
  • The company converted a mortgage loan fund into a real estate investment trust (REIT) to trade like a stock and pay 90% of its income to shareholders.
  • Approximately 2,700 unit holders, or 54% of the fund unit holders, had asked Vestin to liquidate their holdings, contributing to the sell-off.
  • The company is almost debt-free and has paid a monthly distribution of 4 cents to 6 cents to investors since September 2001.
  • Vestin Realty Mortgage II recovered all of the principal and interest owed by the Vernon Downs harness track in New York state.
  • The company's new notes reflect a $1.2 million principal reduction payment and deferred gain of $171,000 for Vestin I and $1.03 million for Vestin II.
  • The borrower agreed to fees totaling $1.34 million for prepayment of interest and other matters.

Statistics:

  • Vestin Realty Mortgage II's shares are trading at a 34% discount to its book value.
  • The company has approximately 2,700 unit holders who requested liquidation of their holdings in the fund.
  • The company paid a monthly distribution of 4-6 cents to investors since September 2001.
  • Vestin Realty Mortgage II recovered $22.8 million in principal and interest owed by the Vernon Downs harness track in New York state.
  • The new notes bear 9% interest and are due in six months, with the option to extend for an additional six months for a fee.

Sources:

  • "Vestin Realty Mortgage II, which was created from a mortgage loan fund..." (Las Vegas Review-Journal) [1]
  • "A REIT is required to pay 90 percent of its income to shareholders, unlike other publicly held companies." (Las Vegas Review-Journal) [2]
  • "About 2,700 unit holders, or 54 percent of the fund unit holders, had asked Vestin to liquidate their holdings in the fund..." (Las Vegas Review-Journal) [3]
  • "The company is almost debt-free and has paid a monthly distribution of 4 cents to 6 cents to investors since September 2001..." (Las Vegas Review-Journal) [4]
  • "Vestin Realty Mortgage I and Vestin Realty Mortgage II made a secured loan to Vernon Downs prior to a bankruptcy filing by the New York harness track..." (Las Vegas Review-Journal) [5]

References:

[1] Las Vegas Review-Journal

[2] Las Vegas Review-Journal

[3] Las Vegas Review-Journal

[4] Las Vegas Review-Journal

[5] Las Vegas Review-Journal