[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
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VESTIN REALTY MORTGAGE II, INC.
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(Exact name of registrant as specified in its charter)
|
MARYLAND
|
61-1502451
|
|
(State or Other Jurisdiction of
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(I.R.S. Employer
|
|
Incorporation or Organization)
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Identification No.)
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Common Stock, $0.0001 Par Value
|
Nasdaq Global Select Market
|
|
(Title of each class)
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(Name of each exchange on which registered)
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None
|
(Title of class)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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Class
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Market Value as of
June 30, 2015
|
||
Common Stock, $0.0001 Par Value
|
$
|
9,492,499
|
|
Class
|
Number of Shares Outstanding
As of March 30, 2016
|
||
Common Stock, $0.0001 Par Value
|
2,490,514
|
||
ITEM 1.
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BUSINESS
|
|
·
|
The ratio of the amount of the investment to the value of the property by which it is secured, or the loan-to-value ratio;
|
|
·
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The potential for capital appreciation or depreciation of the property securing the investment;
|
|
·
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Expected levels of rental and occupancy rates, if applicable;
|
|
·
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Potential for rental increases, if applicable;
|
|
·
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Current and projected revenues from the property, if applicable;
|
|
·
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The status and condition of the record title of the property securing the investment;
|
|
·
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Geographic location of the property securing the investment; and
|
|
·
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The financial condition of the borrowers and their principals, if any, who guarantee the loan.
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ITEM 2.
|
PROPERTIES
|
Property Description | Location | Year Built | Leasable Square Feet | Acquisition Closing Date | Aggregate Purchase Price | Percentage Owner |
Occupancy at
December 31, 2015
|
|||||||||
Wolfpack Properties LLC single-tenant office building
|
Las Vegas, Nevada
|
2008
|
22,000 |
04/30/14
|
$ | 6,500,000 | 72 | % | 100 | % | ||||||
Building C office building
|
Las Vegas, Nevada
|
2008
|
47,500 |
07/31/14
|
$ | 15,000,000 | 72 | % | 89 | % | ||||||
Building A office building
|
Las Vegas, Nevada
|
2008
|
47,500 |
08/29/14
|
$ | 15,000,000 | 72 | % | 100 | % | ||||||
Devonshire office building
|
Las Vegas, Nevada
|
2008
|
22,000 |
04/30/14
|
$ | 6,400,000 | 72 | % | 100 | % | ||||||
SE Properties office building
|
Las Vegas, Nevada
|
2008
|
22,000 |
04/30/14
|
$ | 6,100,000 | 72 | % | 100 | % | ||||||
ExecuSuites office building
|
Las Vegas, Nevada
|
2008
|
22,000 |
04/30/14
|
$ | 6,100,000 | 72 | % | 94 | % |
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2015
|
High
|
Low
|
||||||
First Quarter
|
$ | 4.82 | $ | 2.76 | ||||
Second Quarter
|
$ | 5.35 | $ | 3.28 | ||||
Third Quarter
|
$ | 3.87 | $ | 3.05 | ||||
Fourth Quarter
|
$ | 3.41 | $ | 2.45 |
2014
|
High
|
Low
|
||||||
First Quarter
|
$ | 7.40 | $ | 5.00 | ||||
Second Quarter
|
$ | 6.33 | $ | 3.82 | ||||
Third Quarter
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$ | 6.37 | $ | 4.20 | ||||
Fourth Quarter
|
$ | 5.25 | $ | 3.00 |
Period
|
(a) Total Number of Shares Purchased
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(b) Average Price Paid per Share
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||||||||
January 1 – January 31, 2015
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-- | $ | -- | -- | $ | 395,615 | ||||||||||
February 1 – February 28, 2015
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-- | -- | -- | 395,615 | ||||||||||||
March 1 – March 31, 2015
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-- | -- | -- | 395,615 | ||||||||||||
April 1 – April 30, 2015
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-- | -- | -- | 395,615 | ||||||||||||
May 1 – May 31, 2015
|
23,425 | 3.89 | 23,425 | 304,641 | ||||||||||||
June 1 – June 30, 2015
|
45,224 | 4.94 | 45,224 | 81,487 | ||||||||||||
July 1 – July 31, 2015
|
-- | -- | -- | 81,487 | ||||||||||||
August 1 – August 31, 2015
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-- | -- | -- | 81,487 | ||||||||||||
September 1 – September 30, 2015
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-- | -- | -- | 81,487 | ||||||||||||
October 1 – October 31, 2015
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-- | -- | -- | 81,487 | ||||||||||||
November 1 – November 30, 2015
|
-- | -- | -- | 81,487 | ||||||||||||
December 1 – December 31, 2015
|
-- | -- | -- | 81,487 | ||||||||||||
Total
|
68,649 | $ | 4.58 | 68,649 | $ | 81,487 |
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Total Revenue:
|
2015
|
2014
|
$ Change
|
% Change
|
||||||||||||
Interest income from investment in real estate loans
|
$ | 645,000 | $ | 979,000 | $ | (334,000 | ) | (34 | %) | |||||||
Gain related to pay off of real estate loan, including recovery of allowance for loan loss
|
1,623,000 | 560,000 | 1,063,000 | 190 | % | |||||||||||
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable
|
552,000 | 198,000 | 354,000 | 179 | % | |||||||||||
Acquisition fee income
|
1,830,000 | -- | 1,830,000 | 100 | % | |||||||||||
Advisor fee
|
566,000 | 379,000 | 187,000 | 49 | % | |||||||||||
Total
|
$ | 5,216,000 | $ | 2,116,000 | $ | 3,100,000 | 147 | % |
Operating expenses:
|
2015
|
2014
|
$ Change
|
% Change
|
||||||||||||
Management fees – related party
|
$ | 1,096,000 | $ | 1,098,000 | $ | (2,000 | ) | (0.18 | %) | |||||||
MVP REIT II organization and offering costs
|
1,329,000 | -- | 1,329,000 | 100 | % | |||||||||||
Wages and benefits
|
3,330,000 | 1,784,000 | 1,546,000 | 86 | % | |||||||||||
Acquisition expense
|
1,000 | 29,000 | (28,000 | ) | (96 | %) | ||||||||||
Depreciation
|
2,000 | -- | 2,000 | 100 | % | |||||||||||
Forgiveness of debt – related party
|
-- | 533,000 | (533,000 | ) | (100 | %) | ||||||||||
Professional fees
|
1,073,000 | 1,237,000 | (164,000 | ) | (13 | %) | ||||||||||
Seminars
|
1,175,000 | 308,000 | 867,000 | 281 | % | |||||||||||
Consulting
|
221,000 | 413,000 | (192,000 | ) | (46 | %) | ||||||||||
Insurance
|
259,000 | 267,000 | (8,000 | ) | (3 | %) | ||||||||||
Commissions
|
3,162,000 | 722,000 | 2,440,000 | 337 | % | |||||||||||
Travel
|
867,000 | 686,000 | 181,000 | 26 | % | |||||||||||
Other
|
1,209,000 | 766,000 | 443,000 | 57 | % | |||||||||||
Total
|
$ | 13,724,000 | $ | 7,843,000 | $ | 5,881,000 | 74 | % |
Non-operating income (loss):
|
2015
|
2014
|
$ Change
|
% Change
|
||||||||||||
Gain related to recovery of allowance on note payable – related party
|
$ | 24,000 | $ | 1,774,000 | $ | (1,750,000 | ) | (98 | %) | |||||||
Other income
|
2,000 | -- | 2,000 | 100 | % | |||||||||||
Interest expense | 3,000 | 3,000 | -- | -- | ||||||||||||
Recovery from settlement with loan guarantor
|
79,000 | 78,000 | 1,000 | 1 | % | |||||||||||
Gain (loss) on marketable securities
|
2,000 | 42,000 | (40,000 | ) | (95 | %) | ||||||||||
Loss on marketable securities – related party
|
(324,000 | ) | (120,000 | ) | (204,000 | ) | (170 | %) | ||||||||
Income (loss) on investment in equity method investee
|
-- | 66,000 | (66,000 | ) | (100 | %) | ||||||||||
Total
|
$ | (220,000 | ) | $ | 1,837,000 | $ | (2,057,000 | ) | (111 | %) |
Discontinued operations, net of income taxes:
|
2015
|
2014
|
$ Change
|
% Change
|
||||||||||||
Net gain on sale of real estate owned held for sale
|
$ | -- | $ | 837,000 | $ | (837,000 | ) | (100 | %) | |||||||
Expenses related to real estate owned held for sale
|
(328,000 | ) | (654,000 | ) | 326,000 | (49 | %) | |||||||||
Recovery from fully impaired real estate held for sale
|
396,000 | 2,259,000 | (1,863,000 | ) | (82 | %) | ||||||||||
Income from investment in equity method investee – held for sale
|
-- | 20,000 | (20,000 | ) | (100 | %) | ||||||||||
Impairment of assets held for sale
|
(10,800,000 | ) | -- | (10,800,00 | ) | 100 | % | |||||||||
Income from assets held for sale, net of income taxes
|
1,454,000 | 778,000 | 676,000 | 86 | % | |||||||||||
Total
|
$ | (9,278,000 | ) | $ | 3,240,000 | $ | 12,518,000 | (386 | %) |
Changed Assumption
|
Increase (Decrease) in Interest Income
|
|||
Weighted average interest rate assumption increased by 1.0% or 100 basis points
|
$ | 70,000 | ||
Weighted average interest rate assumption increased by 5.0% or 500 basis points
|
$ | 382,000 | ||
Weighted average interest rate assumption increased by 10.0% or 1,000 basis points
|
$ | 703,000 | ||
Weighted average interest rate assumption decreased by 1.0% or 100 basis points
|
$ | (70,000 | ) | |
Weighted average interest rate assumption decreased by 5.0% or 500 basis points
|
$ | (382,000 | ) | |
Weighted average interest rate assumption decreased by 10.0% or 1,000 basis points
|
$ | (703,000 | ) |
Changed Assumption
|
Increase (Decrease) in Allowance for Loan Losses
|
|||
Allowance for loan losses assumption increased by 1.0% of loan portfolio
|
$ | 46,000 | ||
Allowance for loan losses assumption increased by 5.0% of loan portfolio
|
$ | 231,000 | ||
Allowance for loan losses assumption increased by 10.0% of loan portfolio
|
$ | 461,000 | ||
Allowance for loan losses assumption decreased by 1.0% of loan portfolio
|
$ | (46,000 | ) | |
Allowance for loan losses assumption decreased by 5.0% of loan portfolio
|
$ | (231,000 | ) | |
Allowance for loan losses assumption decreased by 10.0% of loan portfolio
|
$ | (461,000 | ) |
|
·
|
Declines in real estate market conditions that can cause a decrease in expected market value;
|
|
·
|
Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes;
|
|
·
|
Lack of progress on real estate developments after we advance funds. We customarily utilize disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances;
|
|
·
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Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed upon property; and
|
|
·
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Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property.
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ITEM 8.
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FINANCIAL STATEMENTS
|
Page
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CONSOLIDATED FINANCIAL STATEMENTS
|
|
VESTIN REALTY MORTGAGE II, INC.
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||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
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||||||||
ASSETS
|
||||||||
December 31, 2015
|
December 31, 2014
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 4,228,000 | $ | 7,541,000 | ||||
Prepaid expenses
|
323,000 | 205,000 | ||||||
Prepaid expense – related party
|
-- | 91,000 | ||||||
Investment in marketable securities - related party
|
262,000 | 461,000 | ||||||
Interest and other receivables
|
42,000 | 3,000 | ||||||
Investment in MVP REIT II
|
200,000 | -- | ||||||
Investments in Delaware Statutory Trusts
|
1,800,000 | -- | ||||||
Notes receivable, net of allowance of $1,099,000 and $6,543,000 at December 31, 2015 and 2014, respectively
|
-- | -- | ||||||
Investment in real estate loans, net of allowance for loan losses of $2,450,000 at December 31, 2015 and 2014
|
2,161,000 | 5,187,000 | ||||||
Fixed assets, net of accumulated depreciation of $1,000 and $0 at December 31, 2015 and 2014, respectively
|
21,000 | -- | ||||||
Due from related parties
|
408,000 | 301,000 | ||||||
Assets held for sale
|
44,923,000 | 55,427,000 | ||||||
Total assets
|
$ | 54,368,000 | $ | 69,216,000 | ||||
LIABILITIES AND EQUITY
|
||||||||
Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$ | 928,000 | $ | 618,000 | ||||
Note payable
|
-- | 23,000 | ||||||
Due to related parties
|
5,265,000 | 1,437,000 | ||||||
Liabilities related to assets held for sale
|
30,684,000 | 31,056,000 | ||||||
Total liabilities
|
36,877,000 | 33,134,000 | ||||||
Commitments and contingencies
|
||||||||
Equity
|
||||||||
Vestin Realty Mortgage II, Inc. stockholders’ equity:
|
||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
-- | -- | ||||||
Treasury stock, at cost, 0 shares at December 31, 2015 and 2014
|
-- | -- | ||||||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 2,490,514 and 2,578,420 shares issued and outstanding at December 31, 2015 and 2014, respectively.
|
-- | -- | ||||||
Additional paid-in capital
|
266,576,000 | 267,081,000 | ||||||
Accumulated deficit
|
(252,997,000 | ) | (238,165,000 | ) | ||||
Accumulated other comprehensive income
|
-- | -- | ||||||
Total Vestin Realty Mortgage II, Inc. stockholders’ equity
|
13,579,000 | 28,916,000 | ||||||
Non-controlling interest
|
3,912,000 | 7,166,000 | ||||||
Total equity
|
17,491,000 | 36,082,000 | ||||||
Total liabilities and equity
|
$ | 54,368,000 | $ | 69,216,000 |
VESTIN REALTY MORTGAGE II, INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
For the Years ended December 31, | ||||||||
2015 | 2014 | |||||||
Revenues
|
||||||||
Interest income from investment in real estate loans
|
$ | 645,000 | $ | 979,000 | ||||
Gain related to pay off of real estate loan, including recovery of allowance for loan loss
|
1,623,000 | 560,000 | ||||||
Gain related to pay off of notes receivable, including recovery of allowance for notes receivable
|
552,000 | 198,000 | ||||||
Acquisition fee income | 1,830,000 | -- | ||||||
Advisor fee | 566,000 | 379,000 | ||||||
Total revenues | 5,216,000 | 2,116,000 | ||||||
Operating expenses
|
||||||||
Management fees - related party
|
1,096,000 | 1,098,000 | ||||||
MVP REIT II organization and offering costs
|
1,329,000 | -- | ||||||
Wages and benefits
|
3,330,000 | 1,784,000 | ||||||
Acquisition expense
|
1,000 | 29,000 | ||||||
Depreciation
|
2,000 | -- | ||||||
Forgiveness of debt – related party
|
-- | 533,000 | ||||||
Professional fees
|
1,073,000 | 1,237,000 | ||||||
Seminars
|
1,175,000 | 308,000 | ||||||
Consulting fees
|
221,000 | 413,000 | ||||||
Insurance
|
259,000 | 267,000 | ||||||
Commissions
|
3,162,000 | 722,000 | ||||||
Travel
|
867,000 | 686,000 | ||||||
Other
|
1,209,000 | 766,000 | ||||||
Total operating expenses
|
13,724,000 | 7,843,000 | ||||||
Loss from operations
|
(8,508,000 | ) | (5,727,000 | ) | ||||
Non-operating income (loss)
|
||||||||
Gain related to recovery of allowance on note payable – related party
|
24,000 | 1,774,000 | ||||||
Interest expense
|
(3,000 | ) | (3,000 | ) | ||||
Other income
|
2,000 | -- | ||||||
Recovery from settlement with loan guarantor
|
79,000 | 78,000 | ||||||
Income on investment in equity method investee
|
-- | 66,000 | ||||||
Gain on sale of marketable securities
|
2,000 | 42,000 | ||||||
Loss on sale of marketable securities – related party
|
(324,000 | ) | (120,000 | ) | ||||
Total other non-operating income (loss), net
|
(220,000 | ) | 1,837,000 | |||||
Provision for income taxes
|
-- | -- | ||||||
Loss from continuing operations
|
(8,728,000 | ) | (3,890,000 | ) | ||||
Discontinued operations, net of income taxes
|
||||||||
Net gain on sale of real estate owned held for sale
|
-- | 837,000 | ||||||
Expenses related to real estate owned held for sale
|
(328,000 | ) | (654,000 | ) | ||||
Impairment of assets held for sale
|
(10,800,000 | ) | -- | |||||
Income from investment in equity method investee
|
-- | 20,000 | ||||||
Recovery from fully impaired real estate held for sale
|
396,000 | 2,259,000 | ||||||
Income from assets held for sale, net of income taxes
|
1,454,000 | 778,000 | ||||||
Total income (loss) from discontinued operations
|
(9,278,000 | ) | 3,240,000 | |||||
Net loss | $ | (18,006,000 | ) | $ |
(650,000
|
) | ||
Allocation of income (loss) to non-controlling interest - related party | (3,174,000 | ) |
455,000
|
|||||
Net loss attributable to common stockholders | $ | (14,832,000 | ) | $ |
(1,105,000
|
) | ||
Basic and diluted income (loss) per weighted average common share | ||||||||
Continuing operations | $ | (3.44 | ) | $ | (1.41 | ) | ||
Discontinued operations | $ | (3.65 | ) | $ | 1.21 | |||
Total basic and diluted loss per weighted average common share | $ | (5.84 | ) | $ | (0.42 | ) | ||
Weighted average common shares outstanding | 2,538,774 | 2,670,143 |
VESTIN REALTY MORTGAGE II, INC.
|
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS
|
For The Years
Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Net loss
|
$ | (18,006,000 | ) | $ | (650,000 | ) | ||
Unrealized holding loss on available-for-sale securities – related party
|
-- | (341,000 | ) | |||||
Unrealized holding gain on available-for-sale securities
|
-- | 10,000 | ||||||
Comprehensive loss
|
(18,006,000 | ) | (981,000 | ) | ||||
Less: net income (loss) attributable to noncontrolling interest
|
(3,174,000 | ) | 455,000 | |||||
Comprehensive loss attributable to Vestin Realty Mortgage II, Inc.
|
$ | (14,832,000 | ) | $ | (1,436,000 | ) |
VESTIN REALTY MORTGAGE II, INC.
|
||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EQUITY AND OTHER COMPREHENSIVE LOSS
|
||||||||||||||||||||||||||||||||||||
Treasury Stock
|
Common Stock
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares (1)
|
Amount
|
Additional
Paid-in-Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income
|
Noncontrolling Interest – Related Party
|
Total
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Stockholders' Equity at December 31, 2013
|
-- | $ | -- | 2,709,174 | $ | -- | $ | 267,745,000 | $ | (237,060,000 | ) | $ | 331,000 | $ | 6,127,000 | $ | 37,144,000 | |||||||||||||||||||
Net Income (Loss)
|
-- | -- | -- | -- | -- | (1,105,000 | ) | -- | 455,000 | (650,000 | ) | |||||||||||||||||||||||||
Unrealized (loss) on Marketable Securities - Related Party
|
-- | -- | -- | -- | -- | -- | (331,000 | ) | -- | (331,000 | ) | |||||||||||||||||||||||||
Comprehensive Income
|
-- | -- | -- | -- | -- | -- | -- | -- | (981,000 | ) | ||||||||||||||||||||||||||
Distributions to non controlling interest
|
-- | -- | -- | -- | -- | -- | -- | (62,000 | ) | (62,000 | ) | |||||||||||||||||||||||||
Reverse split
|
-- | -- | -- | -- | (2,000 | ) | -- | -- | -- | (2,000 | ) | |||||||||||||||||||||||||
Non-controlling interest
|
-- | -- | -- | -- | -- | -- | -- | 646,000 | 646,000 | |||||||||||||||||||||||||||
Retire Treasury Stock
|
(130,754 | ) | 663,000 | -- | -- | (662,000 | ) | -- | -- | -- | -- | |||||||||||||||||||||||||
Purchase of Treasury Stock
|
130,754 | (663,000 | ) | (130,754 | ) | -- | -- | -- | -- | -- | (663,000 | ) | ||||||||||||||||||||||||
Stockholders' Equity at December 31, 2014
|
-- | $ | -- | 2,578,420 | $ | -- | $ | 267,081,000 | $ | (238,165,000) | $ | -- | $ | 7,166,000 | $ | 36,082,000 | ||||||||||||||||||||
Net Income (Loss)
|
-- | -- | -- | -- | -- | (14,832,000 | ) | -- | (3,174,000 | ) | (18,006,000 | ) | ||||||||||||||||||||||||
Unrealized Gain on Marketable Securities - Related Party
|
-- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||
Comprehensive Income
|
-- | -- | -- | -- | -- | -- | -- | -- | (18,006,000 | ) | ||||||||||||||||||||||||||
Distributions to non controlling interest
|
-- | -- | -- | -- | -- | -- | -- | (80,000 | ) | (80,000 | ) | |||||||||||||||||||||||||
Reverse split
|
-- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||
Non-controlling interest
|
-- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||
Retire Treasury Stock
|
(87,906 | ) | 505,000 | -- | -- | (505,000 | ) | -- | -- | -- | -- | |||||||||||||||||||||||||
Purchase of Treasury Stock
|
87,906 | (505,000 | ) | (87,906 | ) | -- | -- | -- | -- | -- | (505,000 | ) | ||||||||||||||||||||||||
Stockholders' Equity at December 31, 2015
|
-- | $ | -- | 2,490,514 | $ | -- | $ | 266,576,000 | $ | (252,997,000 | ) | $ | -- | $ | 3,912,000 | $ | 17,491,000 |
|
(1)
|
Per share data is based on the average number of shares outstanding during the periods, except for the book value and market price which are based on the information at the end of the periods. All per share data has been adjusted to retroactively reflect the 1for 4 reverse stock split effected in January 2014.
|
For the years Ended December 31, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (18,006,000 | ) | $ | (650,000 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
2,000 | 10,000 | ||||||
Recovery of allowance for doubtful notes receivable
|
(552,000 | ) | (198,000 | ) | ||||
Gain on sale of marketable securities
|
(2,000 | ) | (42,000 | ) | ||||
Loss on marketable securities – related party
|
324,000 | 120,000 | ||||||
Income on investment in equity method investee – held for sale
|
-- | (86,000 | ) | |||||
Forgiveness of debt-related party
|
-- | 533,000 | ||||||
Gain on sale of real estate owned held for sale
|
-- | (837,000 | ) | |||||
Gain related to recovery of allowance for notes receivable – related party
|
(24,000 | ) | (1,774,000 | ) | ||||
Gain related to recovery from settlement with loan guarantor
|
(79,000 | ) | (78,000 | ) | ||||
Gain related to recovery of allowance for loan loss
|
(1,623,000 | ) | (560,000 | ) | ||||
Recovery from fully impaired real estate held for sale
|
(396,000 | ) | (2,259,000 | ) | ||||
Impairment of assets held for sale
|
10,800,000 | -- | ||||||
Change in operating assets and liabilities:
|
||||||||
Interest and other receivables
|
(39,000 | ) | 2,000 | |||||
Assets held for sale, net of liabilities
|
24,000 | 447,000 | ||||||
Due to/from related parties, net
|
3,721,000 | 846,000 | ||||||
Prepaid expenses – related party
|
(323,000 | ) | -- | |||||
Other assets
|
296,000 | 126,000 | ||||||
Accounts payable and accrued liabilities
|
312,000 | (311,000 | ) | |||||
Net cash used in operating activities
|
(5,565,000 | ) | (4,711,000 | ) | ||||
Cash flows from investing activities:
|
||||||||
Investments in real estate loans
|
(5,217,000 | ) | (14,269,000 | ) | ||||
Purchase of investments in real estate loans from third parties
|
(200,000 | ) | (468,000 | ) | ||||
Proceeds from loan payoffs
|
5,971,000 | 6,546,000 | ||||||
Sale of investments in real estate loans to:
|
||||||||
VRM I
|
-- | 2,823,000 | ||||||
Third parties
|
2,472,000 | 8,060,000 | ||||||
Investment in Delaware Statutory Trust
|
(8,200,000 | ) | -- | |||||
Payments on Delaware Statutory Trust
|
6,400,000 | -- | ||||||
Proceeds from notes receivable
|
552,000 | 198,000 | ||||||
Proceeds from notes receivable – related party
|
24,000 | 1,774,000 | ||||||
Proceeds from recovery from settlement with loan guarantor
|
79,000 | 78,000 | ||||||
Proceeds related to real estate held for sale
|
-- | 2,552,000 | ||||||
Collection from recovery of loan loss
|
1,623,000 | 560,000 | ||||||
Proceeds from recovery of fully impaired real estate held for sale
|
396,000 | 2,259,000 | ||||||
Payment of noncontrolling interest portion of proceeds related to real estate held for sale
|
-- | (764,000 | ) | |||||
Payments on assets transferred, net
|
-- | (958,000 | ) | |||||
Purchase of investments in real estate
|
-- | (6,263,000 | ) | |||||
Payments on purchase of assets
|
-- | (212,000 | ) | |||||
Purchase of marketable securities
|
(109,000 | ) | (1,946,000 | ) | ||||
Purchase of marketable securities – related party
|
(125,000 | ) | -- | |||||
Purchase of fixed assets
|
(23,000 | ) | -- | |||||
Investment in MVP REIT II
|
(200,000 | ) | -- | |||||
Investment in and note receivable from MVP Realty Advisors, LLC
|
-- | (1,365,000 | ) | |||||
Investment in equity method investee
|
-- | (3,000,000 | ) | |||||
Additional investment from noncontrolling interest investors
|
-- | 84,000 | ||||||
Proceeds from sale of VREO XXV, LLC
|
-- | 39,000 | ||||||
Asset purchase – assets held for sale
|
(115,000 | ) | -- | |||||
Proceeds from sale of marketable securities
|
109,000 | 7,675,000 | ||||||
Net cash provided by investing activities
|
3,437,000 | 3,373,000 | ||||||
Cash flows from financing activities:
|
||||||||
Principal payments on notes payable
|
(189,000 | ) | (8,190,000 | ) | ||||
Purchase of treasury stock
|
(505,000 | ) | (662,000 | ) | ||||
Distribution to noncontrolling interest entity held for sale
|
(80,000 | ) | (62,000 | ) | ||||
Proceeds from note payable
|
166,000 | 7,750,000 | ||||||
Proceeds from note payable on assets held for sale
|
-- | 4,143,000 | ||||||
Payments on note payable on assets held for sale
|
(577,000 | ) | -- | |||||
Payment of noncontrolling interest portion of proceeds from note payable held for sale
|
-- | (1,763,000 | ) | |||||
Net cash (used in) provided by financing activities
|
(1,185,000 | ) | 1,216,000 | |||||
NET CHANGE IN CASH
|
(3,313,000 | ) | (122,000 | ) | ||||
Cash, beginning of period
|
7,541,000 | 7,663,000 | ||||||
Cash, end of period
|
$ | 4,228,000 | $ | 7,541,000 | ||||
Supplemental disclosures of cash flows information:
|
||||||||
Interest paid
|
$ | 3,000 | $ | 400,000 | ||||
Non-cash investing and financing activities:
|
||||||||
Note payable related to prepaid D&O insurance
|
$ | 166,000 | $ | 262,000 | ||||
Unrealized loss on marketable securities - related party
|
$ | (324,000 | ) | $ | (341,000 | ) |
|
·
|
Declines in real estate market conditions, which can cause a decrease in expected market value;
|
|
·
|
Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes;
|
|
·
|
Lack of progress on real estate developments after we advance funds. We customarily utilize disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances;
|
|
·
|
Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed property; and
|
|
·
|
Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property.
|
|
·
|
Management commits to a plan to sell the properties;
|
|
·
|
The property is available for immediate sale in its present condition subject only to terms that are usual and customary;
|
|
·
|
An active program to locate a buyer and other actions required to complete a sale have been initiated;
|
|
·
|
The sale of the property is probable;
|
|
·
|
The property is being actively marketed for sale at a reasonable price; and
|
|
·
|
Withdrawal or significant modification of the sale is not likely.
|
Loan Type
|
Number of Loans
|
Balance *
|
Weighted Average Interest Rate
|
Portfolio Percentage
|
Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses
|
|||||||||||||||
Commercial
|
7 | $ | 4,541,000 | 11.85 | % | 98.48 | % | 60.14 | % | |||||||||||
Construction
|
1 | 70,000 | 0.12 | % | 1.52 | % | 0.44 | % | ||||||||||||
Total
|
8 | $ | 4,611,000 | 11.79 | % | 100.00 | % | 58.61 | % |
Loan Type
|
Number of Loans
|
Balance *
|
Weighted Average Interest Rate
|
Portfolio Percentage
|
Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses
|
|||||||||||||||
Commercial
|
11 | $ | 5,579,000 | 10.88 | % | 73.04 | % | 43.43 | % | |||||||||||
Construction
|
1 | 2,058,000 | 9.00 | % | 26.96 | % | 67.63 | % | ||||||||||||
Total
|
12 | $ | 7,637,000 | 10.37 | % | 100.00 | % | 53.03 | % |
*
|
Please see Balance Sheet Reconciliation below.
|
Loan Type
|
Number of Loans
|
December 31 2015 Balance*
|
Portfolio Percentage
|
Number of Loans
|
December 31, 2014 Balance*
|
Portfolio Percentage
|
||||||||||||||||||
First deeds of trust
|
8 | 4,611,000 | 100.00 | % | 11 | 7,342,000 | 96.14 | % | ||||||||||||||||
Second deeds of trust
|
-- | -- | -- | 1 | 295,000 | 3.86 | % | |||||||||||||||||
Total
|
8 | 4,611,000 | 100.00 | % | 12 | 7,637,000 | 100.00 | % |
*
|
Please see Balance Sheet Reconciliation below.
|
Non-performing and past due loans
|
$ | 2,450,000 | ||
January 2016 –March 2016
|
-- | |||
April 2016 – June 2016
|
-- | |||
July 2016 – September 2016
|
-- | |||
October 2016 – December 2016
|
-- | |||
Thereafter
|
2,161,000 | |||
Total
|
$ | 4,611,000 |
December 31, 2015 Balance *
|
Portfolio Percentage
|
December 31, 2014 Balance *
|
Portfolio Percentage
|
|||||||||||||
Nevada
|
$ | 4,295,000 | 93.15 | % | $ | 5,264,000 | 68.93 | % | ||||||||
California
|
-- | -- | 2,059,000 | 26.96 | % | |||||||||||
Ohio
|
310,000 | 6.72 | % | 314,000 | 4.11 | % | ||||||||||
Arizona
|
6,000 | 0.13 | % | -- | -- | |||||||||||
Total
|
$ | 4,611,000 | 100.00 | % | $ | 7,637,000 | 100.00 | % |
*
|
Please see Balance Sheet Reconciliation below.
|
December 31, 2015
|
December 31, 2014
|
|||||||
Balance per loan portfolio
|
$ | 4,611,000 | $ | 7,637,000 | ||||
Less:
|
||||||||
Allowance for loan losses (a)
|
(2,450,000 | ) | (2,450,000 | ) | ||||
Balance per consolidated balance sheets
|
$ | 2,161,000 | $ | 5,187,000 |
|
(a)
|
Please refer to Specific Reserve Allowance below.
|
Loan Type
|
Number Of Non-Performing Loans
|
Balance
|
Allowance for Loan Losses
|
Net Balance
|
||||||||||||
Commercial
|
1 | $ | 2,450,000 | $ | (2,450,000 | ) | $ | -- | ||||||||
Total
|
1 | $ | 2,450,000 | $ | (2,450,000 | ) | $ | -- |
|
·
|
Prevailing economic conditions;
|
|
·
|
Historical experience;
|
|
·
|
The nature and volume of the loan portfolio;
|
|
·
|
The borrowers’ financial condition and adverse situations that may affect the borrowers’ ability to pay;
|
|
·
|
Evaluation of industry trends; and
|
|
·
|
Estimated net realizable value of any underlying collateral in relation to the loan amount.
|
As of December 31, 2015
|
||||||||||||
Balance
|
Allowance for loan losses **
|
Balance, net of allowance
|
||||||||||
Non-performing loans – no related allowance
|
$ | -- | $ | -- | $ | -- | ||||||
Non-performing loans – related allowance
|
2,450,000 | (2,450,000 | ) | -- | ||||||||
Subtotal non-performing loans
|
2,450,000 | (2,450,000 | ) | -- | ||||||||
Performing loans – no related allowance
|
2,161,000 | -- | 2,161,000 | |||||||||
Performing loans – related allowance
|
-- | -- | -- | |||||||||
Subtotal performing loans
|
2,161,000 | -- | 2,161,000 | |||||||||
Total
|
$ | 4,611,000 | $ | (2,450,000 | ) | $ | 2,161,000 |
As of December 31, 2014
|
||||||||||||
Balance
|
Allowance for loan losses **
|
Balance, net of allowance
|
||||||||||
Non-performing loans – no related allowance
|
$ | -- | $ | -- | $ | -- | ||||||
Non-performing loans – related allowance
|
2,450,000 | (2,450,000 | ) | -- | ||||||||
Subtotal non-performing loans
|
2,450,000 | (2,450,000 | ) | -- | ||||||||
Performing loans – no related allowance
|
5,187,000 | -- | 5,187,000 | |||||||||
Performing loans – related allowance
|
-- | -- | -- | |||||||||
Subtotal performing loans
|
5,187,000 | -- | 5,187,000 | |||||||||
Total
|
$ | 7,637,000 | $ | (2,450,000 | ) | $ | 5,187,000 |
**
|
Please refer to Specific Reserve Allowances below.
|
|
Specific Reserve Allowances
|
Loan Type
|
Balance at
12/31/2014
|
Specific Reserve Allocation
|
Loan Pay Downs
|
Write-off
|
Transfers to REO or Notes Receivable
|
Balance at
12/31/15
|
||||||||||||||||||
Commercial
|
$ | 2,450,000 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 2,450,000 | ||||||||||||
Total
|
$ | 2,450,000 | $ | -- | $ | -- | $ | -- | $ | -- | $ | 2,450,000 |
Loan Type
|
Balance at
12/31/2013
|
Specific Reserve Allocation
|
Loan Pay Downs
|
Write-off
|
Transfers to REO or Notes Receivable
|
Balance at
12/31/14
|
||||||||||||||||||
Commercial
|
$ | 2,500,000 | -- | $ | (50,000 | ) | $ | -- | $ | -- | $ | 2,450,000 | ||||||||||||
Total
|
$ | 2,500,000 | $ | -- | $ | (50,000 | ) | $ | -- | $ | -- | $ | 2,450,000 |
December 31, 2015
|
||||
Assets:
|
||||
Current assets
|
$ | 971,000 | ||
Property and equipment
|
43,952,000 | |||
Total assets
|
$ | 44,923,000 | ||
Liabilities:
|
||||
Accounts payable and accrued liabilities
|
$ | 289,000 | ||
Notes payable
|
30,395,000 | |||
Total liabilities
|
30,684,000 | |||
Net assets held for sale
|
$ | 14,239,000 |
For The
Year Ended
December 31, 2015
|
||||
Revenue
|
$ | 4,832,000 | ||
Revenue eliminated through consolidation
|
(169,000 | ) | ||
Expenses
|
(14,009,000 | ) | ||
Net income
|
$ | (9,346,000 | ) |
December 31, 2014
|
||||
Assets:
|
||||
Current assets
|
$ | 833,000 | ||
Property and equipment
|
54,594,000 | |||
Total assets
|
$ | 55,427,000 | ||
Liabilities:
|
||||
Accounts payable and accrued liabilities
|
$ | 84,000 | ||
Notes payable
|
30,972,000 | |||
Total liabilities
|
31,056,000 | |||
Net assets held for sale
|
$ | 24,371,000 |
For The
Year Ended
December 31, 2014
|
||||
Revenue
|
$ | 2,727,000 | ||
Expenses
|
(2,020,000 | ) | ||
Net Income
|
$ | 708,000 |
2016
|
$ | 584,000 | ||
2017
|
648,000 | |||
2018
|
683,000 | |||
2019
|
8,431,000 | |||
2020
|
591,000 | |||
Thereafter
|
19,458,000 | |||
Total
|
$ | 30,395,000 |
2015
|
$ | 557,000 | ||
2016
|
616,000 | |||
2017
|
648,000 | |||
2018
|
683,000 | |||
2019
|
8,431,000 | |||
Thereafter
|
20,059,000 | |||
Total
|
$ | 30,994,000 |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Balance at 12/31/15
|
Carrying Value on Balance Sheet at 12/31/15
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Investment in marketable securities - related party
|
$ | 262,000 | $ | -- | $ | -- | $ | 262,000 | $ | 262,000 | ||||||||||
Investment in real estate loans
|
$ | -- | $ | -- | $ | 2,148,000 | $ | 2,148,000 | $ | 2,161,000 |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Balance at 12/31/14
|
Carrying Value on Balance Sheet at 12/31/14
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Investment in marketable securities - related party
|
$ | 461,000 | $ | -- | $ | -- | $ | 461,000 | $ | 461,000 | ||||||||||
Investment in real estate loans
|
$ | -- | $ | -- | $ | 5,167,000 | $ | 5,167,000 | $ | 5,187,000 |
Investment in
real estate loans
|
||||
Balance on January 1, 2015
|
$ | 5,167,000 | ||
Purchase and additions of assets
|
||||
New mortgage loans and mortgage loans acquired
|
5,217,000 | |||
Purchase from third parties
|
200,000 | |||
Sales, pay downs and reduction of assets
|
||||
Collections and settlements of principal and sales of investment in real estate loans
|
(5,971,000 | ) | ||
Sale of assets to third parties
|
(2,472,000 | ) | ||
Temporary change in estimated fair value based on future cash flows
|
7,000 | |||
Balance on December 31, 2015, net of temporary valuation adjustment
|
$ | 2,148,000 |
Investment in
real estate loans
|
||||
Balance on January 1, 2014
|
$ | 7,867,000 | ||
Purchase and additions of assets
|
||||
New mortgage loans and mortgage loans acquired
|
14,269,000 | |||
Purchase from third parties
|
498,000 | |||
Sales, pay downs and reduction of assets
|
||||
Collections and settlements of principal and sales of investment in real estate loans
|
(6,546,000 | ) | ||
Sale of assets to VRM I
|
(2,823,000 | ) | ||
Sale of assets to third parties
|
(8,060,000 | ) | ||
Temporary change in estimated fair value based on future cash flows
|
(38,000 | ) | ||
Balance on December 31, 2014, net of temporary valuation adjustment
|
$ | 5,167,000 |
For the Years Ended December 31, | ||||||||
2015 | 2014 | |||||||
Revenues
|
||||||||
Investment in real estate loans
|
$ | 2,820,000 | $ | 1,737,000 | ||||
Investment in real property held for sale
|
1,830,000 | -- | ||||||
Investment in real estate management
|
566,000 | 379,000 | ||||||
Total revenues
|
5,216,000 | 2,116,000 | ||||||
Operating expenses
|
||||||||
Investment in real estate loans
|
$ | 1,096,000 | $ | 1,098,000 | ||||
Investment in real property held for sale
|
4,000 | 32,000 | ||||||
Investment in real estate management
|
4,659,000 | 2,317,000 | ||||||
Corporate activities
|
7,968,000 | 4,399,000 |
Total expenses
|
13,727,000 | 7,846,000 |
Total Assets
|
December 31, 2015
|
December 31, 2014
|
||||||
Investment in real estate loans
|
$ | 4,203,000 | $ | 5,190,000 | ||||
Investment in real property held for sale
|
44,923,000 | 55,427,000 | ||||||
Corporate assets
|
5,242,000 | 8,298,000 | ||||||
Total assets
|
$ | 54,368,000 | $ | 68,915,000 |
December 31, 2015
|
December 31, 2014
|
|||||||
Current Taxes
|
||||||||
Federal
|
$ | -- | $ | -- | ||||
State
|
-- | -- | ||||||
Total Current Taxes
|
-- | -- | ||||||
Change in Deferred Taxes
|
(5,042,900 | ) | (375,700 | ) | ||||
Change in Valuation Allowance
|
5,042,900 | 375,700 | ||||||
Provision for income tax expense (benefit)
|
$ | -- | $ | -- |
December 31, 2015
|
December 31, 2014
|
|||||||||
Deferred Tax Assets:
|
||||||||||
Provision for Loan Losses
|
$ | 834,000 | $ | 834,000 | ||||||
Impairment on asset held for sale
|
3,672,000 | -- | ||||||||
Impairment on investment in MVP Advisors
|
2,095,000 | 2,095,000 | ||||||||
Impairment on investment in marketable securities – related party
|
41,000 | 41,000 | ||||||||
Recovery of allowance for doubtful notes receivable
|
204,000 | 391,000 | ||||||||
Conversion from straight line rental revenue to actual
|
48,000 | 48,000 | ||||||||
Net operating loss carryforward
|
75,372,000 | 76,942,000 | ||||||||
Total Deferred Tax Assets
|
82,266,000 | 80,351,000 | ||||||||
Valuation allowance
|
(82,266,000 | ) | (80,351,000 | ) | ||||||
Deferred Tax Assets, net of valuation allowance
|
-- | -- | ||||||||
Non-current portion
|
-- | -- | ||||||||
Current portion
|
$ | -- | $ | -- |
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
Title
|
Michael V. Shustek
|
57
|
President, Chief Executive Officer and Director
|
Tracee Gress(4)
|
45
|
Chief Financial Officer
|
Donovan Jacobs (1)(2)(3)
|
59
|
Director
|
Roland M. Sansone(1)(2)(3)
|
61
|
Director
|
Daryl C. Idler, Jr. (1)(2)(3)
|
71
|
Director
|
|
(1)
|
Member of the audit committee.
|
|
(2)
|
Member of the nominating committee.
|
|
(3)
|
Member of the compensation committee.
|
Name
|
Age
|
Title
|
|
Michael V. Shustek
|
57
|
President, Chief Executive Officer and Chairman
|
|
Tracee Gress
|
45
|
Chief Financial Officer
|
|
Michael J. Whiteaker
|
66
|
Vice President of Regulatory Affairs
|
|
·
|
The class I director is Mr. Idler, and his term will expire at the 2016 annual meeting of stockholders;
|
|
·
|
The class II director is Mr. Sansone, and their terms will expire at the 2017 annual meeting of stockholders; and
|
|
·
|
The class III directors are Messrs. Jacobs and Shustek, and their terms will expire at the 2018 annual meeting of stockholders.
|
|
·
|
Selecting and hiring our independent auditors;
|
|
·
|
Evaluating the qualifications, independence and performance of our independent auditors;
|
|
·
|
Approving the audit and non-audit services to be performed by our independent auditors;
|
|
·
|
Reviewing the design, implementation, adequacy and effectiveness of our internal controls and our critical accounting policies;
|
|
·
|
Overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; and
|
|
·
|
Reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations.
|
|
·
|
Evaluating the composition, size, operations and governance of our board of directors and making recommendations regarding future planning and the appointment of directors;
|
|
·
|
Evaluating the independence of our directors and candidates for election to the Board; and
|
|
·
|
Evaluating and recommending candidates for election to our board of directors.
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
Name
|
Fees Earned
or Paid in
Cash
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
(1)($)
|
Total ($)
|
|||||||||||||||
Michael V. Shustek
|
--
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
$
|
--
|
|
$ |
--
|
|||||
Donovan Jacobs
|
$5,000
|
--
|
|
--
|
|
--
|
|
--
|
|
-- |
|
$ |
5,000
|
|||||||||
Roland M. Sansone
|
$5,000
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
$ |
5,000
|
|||||||||
Fredrick J. Leavitt (2)
|
$5,000
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
$ |
5,000
|
(1)
|
Amount represents reimbursement of travel and other expenses incurred by directors to attend various director meetings.
|
(2)
|
On February 19, 2016, the Board of Directors of MVP REIT, Inc. accepted the resignation of Fredrick Leavitt as a director.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Name and Address of
Beneficial Owner
|
Amount and Nature of
Beneficial Ownership
|
Percent of Class
|
||
Michael V. Shustek
8880 West Sunset Rd Ste 200
Las Vegas, NV 89148
|
Sole voting and investment power of 478,032 shares and shared voting and investment power of 18,774 shares
|
19%
|
|
·
|
Each director;
|
|
·
|
Our chief executive officer, chief financial officer and the officers of our manager who function as the equivalent of our executive officers; and
|
|
·
|
All executive officers and directors as a group.
|
Common Shares Beneficially Owned
|
||||||
Beneficial Owner
|
Address
|
Number
|
Percent
|
|||
Michael V. Shustek(1)
|
8880 West Sunset Rd. Ste 200
Las Vegas, NV 89148
|
478,032
|
19%
|
|||
Donovan Jacobs
|
1347 Tavern Rd. #18 PMVB201 Alpine, CA 91901
|
**
|
**
|
|||
Roland M. Sansone
|
2310 E. Sunset Rd #8015
Las Vegas, NV 89119
|
--
|
--
|
|||
All directors and executive officers as a group (5 persons)
|
478,032
|
19%
|
(1)
|
Mr. Shustek is the Manager of Vestin Mortgage. Mr. Shustek is the beneficial owner of 496,806 shares of our common stock, representing approximately 19% of our outstanding common stock (based upon 2,490,514 shares of common stock outstanding at March 30, 2016). Mr. Shustek, directly owns 454,857 shares of our common stock (totaling 18%) and indirectly owns and has economic benefit of 23,175 shares of our common stock (totaling 0.9%) through his ownership of Vestin Mortgage. Mr. Shustek has economic benefit of and shares voting and dispositive power of 18,774 shares of our common stock (totaling 0.8%) owned by his spouse, of which 6,327 shares were acquired by her prior to their marriage.
|
(3)
|
Except as otherwise indicated, and subject to applicable community property and similar laws, the persons listed as beneficial owners of the shares have sole voting and investment power with respect to such shares.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
2015
|
2014
|
|||||||
Audit Fees
|
$ | 60,000 | $ | -- | ||||
Audit Related Fees
|
$ | -- | $ | -- | ||||
Tax Fees
|
$ | -- | $ | -- | ||||
All Other Fees
|
$ | -- | $ | -- |
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
(a)
|
3. Exhibits
|
Vestin Realty Mortgage II, Inc.
|
||
By:
|
/s/ Michael V. Shustek
|
|
Michael V. Shustek
|
||
President and Chief Executive Officer
|
||
Date:
|
March 30, 2016
|
Signature
|
Capacity
|
Date
|
||
/s/ Michael V. Shustek
|
President and Chief Executive Officer and Director
|
March 30, 2016
|
||
Michael V. Shustek
|
(Principal Executive Officer)
|
|||
/s/ Tracee Gress
|
Chief Financial Officer
|
March 30, 2016
|
||
Tracee Gress
|
(Principal Financial and Accounting Officer)
|
|||
/s/ Donovan Jacobs
|
Director
|
March 30, 2016
|
||
Donovan Jacobs
|
||||
/s/ Daryl C. Idler, Jr.
|
Director
|
March 30, 2016
|
||
Daryl C. Idler, Jr.
|
||||
/s/ Roland M. Sansone
|
Director
|
March 30, 2016
|
||
Roland M. Sansone
|
Exhibit No.
|
Description of Exhibits
|
|
2.1 (2)
|
Agreement and Plan of Merger between Vestin Fund II, LLC and the Registrant
|
|
2.2(12)
|
Membership Interest Purchase Agreement between VRM I, VRM II and NorthStar Hawaii, LLC
|
|
3.1 (1)
|
Articles of Incorporation of the Registrant
|
|
3.2 (1)
|
Bylaws of the Registrant
|
|
3.3 (1)
|
Form of Articles Supplementary of the Registrant
|
|
3.4 (5)
|
Amendment to Vestin Realty Mortgage II’s Articles of Incorporation, effective December 31, 2007.
|
|
3.5 (6)
|
Amended Articles of Incorporation of the Registrant
|
|
4.1 (1)
|
Reference is made to Exhibits 3.1, 3.2 and 3.3
|
|
4.2 (2)
|
Specimen Common Stock Certificate
|
|
4.3 (1)
|
Form of Rights Certificate
|
|
4.4(14)
|
First Amendment to Rights Agreement, dated as of July 9, 2012, between Registrant and the rights agent
|
|
4.5(14)
|
Second Amendment to Rights Agreement, dated as of July 9, 2012, between Registrant and the rights agent
|
|
10.1 (1)
|
Form of Management Agreement between Vestin Mortgage, LLC and the Registrant
|
|
10.2 (1)
|
Form of Rights Agreement between the Registrant and the rights agent
|
|
10.3 (4)
|
Form of Purchase Agreement
|
|
10.4 (4)
|
Amended and Restated Trust Agreement
|
|
10.5 (7)
|
Intercreditor Agreement, dated June 16, 2008, by and between Vestin Originations, Inc., Vestin Mortgage, LLC, Vestin Realty Mortgage II, Inc., and Owens Mortgage Investment Fund
|
|
10.6 (10)
|
Agreement between Strategix Solutions, LLC and Vestin Realty Mortgage II, Inc. for accounting services.
|
|
10.7 (11)
|
Second Supplemental Indenture, dated as of May 27, 2009 pertaining to Junior Subordinated Indenture
|
|
10.8 (11)
|
First Amendment to Amended and Restated Trust Agreement, dated as of May 27, 2009
|
|
10.9 (13)
|
Deed in Lieu
|
|
10.10 (15)
|
Purchase and Sale Agreement, dated August 2013, for the acquisition of the parking facilities
|
|
10.11 (16)
|
Membership Interest Transfer Agreement, dated as of December 19, 2013, between Registrant and MVP Capital Partners, LLC.
|
|
10.12(17)
|
Membership Purchase Agreement, dated March 26, 2014, for purchase of Building C, LLC.
|
|
10.13(18)
|
Separation and Release Agreement, dated August 11, 2014, among Steven Reed, MVP Realty Advisors, LLC, MVP American Securities, LLC and MVP REIT, Inc
|
|
14 (3)
|
Vestin Realty Mortgage II, Inc. Code of Business Conduct and Ethics
|
|
21.1*
|
List of subsidiaries of the Registrant
|
|
31.1*
|
Section 302 Certification of Michael V. Shustek
|
|
31.2*
|
Section 302 Certification of Tracee Gress
|
|
32*
|
Certification Pursuant to 18 U.S.C. Sec. 1350
|
|
101*
|
The following material from the Company's quarterly report on Form 10-K for the year ended December 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2015 and 2014, (ii) Consolidated Statements of Operations for the years ended December 31, 2015 and 2014 (iii) Cosolidated Statements of Other Comprehensive Income for the years ended December 31, 2015 and 2014 (iv) Consolidated Statement of Equity for the years ended December 31, 2015 and 2014 (v) Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014 and (vi) Notes to the Consolidated Financial Statements.
|
*
|
Filed concurrently herewith.
|
|
(1)
|
Incorporated herein by reference to Post-Effective Amendment No. 6 to our Form S-4 Registration Statement filed on January 4, 2006 (File No. 333-125121)
|
|
(2)
|
Incorporated herein by reference to Post-Effective Amendment No. 7 to our Form S-4 Registration Statement filed on January 13, 2006 (File No. 333-125121)
|
|
(3)
|
Incorporated herein by reference to the Transition Report on Form 10-K for the nine month transition period ended March 31, 2006 filed on September 7, 2006 (File No. 000-51892)
|
|
(5)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on January 4, 2008 (File No. 000-51892)
|
|
(6)
|
Incorporated herein by reference to the Annual Report on Form 10-K filed on March 14, 2008 (File No. 000-51892)
|
|
(7)
|
Incorporated herein by reference to the Quarterly Report on Form 10-Q filed on August 11, 2008 (File No. 000-51892)
|
|
(10)
|
Incorporated herein by reference to the Quarterly Report on Form 10-Q filed on May 8, 2009 (File No. 000-51892)
|
|
(11)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on June 10, 2009 (File No. 000-51892)
|
|
(12)
|
Incorporated herein by reference to the Current Report on Form 8-K/A filed on November 14, 2011 (File No. 000-51892)
|
|
(13)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on March 16, 2012 (File No. 000-51892)
|
|
(14)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on July 13, 2012 (File No. 000-51892)
|
|
(15)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on August 1, 2013 (File No. 000-51892)
|
|
(16)
|
Incorporated herein by reference to the Current Report on Form 8-K filed on December 26, 2013 (File No. 000-51892)
|
|
(17)
|
Incorporated herein by reference to the Current Report on Form 10-Q filed on May 14, 2013 (File No. 000-51892)
|
|
(18)
|
Incorporated herein by reference to the Current Report on Form 10-Q filed on August 13, 2014 (File No. 000-51892)
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Michael V. Shustek
|
Michael V. Shustek
|
Chief Executive Officer
|
Vestin Realty Mortgage II, Inc.
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Tracee Gress
|
Tracee Gress
|
Chief Financial Officer
|
Vestin Realty Mortgage II, Inc.
|
|
(1)
|
The Registrant’s Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
/s/ Michael V. Shustek
|
Michael V. Shustek
|
Chief Executive Officer
|
Vestin Realty Mortgage II, Inc.
|
/s/ Tracee Gress
|
Tracee Gress
|
Chief Financial Officer
|
Vestin Realty Mortgage II, Inc.
|
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Mar. 30, 2016 |
Jun. 30, 2015 |
|
Document And Entity Information | |||
Entity Registrant Name | Vestin Realty Mortgage II, Inc | ||
Entity Central Index Key | 0001327603 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 9,492,499 | ||
Entity Common Stock, Shares Outstanding | 2,490,514 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2015 |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Notes receivable, allowance | $ 1,099,000 | $ 6,543,000 |
Investment in real estate loans, allowance | 2,450,000 | 2,450,000 |
Accumulated Depreciation | $ 1,000 | $ 0 |
Preferred stock par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 2,578,420 | 2,578,420 |
Common stock, shares outstanding | 2,578,420 | 2,578,420 |
Consolidated Statements Of Other Comprehensive Loss - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (18,006,000) | $ (650,000) |
Unrealized holding loss on available-for-sale securities - related party | (331,000) | |
Unrealized holding gain on available-for-sale securities | 10,000 | |
Comprehensive Income (Loss) | $ (18,006,000) | (981,000) |
Less: net income attributable to noncontrolling interest | (3,174,000) | 455,000 |
Comprehensive loss attributable to Vestin Realty Mortgage II, Inc. | $ (14,832,000) | $ (1,436,000) |
Consolidated Statements Of Equity And Other Comprehensive Loss - USD ($) |
Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Noncontrolling Interest - Related Party |
Total |
---|---|---|---|---|---|
Stockholders Equity at Dec. 31, 2013 | $ 267,745,000 | $ (237,060,000) | $ 331,000 | $ 6,127,000 | $ 37,144,000 |
Net Income (Loss) | (1,105,000) | $ 455,000 | (650,000) | ||
Unrealized (loss) on Marketable Securities - Related Party | $ (331,000) | (331,000) | |||
Comprehensive Income (Loss) | (981,000) | ||||
Distributions to non controlling interest | $ (62,000) | 60,000 | |||
Reverse split | $ (2,000) | (2,000) | |||
Non-controlling interest | $ 646,000 | $ 646,000 | |||
Retire Treasury Stock | $ (662,000) | ||||
Purchase of Treasury Stock | $ (663,000) | ||||
Stockholders Equity at Dec. 31, 2014 | $ 267,081,000 | $ (238,165,000) | $ 7,166,000 | 36,082,000 | |
Net Income (Loss) | $ (14,832,000) | $ (3,174,000) | $ (18,006,000) | ||
Unrealized (loss) on Marketable Securities - Related Party | |||||
Comprehensive Income (Loss) | $ (18,006,000) | ||||
Distributions to non controlling interest | $ (80,000) | $ 82,000 | |||
Reverse split | |||||
Non-controlling interest | |||||
Retire Treasury Stock | $ (505,000) | ||||
Purchase of Treasury Stock | $ (505,000) | ||||
Stockholders Equity (in Shares) at Dec. 31, 2015 | 266,576,000 | (252,997,000) | 3,912,000 | 17,491,000 |
Organization |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | NOTE A ORGANIZATION
Vestin Realty Mortgage II, Inc. (VRM II, the Company, we, us or our), formerly Vestin Fund II, LLC (Fund II), invests in loans secured by real estate through deeds of trust or mortgages (hereafter referred to collectively as deeds of trust and as defined in our management agreement (Management Agreement) as mortgage assets (Mortgage Assets).) In addition, we invest in, acquire, manage or sell real property and acquire entities involved in the ownership or management of real property. We commenced operations in June 2001. References in this report to the Company, we, us, or our refer to Fund II with respect to the period prior to April 1, 2006 and to VRM II with respect to the period commencing on April 1, 2006.
We operated as a real estate investment trust (REIT) through December 31, 2011. We are not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor are we subject to any regulation thereunder. As a REIT, we were required to have a December 31 fiscal year end. We announced on March 28, 2012 that we have terminated our election to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the Code), effective for the tax year ending December 31, 2012. Under the Code, we will not be able to make a new election to be taxed as a REIT during the four years following December 31, 2012. Pursuant to our charter, upon the determination by the Board of Directors that we should no longer qualify as a REIT, the restrictions on transfer and ownership of shares set forth in Article VII of our charter ceased to be in effect and, accordingly, shares of the Companys stock will no longer be subject to such restrictions. In connection with the termination of our REIT status, we also amended our stockholders rights plan to provide that a stockholder, other than Michael Shustek, may own up to 20% of outstanding shares of common stock, and that Michael Shustek may own up to 35% of outstanding shares of common stock.
Michael Shustek owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, which is our manager (the manager or Vestin Mortgage). The business of brokerage and placement of real estate loans have been performed by affiliated or non-affiliated mortgage brokers, including Advant Mortgage, LLC (MVP Mortgage), a licensed Nevada mortgage broker, which is indirectly wholly owned by Mr. Shustek.
Pursuant to a management agreement, our manager is responsible for managing our operations and implementing our business strategies on a day-to-day basis. Consequently, our operating results are dependent to a significant extent upon our managers ability and performance in managing our operations and servicing our loans.
Vestin Mortgage is also the manager of Vestin Realty Mortgage I, Inc. (VRM I), as the successor by merger to Vestin Fund I, LLC (Fund I) and Vestin Fund III, LLC (Fund III). VRM I has investment objectives similar to ours, and Fund III is in the process of an orderly liquidation of its assets.
The consolidated financial statements include the accounts of VRM II; Building A, LLC, Building C, LLC, Wolfpack Properties, LLC; Devonshire, LLC; SE Properties, LLC; ExecuSuites, LLC; MVP Realty Advisors, LLC (MVP Advisors) and MVP Capital Partners II, LLC (MVP CP II). All significant intercompany transactions and balances have been eliminated in consolidation.
In April 2009, we entered into an accounting services agreement with Strategix Solutions, LLC (Strategix Solutions), a Nevada limited liability company, for the provision of accounting and financial reporting services. Strategix Solutions also provides accounting and financial reporting services to VRM I and Fund III. Our CFO and other members of our accounting staff are employees of Strategix Solutions. Strategix Solutions is owned by our CFO, Ms. Gress. As used herein, management means our manager, its executive officers and the individuals at Strategix Solutions who perform accounting and financial reporting services on our behalf.
In December 2013, we entered into a membership interest transfer agreement with MVP Capital Partners, LLC (MVP Capital) pursuant to which we increased our ownership interest from 40% to 60% in MVP Advisors, the manager of MVP REIT, Inc. (MVP REIT). At the same time, VRM I acquired from MVP Capital the remaining 40% interest in MVP Advisors. Pursuant to the transfer agreement, we and VRM I did not pay any up-front consideration for the acquired interest but will be responsible for our proportionate share of future expenses of MVP Advisors. In recognition of MVP Capitals substantial investment in MVP Advisors for which MVP Capital received no up-front consideration, the transfer agreement further provides that once we and VRM I have been repaid in full for any capital contributions to MVP Advisors or for any expenses advanced on MVP Advisors behalf (Capital Investment), and once we and VRM I have received an annualized return on our Capital Investment of 7.5%, then MVP Capital will receive one-third of the net profits of MVP Advisors. MVP REIT is a SEC-registered, non-traded REIT that seeks to invest predominantly in parking facilities located throughout the United States and loans secured by real estate as its core assets.
During May 2015, our Board of Directors and the Board of Directors of VRM I agreed to form MVP CP II. We own 60% and VRM I owns 40%. The purpose of MVP CP II is to act as the sponsor of MVP REIT II, a Maryland corporation, which was formed as a publicly registered non traded REIT (MVP REIT II). MVP REIT II has been declared effective on October 23, 2015. MVP REIT II is a proposed $550,000,000 offering with the proceeds raised from the offering being used primarily to acquire parking assets in the United States and Canada. MVP REIT II has engaged MVP Advisors as its advisor.
We and VRM I have agreed to fund certain costs and expenses of MVP REIT II through MVP CP II in proportion to our respective ownership interest. As consideration for the initial investment of $0.2 million MVP CP II received 8,000 shares of common stock in MVP REIT II. As part of the advisory agreement, MVP Advisors will receive a 1% annual asset management fee and 2.25% of purchase price on all acquisitions. MVP Advisors will also receive the lesser of 3% of contract sale price or 50% of the brokerage commission paid on dispositions of MVP REIT II assets, which amount shall accrue until the MVP REIT II investors have a return of their net capital and a 6% annual cumulative non compounded return. In addition once the MVP REIT II investors have received a return of their net capital invested and a 6% annual cumulative, non-compounded return, then MVP Advisors will be entitled to receive 15% of the remaining proceeds. This fee will be payable under only one of the following events: (i) if MVP REIT II shares are listed on a national securities exchange; (ii) if MVP REIT II assets are sold, other than single assets sold in the ordinary course, or liquidated; (iii) upon a merger, share exchange, reorganization or other transaction pursuant to which MVP REIT II investors receive cash or publicly traded securities in exchange for their shares; or (iv) upon termination of the advisory agreement. The operating agreement of the Advisor provides that once we and VRM I have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisors behalf, or capital investment, and once we and VRM I have received an annualized return on our capital investment of 7.5%, then Michael Shustek will receive 40% of the net profits of the Advisor. |
Summary Of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included.
Management Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Investments in Real Estate Loans
We may, from time to time, acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received or when managements assessment of the value has changed, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Companys impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loans effective interest rate, or at the loans observable market price or the fair value of its collateral.
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (TDR) as defined by ASC 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected.
Allowance for Loan Losses
We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Our managers estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrowers ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. We and our manager generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry we perform will not reveal all material facts pertaining to a borrower and the security.
Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that have and may continue to cause significant changes in our estimated allowance include, but are not limited to:
Discontinued Operations
We have reclassified for all periods presented in the accompanying consolidated statements of operations, the amounts related to discontinued operations and real estate held for sale, in accordance with the applicable accounting criteria. In addition, the assets and liabilities related to the discontinued operations are reported separately in the accompanying consolidated balance sheets as real estate held for sale, assets held for sale, and liabilities related to assets held for sale.
Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to REO are separately identified in the accompanying consolidated statements of operations.
Real Estate Owned Held for Sale
Real estate owned held for sale (REO) includes real estate acquired through foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property's estimated fair value, less estimated costs to sell, with fair value based on appraisals and knowledge of local market conditions. While pursuing foreclosure actions, we seek to identify potential purchasers of such property. We generally seek to sell properties acquired through foreclosure as quickly as circumstances permit, taking into account current economic conditions. The carrying values of REO are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers.
Management classifies real estate as REO when the following criteria are met:
Acquisitions
The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.
The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings and improvements, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.
The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) management's estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. Our below-market operating leases generally do not include fixed rate or below-market renewal options.
The fair value of acquired in-place leases is derived based on management's assessment of lost revenue and costs incurred for the period required to lease the assumed vacant property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered by us in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand at market rates. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The amount recorded for acquired in-place leases is included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If a lease were to be terminated or if termination were determined to be likely prior to its contractual expiration (for example resulting from bankruptcy), amortization of the related unamortized in-place lease intangible would be accelerated.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.
The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred. Our acquisition expenses are directly related to our acquisition activity and if our acquisition activity was to increase or decrease, so would our acquisition costs. Costs directly associated with development acquisitions accounted for as asset acquisitions are capitalized as part of the cost of the acquisition. During the year ended December 31, 2015, the Company did not capitalize any such acquisition costs.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the propertys use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.
Cash and Cash Equivalents
Cash and cash equivalents include interest-bearing and non-interest bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less.
Revenue Recognition
The Company recognizes interest income from loans on an accrual basis over the expected terms of the loans using the effective interest method. The Company may recognize fees, discounts, premiums, anticipated exit fees and direct cost over the terms of the loans as an adjustment to the yield. The Company may recognize fees on commitments that expire unused at expiration. The Company may recognize interest income from available-for-sale securities on an accrual basis over the life of the investment on a yield-to-maturity basis. Interest is fully allowed for on impaired loans and is recognized on a cash basis method. The receipt of previous loan or note receivable allowances or impairments are recognized as revenue.
Advertising Costs
Advertising costs incurred in the normal course of operations are expensed as incurred. The Company had no advertising expense for the years ended December 31, 2015 and 2014.
Investments in Real Estate and Fixed Assets
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.
Investment in Marketable Securities
Investment in marketable securities consists of stock in VRM I and MVP REIT II, related parties. The securities are stated at fair value as determined by the closing market prices as of December 31, 2015 and 2014. All securities are classified as available-for-sale.
We are required to evaluate our available-for-sale investment for other-than-temporary impairment charges. We will determine when an investment is considered impaired (i.e., decline in fair value below its amortized cost), and evaluate whether the impairment is other than temporary (i.e., investment value will not be recovered over its remaining life). If the impairment is considered other than temporary, we will recognize an impairment loss equal to the difference between the investments cost and its fair value.
Basic and Diluted Earnings Per Common Share
Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. We had no outstanding common share equivalents during the periods ended December 31, 2015 and 2014.
Common Stock Dividends
During June 2008, our Board of Directors decided to suspend the payment of dividends. Our Board of Directors will closely monitor our operating results in order to determine when dividends should be reinstated; however, we do not expect our Board of Directors to reinstate dividends in the foreseeable future.
Treasury Stock
On March 21, 2007, our Board of Directors authorized the repurchase of up to $10 million worth of our common stock. On November 17, 2014, our Board of Directors authorized the repurchase of an additional $500,000 in common stock. Depending upon market conditions, shares may be repurchased from time to time at prevailing market prices through open market or privately negotiated transactions. We are not obligated to purchase any shares. Subject to applicable securities laws, including SEC rule 10b-18, repurchases may be made at such times and in such amounts, as our management deems appropriate. The share repurchase program may be discontinued or terminated at any time and we have not established a date for completion of the share repurchase program. The repurchases will be funded from our available cash.
We record our treasury stock using the cost method. Under the Maryland General Corporation Law, shares of its own stock acquired by a corporation constitute authorized but unissued shares.
Segments
We currently are authorized to operate three reportable segments, investments in real estate loans, investments in real property and investment in a real estate management company. As of December 31, 2015, the Company operates in all segments.
Our objective is to invest approximately 97% of our assets in real estate loans and real estate related investments, while maintaining approximately 3% as a working capital cash reserve.
Reclassifications
Amounts listed in connection with assets held for sale, including liabilities related to assets held for sale, in the 2014 consolidated financial statements have been reclassified to conform to the December 31, 2015 presentation. This reclassification resulted in no net effect on the 2014 consolidated financial statements.
Principles of Consolidation
Our consolidated financial statements include the accounts of VRM II; Building A, LLC, Building C, LLC, Wolfpack Properties, LLC; Devonshire, LLC; SE Properties, LLC; ExecuSuites, LLC; MVP Advisors; and MVP Capital Partners II, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.
Business Combinations
In December 2007, the Financial Accounting Standards Board (FASB) revised the authoritative guidance for business combinations, establishing principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired (including goodwill), the liabilities assumed, and any noncontrolling interest in the acquiree. Subsequently, on April 1, 2009, the FASB amended and clarified certain aspects of its authoritative guidance on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. We apply the FASB authoritative guidance to all business combinations for which the acquisition date is on or after January 1, 2009, and to certain future income tax effects related to our prior business combinations, should they arise.
Non-controlling Interests
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.
Income Taxes
The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company was to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also, included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Financial Instruments And Concentrations Of Credit Risk |
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Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Financial Instruments And Concentrations Of Credit Risk | NOTE C FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
Financial instruments consist of cash, interest and other receivables, notes receivable, accounts payable and accrued liabilities, due to/from related parties and notes payable. The carrying values of these instruments approximate their fair values due to their short-term nature. Marketable securities related party and investment in real estate loans are further described in Note L Fair Value.
Financial instruments with concentration of credit and market risk include cash, interest and other receivables, marketable securities - related party, notes receivable, accounts payable and accrued liabilities, due to/from related parties, notes payable, and loans secured by deeds of trust.
We maintain cash deposit accounts and certificates of deposit that, at times, may exceed federally-insured limits. To date, we have not experienced any losses. As of December 31, 2015 and 2014 we had approximately $3.9 and $5.5 million of funds, respectively, in excess of the federally-insured limits.
As of December 31, 2015, 100% of our loans were loans in which we participated with other lenders, most of whom are our affiliates.
As of December 31, 2015, 93% of our loans were in Nevada compared to 69% and 27% in Nevada and California, respectively, at December 31, 2014.
At December 31, 2015 and 2014, the loan to our largest borrower represented approximately 53% and 32%, respectively, of our total investment in real estate loans. This real estate loan is a commercial loan secured by property located in Nevada, with a first lien position. The interest rate is 15%, the outstanding balance is approximately $2.5 million and the loan is considered a non-performing loan.
The success of a borrowers ability to repay its real estate loan obligation in a large lump-sum payment may be dependent upon the borrowers ability to refinance the obligation or otherwise raise a substantial amount of cash. With the weakened economy, credit continues to be difficult to obtain and as such, many of our borrowers who develop and sell commercial real estate projects have been unable to complete their projects, obtain takeout financing or have been otherwise adversely impacted. In addition, an increase in interest rates over the loan rate applicable at origination of the loan may have an adverse effect on our borrowers ability to refinance.
Common Guarantors
As of December 31, 2014, two loans totaling approximately $0.5 million, representing approximately 6.8% of our portfolios total value, had a common guarantor. At December 31, 2014, these loans were considered performing. As of December 31, 2015, these loans were paid in full.
As of December 31, 2014, there were two loans, totaling approximately $1.1 million, representing approximately 14.3% of our portfolios total value, which had a common guarantor. At December 31, 2014, these loans were considered performing. As of December 31, 2015, these loans were paid in full.
As of December 31, 2015, two loans totaling approximately $1.7 million, representing approximately 38% of our portfolios total value, have a common guarantor. These loans were originated in 2015.
As of December 31, 2015, three loans totaling approximately $0.3 million, representing approximately 7% of our portfolios total value, have a common guarantor. At December 31, 2014 these loans represented less than 5% of our portfolio. |
Investments In Real Estate Loans |
12 Months Ended |
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Dec. 31, 2015 | |
Investments In Real Estate Loans | |
Investments In Real Estate Loans | NOTE E INVESTMENTS IN DELAWARE STATUTORY TRUST
As of December 31, 2015, we have an investment in one Delaware Statutory Trusts (DST) for $1.8 million which has a mandatory repurchase agreement which, for accounting purposes, is accounted for in a manner similar to a loan. The DSTs holds commercial property located in Illinois, which we consider to be the collateral on this loan. Additionally, the DST is guaranteed by a third party Broker Dealer who has a selling agreement with MVP REIT. Certain members of the Broker Dealers management also guaranteed this loan. During the year ended, we received approximately $0.5 million in interest payments. |
Investment In Delaware Statutory Trust |
12 Months Ended |
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Dec. 31, 2015 | |
Notes to Financial Statements | |
Investment In Delaware Statutory Trust | NOTE E INVESTMENTS IN DELAWARE STATUTORY TRUST
As of December 31, 2015, we have an investment in one Delaware Statutory Trusts (DST) for $1.8 million which has a mandatory repurchase agreement which, for accounting purposes, is accounted for in a manner similar to a loan. The DSTs holds commercial property located in Illinois, which we consider to be the collateral on this loan. Additionally, the DST is guaranteed by a third party Broker Dealer who has a selling agreement with MVP REIT. Certain members of the Broker Dealers management also guaranteed this loan. During the year ended, we received approximately $0.5 million in interest payments. |
Assets Held For Sale |
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held For Sale | NOTE F ASSETS HELD FOR SALE
During April 2015, we committed to a plan to sell all interests in our six office buildings, at which point we began classifying the related assets as assets held for sale, and the related liabilities as liabilities related to assets held for sale. Additionally, we have classified the six office buildings operating results of operations as discontinued operations.
Assets and groups of assets and liabilities which comprise disposal groups are classified as held for sale when all of the following criteria are met: a decision has been made to sell, the assets are available for sale immediately, the assets are being actively marketed at a reasonable price in relation to the current fair value, a sale has been or is expected to be concluded within twelve months of the balance sheet date, and significant changes to the plan to sell are not expected. Assets held for sale are not depreciated.
Additionally, the operating results and cash flows related to these assets and liabilities are included in discontinued operations in the consolidated statements of operations and consolidated statements of cash flows for the year ended December 31, 2015.
The following is summary of net assets held for sale through December 31, 2015:
The following is a summary of the results of operations related to the assets held for sale for the year ended December 31, 2015 and 2014:
2014
The following is summary of net assets held for sale through December 31, 2014:
The following is a summary of the results of operations related to the assets held for sale for the year ended December 31, 2014:
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Investment In Marketable Securities - Related Party |
12 Months Ended |
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Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment In Marketable Securities - Related Party | NOTE G INVESTMENT IN MARKETABLE SECURITIES RELATED PARTY
In December 2014, VRM I effected a 1 for 4 reverse split of its common stock. All share and per share information in VRM Is consolidated financial statements and its accompanying notes have been adjusted to retroactively reflect the 1 for 4 reverse stock split.
As of December 31, 2015, we owned 134,545 shares of VRM Is common stock, representing approximately 10.4% of the total outstanding shares. The closing price of VRM Is common stock on December 31, 2015, was $1.02 per share.
During the year ended December 31, 2015, the trading price for VRM Is common stock ranged from $1.02 to $5.87 per share. At December 31, 2015, our manager evaluated the near-term prospects of VRM I in relation to the severity and duration of the unrealized loss. Based on that evaluation and current market conditions, we have determined there was an other-than-temporary impairment on our investment in VRM I as of December 31, 2015, totaling approximately $0.3 million and recognized the impairment.
As of December 31, 2015, VRM II purchased 5,000 shares of MVP REIT IIs outstanding common stock for $125,000. |
Investment In MVP REIT II |
12 Months Ended |
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Dec. 31, 2015 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment In MVP REIT II | NOTE H INVESTMENT IN MVP REIT II
During May 2015, our Board of Directors and the Board of Directors of VRM I agreed to form MVP CP II. We own 60% and VRM I owns 40%. The purpose of MVP CP II is to act as the sponsor of MVP REIT II, a Maryland corporation, which was formed as a publicly registered non traded REIT (MVP REIT II). MVP REIT IIs registration statement has been declared effective by the SEC on October 23, 2015. MVP REIT II is a proposed $550,000,000 offering with the proceeds raised from the offering being used primarily to acquire parking assets in the United States and Canada. MVP REIT II has engaged MVP Advisors as its advisor.
We and VRM I have agreed to fund certain costs and expenses of MVP REIT II through MVP CP II in proportion to our respective ownership interest. As consideration for the initial investment of $0.2 million MVP CP II received 8,000 shares of common stock in MVP REIT II. As part of the advisory agreement, MVP Advisors will receive a 1% annual asset management fee and 2.25% of the purchase price on all acquisitions. MVP Advisors will also receive the lesser of 3% of contract sale price or 50% of the brokerage commission paid on dispositions of MVP REIT II assets, which amount shall accrue until the MVP REIT II investors have a return of their net capital and a 6% annual cumulative non compounded return. In addition once the MVP REIT II investors have received a return of their net capital invested and a 6% annual cumulative, non-compounded return, then MVP Advisors will be entitled to receive 15% of the remaining proceeds. This fee will be payable under only one of the following events: (i) if MVP REIT II shares are listed on a national securities exchange; (ii) if MVP REIT II assets are sold, other than single assets sold in the ordinary course, or liquidated; (iii) upon a merger, share exchange, reorganization or other transaction pursuant to which MVP REIT II investors receive cash or publicly traded securities in exchange for their shares; or (iv) upon termination of the advisory agreement. The operating agreement of the Advisor provides that once we and VRM I have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisors behalf, or capital investment, and once we and VRM I have received an annualized return on our capital investment of 7.5%, then Michael Shustek will receive 40% of the net profits of the Advisor. |
Related Party Transactions |
12 Months Ended |
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Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE I RELATED PARTY TRANSACTIONS
Transactions with the Manager
Our manager is entitled to receive from us an annual management fee of up to 0.25% of our aggregate capital contributions received by us and Fund II from the sale of shares or membership units, paid monthly. The amount of management fees earned by our manager for the years ended December 31, 2015 and 2014 were approximately $1.1 million for each period.
As of December 31, 2015 and 2014, our manager owned 23,175 of our common shares, representing approximately 0.9% of our total outstanding common stock at the respective dates.
As of December 31, 2015 and 2014, we had receivables from our manager of approximately $20,000 related to consulting and accounting fees.
During September 2015, we and VRM I paid the manager approximately $0.3 million in fees, of which our portion was approximately $0.2 million, related to the investment in Delaware Statutory Trust.
Transactions with Other Related Parties
During the year ended December 31, 2015, the trading price for VRM Is common stock ranged from $1.02 to $5.87 per share. At December 31, 2015, our manager evaluated the near-term prospects of VRM I in relation to the severity and duration of the unrealized loss. Based on that evaluation and current market conditions, we have determined there was an other-than-temporary impairment on our investment in VRM I as of December 31, 2015, totaling approximately $0.3 million and recognized the impairment. For the years ended December 31, 2015 and 2014, we recognized no dividend income from VRM I.
As of December 31, 2015 and 2014, VRM I owned 134,270 of our common shares, representing approximately 5.4% of our total outstanding common stock for both periods.
As of December 31, 2015, we had a receivable from VRM I of approximately $4,000. As of December 31, 2014 we had a receivable from VRM I of approximately $30,000, primarily related to asset transfer and legal fees.
As of December 31, 2015, we owed Fund III approximately $1,000. As of December 31, 2014 we had a receivable from Fund III of approximately $4,000.
As of December 31, 2015 and 2014 we had a receivable from Vestin Mortgage of approximately $0.3 million and $0.1 million, respectively, related to payroll expenses paid by MVP Advisors.
As of December 31, 2015 and 2014, MVP Advisors owed VRM I approximately $4.5 million and $1.4 million, respectively.
As of December 31, 2015 and 2014, we owned a 60% interest in MVP Advisors, the advisor of MVP REIT and MVP REIT II, Inc.
MVP Advisors is entitled to receive a monthly asset management fee at an annual rate equal to 0.85% of the fair market value of (i) all assets then held by MVP REIT or (ii) MVP REITs proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement, excluding (only for clause (ii)) debt financing obtained by MVP REIT or made available to MVP REIT. The fair market value of real property shall be based on annual AS-IS, WHERE-IS appraisals, and the fair market value of real estate-related secured loans shall be equal to the face value of such loan, unless it is non-performing, in which case the fair market value shall be equal to the book value of such loan. The asset management fee will be reduced to 0.75% if MVP REIT is listed on a national securities exchange. Asset management fees for the years ended December 31, 2015 and 2014 were approximately $0.5 million and $0.4 million, respectively.
MVP Advisors receives a monthly debt financing fee at an annual rate equal to 0.25% of the aggregate debt financing obtained by MVP REIT or made available to MVP REIT, such as mortgage debt, lines of credit, and other term indebtedness, including refinancings. In the case of a joint venture, MVP REIT pays this fee only on MVP REITs pro rata share. Debt financing fees for the years ended December 31, 2015 and 2014 were approximately $66,000, and $29,000, respectively.
MVP Advisors receives a 3% acquisition fee for all acquisition s of MVP REIT. MVP Advisors received approximately $1.8 million in acquisition fee income from MVP REIT during the year ending December 31, 2015.
As of December 31, 2015 we have made loans of approximately $12.9 million to MVP Advisors, the manager of MVP REIT. We believe MVP Advisors has the opportunity to generate fees for the services it will render to MVP REIT. However, such fees may not be significant in the near term as MVP REIT only recently commenced operations in December 2012, and over the next 12 months, there may be a diminution of our liquid assets. If MVP REIT is unable to deploy the capital and operate its business successfully, then our return on our investment in MVP Advisor and the ability of MVP Advisor to repay our loans could be adversely impacted. We have not forgiven the balance due from MVP Advisor; however the decision by MVP Advisor to forgive certain amounts creates additional uncertainty as to when we will be repaid the amounts loaned to MVP Advisor. Based on these uncertainties, we have determined to fully impair the balance of this investment and note receivable.
As consideration for the initial investment of $0.2 million MVP CP II received 8,000 shares of common stock in MVP REIT II. As of December 31, 2015 we have made loans of approximately $1.1 million to MVP CP II. Similar to our investments in MVP Advisors in connection with MVP REIT, the return on our investment in MVP CP II in connection with MVP REIT II, including the ability of MVP CP II to repay its loans, will likely depend upon the success of the pending public offering of MVP REIT II and the ability of MVP CP II and MVP Advisor to successfully deploy the offering proceeds. Based on uncertainties regarding repayment, during the year ended December 31, 2015, we have determined to fully impair the entire balance of this loan.
From time to time, we may also jointly invest in real property or real estate loans with our affiliates, including VRM I and MVP REIT, Inc. These investments are described elsewhere in this report and incorporated herein by reference.
From time to time, we may also acquire or sell investments in real estate or in real estate loans from/to our manager or other related parties. Pursuant to the terms of our Management Agreement, such acquisitions and sales are made without any mark up or mark down. No gain or loss is recorded on these transactions, as it is not our intent to make a profit on the purchase or sale of such investments. The purpose is generally to diversify our portfolio by syndicating loans and real estate investments, thereby providing us with additional capital to make additional loans and investments in real estate.
On November 25, 2014, Shustek Investments Inc., a company wholly owned by our CEO Mike Shustek, entered into a loan purchase contract with us to acquire a loan with a book value of approximately $2.4 million. The loan was originated during March 2009 with an original principal balance of $7.45 million earning interest at a rate of 11% per annum. The borrower made principal payments during the life of the loan; however, they also received extensions for the maturity of the note. As of the date of the loan purchase contract, the loan was extended through January 2015. The purchase price of the loan was approximately $3.0 million, which includes the purchase of interest assigned to third parties. As additional consideration we may receive 50% of any amount collected in excess of the purchase price less any expenses incurred by Shustek Investments. After three years the 50% shall be reduced to 33%. This transaction resulted in a gain on sale of loan related party totaling approximately $0.6 million for the year ended December 31, 2014. During the quarter ended March 31, 2015, this loan was paid in full and we received approximately $1.6 million.
Accounting services
During the years ended December 31, 2015 and 2014, Strategix Solutions, an entity owned by Ms. Gress, the Companys Chief Financial Officer, received fees of approximately $237,000 and $135,000, respectively, for accounting services. |
Notes Receivable |
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Dec. 31, 2015 | |
Receivables [Abstract] | |
Notes Receivable | NOTE J NOTES RECEIVABLE
During December 2006, we and VRM I entered into a settlement agreement in the amount of $1.5 million with the guarantors of a loan collateralized by a 126 unit (207 bed) assisted living facility in Phoenix, AZ, which we had foreclosed on. Our portion was approximately $1.3 million. The promissory note is payable in seven annual installments of $100,000 with an accruing interest rate of 7%, with the remaining note balance due in April 2013. During 2011, we had received $88,000 in regularly scheduled principal payments. Also during 2011, an agreement which would accept approximately $0.4 million as a final payment for the note was approved, of which approximately $0.3 million was received. No payments were received in 2015. The balance of this agreement of approximately $50,000 was fully reserved as of December 31, 2015. Payments will be recognized as income when received.
During March 2011, we were awarded a deficiency judgment totaling $5.0 million related to a REO sold in a prior period. The balance accrues interest at the rate of 9% until paid in full. Provided all payments of approximately $3.0 million as outlined in the judgment are received, the remaining balance of judgment shall be forgiven. Annual payments of $0.5 million are accrued when due. The balance of approximately $3.9 million was fully reserved as of December 31, 2014. On September 15, 2015, we entered into a settlement agreement, wherein we received payment in the amount of $ 1.0 million in exchange for a full satisfaction of the judgement.
During March 2011, we were awarded a deficiency judgment totaling $2.8 million related to a REO sold in a prior period. The balance accrues interest at the rate of 9% until paid in full. Provided all payments of approximately $1.2 million as outlined in the judgment are received, the remaining balance of judgment shall be forgiven. Annual payments of $0.2 million are accrued when due. The balance of approximately $1.5 million was fully reserved as of December 31, 2014. On September 15, 2015, we entered into a settlement agreement, wherein we received payment in the amount of $0.6 million in exchange for a full satisfaction of the judgement.
During February 2012, we, VRM I and Fund III received a payment in full satisfaction of an investment in real estate loan secured by a first deed of trust and a partial payment of an investment in real estate loan secured by a second deed of trust on the same real estate. The remaining balance due on the second deed of trust, which was previously fully allowed for, of approximately $1.3 million was moved to notes receivable and remains fully allowed for. We receive quarterly payments of $24,000. As of December 31, 2015 the balance is approximately $1.0 million. |
Notes Payable |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||
Notes Payable | NOTE K NOTES PAYABLE
In April 2014, we financed a 12-month insurance policy for Directors and Officers liability, with an annual interest rate of 2.99%. The agreement required a down payment of $39,000 and nine monthly payments of $23,000 beginning on May 27, 2014. As of December 31, 2014, the outstanding balance of the note was approximately $23,000. During January 2015, the outstanding balance of the note was paid in full.
In April 2015, we financed a 12-month insurance policy for Directors and Officers liability, with an annual interest rate of 2.9%. The agreement required a down payment of $39,000 and nine monthly payments of $25,000 beginning on May 27, 2015. As of December 31, 2015, the note was paid in full.
At December 31, 2015 and 2014, the following loans are reported as liabilities related to assets held for sale:
On May 16, 2014 Wolfpack, LLC and Devonshire, LLC entered into a loan agreement with a financial institution in the amount of $7.8 million, collateralized by real property held in Las Vegas, Nevada. The loan bears an annual interest rate of 4.6% and is payable in monthly installment payments of principal and interest totaling approximately $50,000, with a lump sum payment of approximately $6.3 million due at maturity in June of 2024. This loan agreement replaces their previous loans which held balances of approximately $3.9 million and $3.9 million, respectively, at payoff.
During April 2014, through the acquisition of SE Properties, the Company assumed the liability on a loan with a balance of approximately $3.4 million, collateralized by real property located in Las Vegas, Nevada, bearing an annual interest rate of 6.625%, and payable in monthly installment payments of principal and interest totaling approximately $25,000 maturing in January 2036.
During April 2014, through the acquisition of ExecuSuites, the Company assumed the liability on a loan with a balance of approximately $3.1 million, collateralized by real property located in Las Vegas, Nevada, bearing an annual interest rate of 5.875%, and payable in monthly installment payments of principal and interest totaling approximately $21,000 maturing in May 2037.
During July 2014, through the acquisition of Building C, the Company assumed the liability on a loan with a balance of approximately $8.4 million, collateralized by real property located in Las Vegas, Nevada, bearing an annual interest rate of 4.81%, and payable in monthly installment payments of principal and interest totaling approximately $49,000, with a lump sum payment of approximately $7.0 million due at maturity in April of 2021.
During August 2014, through the acquisition of Building A, the Company assumed the liability on a loan with a balance of approximately $8.4 million, collateralized by real property located in Las Vegas, Nevada, bearing an annual interest rate of 4.969%, and payable in monthly installment payments of principal and interest totaling approximately $46,000, with a lump sum payment of approximately $7.8 million due at maturity in April of 2019.
As of December 31, 2015, future principal payments on the notes payable are as follows:
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Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | NOTE L FAIR VALUE
As of December 31, 2015 and 2014, financial assets and liabilities utilizing Level 1 inputs included investment in marketable securities - related party and third party. We had no assets or liabilities utilizing Level 2 inputs, and assets and liabilities utilizing Level 3 inputs included investments in real estate loans and investments in equity method investees, both held for sale and not held for sale.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, our degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability will be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value.
Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that are current as of the measurement date, including during periods of market dislocation, such as the recent illiquidity in the auction rate securities market. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition may cause our financial instruments to be reclassified from Level 1 to Level 2 or Level 3 and/or vice versa.
Our valuation techniques will be consistent with at least one of the three possible approaches: the market approach, income approach and/or cost approach. Our Level 1 inputs are based on the market approach and consist primarily of quoted prices for identical items on active securities exchanges. Our Level 2 inputs are primarily based on the market approach of quoted prices in active markets or current transactions in inactive markets for the same or similar collateral that do not require significant adjustment based on unobservable inputs. Our Level 3 inputs are primarily based on the income and cost approaches, specifically, discounted cash flow analyses, which utilize significant inputs based on our estimates and assumptions.
The following table presents the valuation of our financial assets and liabilities as of December 31, 2015 and 2014, measured at fair value on a recurring basis by input levels:
The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2015 to December 31, 2015:
The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2014 to December 31, 2014:
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Employee Benefit Plan |
12 Months Ended |
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Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plan | NOTE M EMPLOYEE BENEFIT PLAN
MVP Advisors maintains a 401(k) Plan (the Plan), which is a defined contribution plan covering all eligible employees. Under the provisions of the Plan, participants may direct the Company to defer a portion of their compensation to the Plan, subject to Internal Revenue Code limitations. The Company provides for an employer matching contribution equal to 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation contributed by each employee, which is funded in cash. All contributions vest immediately.
Total expense recorded for the matching 401(k) contribution in the year ended December 31, 2015 was approximately $39,000. The Plan started in 2015 so there is no similar expense in 2014. |
Segment Information |
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Segment Information | NOTE N SEGMENT INFORMATION
Company management reviews financial and operating performance in the following three separate operating segments: (1) investment in real estate loans, (2) investments in real property and (3) investment in a real estate management company. Selling, general and administrative expenses, primarily consisting of compensation of employees, seminar expense, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities.
Assets related to investments in real property are currently listed as held for sale. Revenue, net of expenses for this segment are reported in discontinued operations.
The following are certain financial data for the Companys operating segments for the periods:
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Recent Accounting Pronouncements |
12 Months Ended |
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Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | NOTE O RECENT ACCOUNTING PRONOUNCEMENTS
In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In accordance with the guidance, all legal entities are subject to reevaluation under the revised consolidation model. The guidance is effective in the first quarter of 2016, and early adoption is permitted. We are currently evaluating the potential impact of the adoption of ASU 2015-02 on our consolidated financial statements.
On April 17, 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. Currently, debt issuance costs are recorded as an asset and amortization of these deferred financing costs is recorded in interest expense. Under the new standard, debt issuance costs will continue to be amortized over the life of the debt instrument and amortization will continue to be recorded in interest expense. The new standard is effective for the Company on January 1, 2016 and will be applied on a retrospective basis. The Company is currently evaluating ASU 2015-03, and anticipates a change in our presentation only since the standard does not alter the accounting for debt issuance costs. |
Legal Matters Involving The Manager |
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Dec. 31, 2015 | |
Legal Matters Involving Manager | |
Legal Matters Involving The Manager | NOTE P LEGAL MATTERS INVOLVING THE MANAGER
The United States Securities and Exchange Commission (the Commission), conducted an investigation of certain matters related to us, our manager, Vestin Capital, VRM I, and Fund III. We fully cooperated during the course of the investigation. On September 27, 2006, the investigation was resolved through the entry of an Administrative Order by the Commission (the Order). Our manager, Vestin Mortgage and its Chief Executive Officer, Michael Shustek, as well as Vestin Capital (collectively, the Respondents), consented to the entry of the Order without admitting or denying the findings therein.
In the Order, the Commission found that the Respondents violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 through the use of certain slide presentations in connection with the sale of units in Fund III and in our predecessor, Vestin Fund II, LLC. The Respondents consented to the entry of a cease and desist order, the payment by Mr. Shustek of a fine of $100,000 and Mr. Shusteks suspension from association with any broker or dealer for a period of six months, which expired in March 2007. In addition, the Respondents agreed to implement certain undertakings with respect to future sales of securities. We are not a party to the Order.
Other than the matters described above, our manager believes that it is not a party to any pending legal or arbitration proceedings that would have a material adverse effect on our managers financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on our managers net income in any particular period. |
Legal Matters Involving The Company |
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Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters Involving The Company | NOTE Q LEGAL MATTERS INVOLVING THE COMPANY
On February 7, 2012, we, VRM I and Fund III entered into a Deed in Lieu Agreement with a borrower in lieu of the foreclosure of our subordinated secured loan which had matured on December 31, 2011, with a principal balance, net of allowance for loan loss, of approximately $9.9 million, of which our portion was approximately $9.0 million. Pursuant to the Deed in Lieu Agreement, our subsidiary 1701 Commerce, LLC (1701 Commerce) received a deed to the secured property operated as the Sheraton Hotel and Spa Fort Worth, Texas (the Hotel). On March 26, 2012, 1701 Commerce filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Texas, Ft. Worth Division, to seek relief from a pending foreclosure of the Hotel by the senior mortgage lien holder and to preserve and protect 1701 Commerces equity and the interests of other Hotel creditors. Due to the uncertainty and disputes involving the Hotel, we recorded this investment as Other Real Estate Owned on our balance sheet until August 23, 2012. On July 17, 2013 the Hotel was sold to a third party for the sum of $49.3 million. The net proceeds of the sale and the cash on hand as of the date of the sale were used to pay all 1701 Commerce creditors 100% of their claim plus interest, with the balance distributed to us and our two partners, VRM I and Fund III. On February 4, 2015, the court entered its final decree closing the case.
We hold an interest of approximately 90%, VRM I holds an interest of approximately 8% and Fund III holds an interest of approximately 2% in 1701 Commerce.
In addition to the matters described above, we are involved in a number of other legal proceedings concerning matters arising in the ordinary course of our business activities. We believe we have meritorious defenses to each of these actions and intend to defend them vigorously. Other than the matters described above, we believe that we are not a party to any pending legal or arbitration proceedings that would have a material adverse effect on our financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on our operations in any particular period. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | NOTE R INCOME TAXES
We operated as a REIT through December 31, 2011. We announced on March 28, 2012 that we have terminated our election to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the Code), effective for the tax year ending December 31, 2012.
The components of the provision for income tax benefit are as follows for the years ended:
The following is a summary of the significant components of the Companys deferred tax assets and liabilities at years end:
The effective tax rate used for calculation of the deferred taxes as of December 31, 2015 was 34%. The Company has established a valuation allowance against deferred tax assets of $82,266,000 due to the uncertainty regarding realization, comprised primarily of a reserve against the deferred tax assets attributable to the net operating loss carryforward timing differences.
As of December 31, 2011 we were organized and conducted our operations to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the Code) and to comply with the provisions of the Internal Revenue Code with respect thereto. A REIT is generally not subject to federal income tax on that portion of its REIT taxable income (Taxable Income) which is distributed to its stockholders, provided that at least 90% of Taxable Income is distributed and provided that certain other requirements are met. Our Taxable Income may substantially exceed or be less than our net income as determined based on GAAP, because, differences in GAAP and taxable net income consist primarily of allowances for loan losses or doubtful account, write-downs on real estate owned held for sale, amortization of deferred financing cost, capital gains and losses, and deferred income. |
Subsequent Events |
12 Months Ended |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE S SUBSEQUENT EVENTS
The following subsequent events have been evaluated through the date of this filing with the SEC.
On January 29, 2016, we closed on the sale of our interest in three office buildings that we owned with VRM I through various subsidiaries. The first building was owned by Building C, LLC and is located at 8930 West Sunset Road, Las Vegas, Nevada (the 8930 Building). The second building was owned by SE Property Investments, LLC and is located at 8905 West Post Road, Las Vegas, Nevada (the 8905 Building) and the third building was owned by ExecuSuite Properties, LLC and is located at 8945 West Post Road, Las Vegas, Nevada (the 8945 Building).
The sales price for the 8930 Building is $12.1 million less the current debt on the property of approximately $8.1 million, which was assumed by the purchaser for a net of approximately $4.0 million of which our share was approximately $2.9 million. The sales price for the 8905 Building is $5.6 million less the current debt on the property of approximately $3.3 million, which was assumed by the purchaser for a net of approximately $2.3 million of which our share was approximately $1.6 million. The sales price for the 8945 Building is $5.0 million less the current debt on the property of approximately $3.0 million, which was assumed by the purchaser for a net of approximately $2.0 of which our share was approximately $1.4 million.
We and VRM I, through its subsidiaries, have the right, for a period of one year from the Closing Date, to repurchase one or more of the buildings at a price equal to (i) the sales price for each building, plus (ii) $65,000 for the 8930 Building, $30,000 for the 8905 Building and $30,000 for the 8945 Building, plus (iii) twelve percent less any profit realized by the purchaser of the building being repurchased. Stable Development, LLC, a limited liability company is the manager of and owns a 15% interest in each of the purchasers. Lance Bradford, the former President of MVP REIT is the owner of Stable Development, LLC. |
Summary Of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||
Basis of Accounting | Basis of Accounting
The consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included. |
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Management Estimates | Management Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Investments in Real Estate Loans | Investments in Real Estate Loans
We may, from time to time, acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received or when managements assessment of the value has changed, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Companys impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loans effective interest rate, or at the loans observable market price or the fair value of its collateral.
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (TDR) as defined by ASC 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected. |
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Allowance for Loan Losses | Allowance for Loan Losses
We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Our managers estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrowers ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. We and our manager generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry we perform will not reveal all material facts pertaining to a borrower and the security.
Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that have and may continue to cause significant changes in our estimated allowance include, but are not limited to:
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Discontinued Operations | Discontinued Operations
We have reclassified for all periods presented in the accompanying consolidated statements of operations, the amounts related to discontinued operations and real estate held for sale, in accordance with the applicable accounting criteria. In addition, the assets and liabilities related to the discontinued operations are reported separately in the accompanying consolidated balance sheets as real estate held for sale, assets held for sale, and liabilities related to assets held for sale.
Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to REO are separately identified in the accompanying consolidated statements of operations. |
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Real Estate Owned Held for Sale | Real Estate Owned Held for Sale
Real estate owned held for sale (REO) includes real estate acquired through foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property's estimated fair value, less estimated costs to sell, with fair value based on appraisals and knowledge of local market conditions. While pursuing foreclosure actions, we seek to identify potential purchasers of such property. We generally seek to sell properties acquired through foreclosure as quickly as circumstances permit, taking into account current economic conditions. The carrying values of REO are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers.
Management classifies real estate as REO when the following criteria are met:
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Acquisitions | Acquisitions
The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.
The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings and improvements, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.
The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) management's estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. Our below-market operating leases generally do not include fixed rate or below-market renewal options.
The fair value of acquired in-place leases is derived based on management's assessment of lost revenue and costs incurred for the period required to lease the assumed vacant property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered by us in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand at market rates. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The amount recorded for acquired in-place leases is included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If a lease were to be terminated or if termination were determined to be likely prior to its contractual expiration (for example resulting from bankruptcy), amortization of the related unamortized in-place lease intangible would be accelerated.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.
The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred. Our acquisition expenses are directly related to our acquisition activity and if our acquisition activity was to increase or decrease, so would our acquisition costs. Costs directly associated with development acquisitions accounted for as asset acquisitions are capitalized as part of the cost of the acquisition. During the year ended December 31, 2015, the Company did not capitalize any such acquisition costs. |
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Impairment of Long Lived Assets | Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the propertys use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income. |
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Cash and Cash Equivalents | Cash and Cash Equivalents
Cash and cash equivalents include interest-bearing and non-interest bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less. |
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Revenue Recognition | Revenue Recognition
The Company recognizes interest income from loans on an accrual basis over the expected terms of the loans using the effective interest method. The Company may recognize fees, discounts, premiums, anticipated exit fees and direct cost over the terms of the loans as an adjustment to the yield. The Company may recognize fees on commitments that expire unused at expiration. The Company may recognize interest income from available-for-sale securities on an accrual basis over the life of the investment on a yield-to-maturity basis. Interest is fully allowed for on impaired loans and is recognized on a cash basis method. The receipt of previous loan or note receivable allowances or impairments are recognized as revenue. |
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Advertising Costs | Advertising Costs
Advertising costs incurred in the normal course of operations are expensed as incurred. The Company had no advertising expense for the years ended December 31, 2015 and 2014. |
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Investments in Real Estate and Fixed Assets | Investments in Real Estate and Fixed Assets
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. |
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Investment in Marketable Securities | Investment in Marketable Securities
Investment in marketable securities consists of stock in VRM I and MVP REIT II, related parties. The securities are stated at fair value as determined by the closing market prices as of December 31, 2015 and 2014. All securities are classified as available-for-sale.
We are required to evaluate our available-for-sale investment for other-than-temporary impairment charges. We will determine when an investment is considered impaired (i.e., decline in fair value below its amortized cost), and evaluate whether the impairment is other than temporary (i.e., investment value will not be recovered over its remaining life). If the impairment is considered other than temporary, we will recognize an impairment loss equal to the difference between the investments cost and its fair value. |
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Basic and Diluted Earnings Per Common Share | Basic and Diluted Earnings Per Common Share
Basic earnings per share (EPS) is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been exercised. We had no outstanding common share equivalents during the periods ended December 31, 2015 and 2014. |
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Common Stock Dividends | Common Stock Dividends
During June 2008, our Board of Directors decided to suspend the payment of dividends. Our Board of Directors will closely monitor our operating results in order to determine when dividends should be reinstated; however, we do not expect our Board of Directors to reinstate dividends in the foreseeable future. |
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Treasury Stock | Treasury Stock
On March 21, 2007, our Board of Directors authorized the repurchase of up to $10 million worth of our common stock. On November 17, 2014, our Board of Directors authorized the repurchase of an additional $500,000 in common stock. Depending upon market conditions, shares may be repurchased from time to time at prevailing market prices through open market or privately negotiated transactions. We are not obligated to purchase any shares. Subject to applicable securities laws, including SEC rule 10b-18, repurchases may be made at such times and in such amounts, as our management deems appropriate. The share repurchase program may be discontinued or terminated at any time and we have not established a date for completion of the share repurchase program. The repurchases will be funded from our available cash.
We record our treasury stock using the cost method. Under the Maryland General Corporation Law, shares of its own stock acquired by a corporation constitute authorized but unissued shares. |
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Segments | Segments
We currently are authorized to operate three reportable segments, investments in real estate loans, investments in real property and investment in a real estate management company. As of December 31, 2015, the Company operates in all segments.
Our objective is to invest approximately 97% of our assets in real estate loans and real estate related investments, while maintaining approximately 3% as a working capital cash reserve. |
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Reclassifications | Reclassifications
Amounts listed in connection with assets held for sale, including liabilities related to assets held for sale, in the 2014 consolidated financial statements have been reclassified to conform to the December 31, 2015 presentation. This reclassification resulted in no net effect on the 2014 consolidated financial statements. |
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Principles of Consolidation | Principles of Consolidation
Our consolidated financial statements include the accounts of VRM II; Building A, LLC, Building C, LLC, Wolfpack Properties, LLC; Devonshire, LLC; SE Properties, LLC; ExecuSuites, LLC; MVP Advisors; and MVP Capital Partners II, LLC. All significant intercompany transactions and balances have been eliminated in consolidation. |
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Business Combinations | Business Combinations
In December 2007, the Financial Accounting Standards Board (FASB) revised the authoritative guidance for business combinations, establishing principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired (including goodwill), the liabilities assumed, and any noncontrolling interest in the acquiree. Subsequently, on April 1, 2009, the FASB amended and clarified certain aspects of its authoritative guidance on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. We apply the FASB authoritative guidance to all business combinations for which the acquisition date is on or after January 1, 2009, and to certain future income tax effects related to our prior business combinations, should they arise. |
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Non-controlling Interests | Non-controlling Interests
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. |
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Income Taxes | Income Taxes
The Company accounts for its income taxes under the assets and liabilities method, which requires recognition of deferred tax assets and liabilities for future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company was to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, they would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also, included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Investments In Real Estate Loans (Tables) |
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Investments In Real Estate Loans |
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Schedule Of Priority Of Real Estate Loans |
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Investments Classified by Contractual Maturity Date |
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Schedule By Geographic Location Of Investments In Real Estate Loans |
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Reconciliation Of Portfolio To Balance Sheet |
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Non-Performing Loans |
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Allowance for Credit Losses on Financing Receivables |
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Allowance For Loan Losses Roll-Forward |
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Assets Held For Sale (Tables) |
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Net Assets Held For Sale |
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Summary Of Results Of Operations Related To Assets Held For Sale |
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Notes Payable (Tables) |
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Future Principal Payments On The Notes Payable |
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Fair Value (Tables) |
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Valuation Of Financial Assets And Liabilities on Recurring Basis |
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Changes In Financial Assets And Liabilities on Recurring Basis Using Significant Unobservable Inputs |
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Segment Information (Tables) |
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Schedule Of Investment In Real Estate Loans And Investments In Real Property |
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Income Taxes (Tables) |
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Schedule of Components of Income Tax Expense Benefit |
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Schedule of Deferred Tax Assets and Liabilities |
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Investments In Real Estate Loans (Detail) - Investments in Real Estate Loans |
12 Months Ended | |
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Dec. 31, 2015
USD ($)
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Dec. 31, 2014
USD ($)
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Balance | $ 4,611,000 | $ 7,637,000 |
Weighted Average Interest Rate | 11.79% | 10.37% |
Commercial Loans [Member] | ||
Number of Loans | 7 | 11 |
Balance | $ 4,541,000 | $ 5,579,000 |
Weighted Average Interest Rate | 11.85% | 10.88% |
Portfolio Percentage | 98.48% | 73.04% |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 60.14% | 43.43% |
Construction Loans [Member] | ||
Number of Loans | 1 | 1 |
Balance | $ 70,000 | $ 2,058,000 |
Weighted Average Interest Rate | 0.12% | 9.00% |
Portfolio Percentage | 1.52% | 26.96% |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 0.44% | 67.63% |
Total [Member] | ||
Number of Loans | 8 | 12 |
Balance | $ 4,611,000 | $ 7,637,000 |
Weighted Average Interest Rate | 11.79% | 10.37% |
Portfolio Percentage | 100.00% | 100.00% |
Current Weighted Average Loan-To-Value Net of Allowance for Loan Losses | 58.61% | 53.03% |
Investments In Real Estate Loans (Detail) - Schedule Of Priority Of Real Estate Loans |
12 Months Ended | |
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Dec. 31, 2015
USD ($)
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Dec. 31, 2014
USD ($)
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First Deeds Of Trust [Member] | ||
Number of Loans | 8 | 11 |
Balance | $ 4,611,000 | $ 7,342,000 |
Portfolio Percentage | 100.00% | 96.14% |
Second Deeds Of Trust [Member] | ||
Number of Loans | 0 | 1 |
Balance | $ 295,000 | |
Portfolio Percentage | 3.86% | |
Total [Member] | ||
Number of Loans | 8 | 12 |
Balance | $ 4,611,000 | $ 7,637,000 |
Portfolio Percentage | 100.00% | 100.00% |
Investments In Real Estate Loans (Detail) - Investments Classified by Contractual Maturity Date - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Balance | $ 4,611,000 | $ 7,637,000 |
Non-performing and past due loans [Member] | ||
Balance | $ 2,450,000 | |
January 2016 to March 2016 [Member] | ||
Balance | ||
April 2016 to June 2016 [Member] | ||
Balance | ||
July 2016 to September 2016 [Member] | ||
Balance | ||
October 2016 to December 2016 [Member] | ||
Balance | ||
Thereafter [Member] | ||
Balance | $ 2,161,000 | |
Total [Member] | ||
Balance | $ 4,611,000 |
Investments In Real Estate Loans (Detail) - Geoographic Location of Investments in Real Estate Loans - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Balance | $ 4,611,000 | $ 7,637,000 |
Nevada [Member] | ||
Balance | $ 4,295,000 | $ 5,264,000 |
Portfolio Percentage | 93.15% | 68.93% |
California [Member] | ||
Balance | $ 2,059,000 | |
Portfolio Percentage | 26.96% | |
Ohio [Member] | ||
Balance | $ 310,000 | $ 314,000 |
Portfolio Percentage | 6.72% | 4.11% |
Arizona [Member] | ||
Balance | $ 6,000 | |
Portfolio Percentage | 0.13% |
Investments In Real Estate Loans (Detail) - Reconciliation Of Portfolio To Balance Sheet - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Investments In Real Estate Loans | ||
Balance per loan portfolio | $ 4,611,000 | $ 7,637,000 |
Less: | ||
Allowance for loan losses | (2,450,000) | (2,450,000) |
Balance per consolidated balance sheets | $ 2,161,000 | $ 5,187,000 |
Investments In Real Estate Loans (Detail) - Non-Performing Loans |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Allowance for Loan Losses | $ (2,450,000) | $ (2,450,000) |
Commercial Loans [Member] | ||
Number Of Non-Performing Loans | 1 | 1 |
Balance | $ 2,450,000 | $ 2,450,000 |
Allowance for Loan Losses | $ (2,450,000) | $ 2,450,000 |
Total [Member] | ||
Number Of Non-Performing Loans | 1 | 1 |
Balance | $ 2,450,000 | $ 2,450,000 |
Allowance for Loan Losses | $ (2,450,000) | $ (2,450,000) |
Net Balance [Member] | ||
Balance | ||
Allowance for Loan Losses |
Investments In Real Estate Loans (Detail) - Roll-forward of Allowance for Loan Losses - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Balance | $ 2,450,000 | $ 2,450,000 | |
Specific Reserve Allocation | |||
Loan Pay Downs | |||
Write Off | |||
Transfers to REO and Notes Receivable | |||
Commercial Loans [Member] | |||
Balance | $ 2,450,000 | $ 2,500,000 | |
Specific Reserve Allocation | |||
Loan Pay Downs | $ (50,000) | ||
Write Off | |||
Transfers to REO and Notes Receivable |
Assets Held For Sale (Detail) - Summary Of Net Assets Held For Sale - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Assets: | ||
Current assets | $ 971,000 | $ 833,000 |
Property and equipment | 43,952,000 | 54,594,000 |
Total assets | 44,923,000 | 55,427,000 |
Liabilities: | ||
Accounts payable and accrued liabilities | 289,000 | 84,000 |
Notes payable | 30,395,000 | 30,972,000 |
Total liabilities | 30,684,000 | 31,056,000 |
Net assets held for sale | $ 14,239,000 | $ 24,371,000 |
Assets Held For Sale (Detail) - Summary Of Results Of Operations Related To Assets Held For Sale - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Abstract] | ||
Revenue | $ 4,832,000 | $ 2,727,000 |
Revenue eliminated through consolidation | (169,000) | |
Expenses | (14,009,000) | $ (2,020,000) |
Net Income | $ (9,346,000) | $ 708,000 |
Notes Payable (Detail) - Future Principal Payments On The Notes Payable - USD ($) |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
2016 [Member] | ||
Principal Payments | $ 584,000 | |
2017 [Member] | ||
Principal Payments | 648,000 | |
2018 [Member] | ||
Principal Payments | 683,000 | |
2019 [Member] | ||
Principal Payments | 8,431,000 | |
2020 [Member] | ||
Principal Payments | $ 591,000 | |
Thereafter [Member] | ||
Principal Payments | $ 19,458,000 | |
Total [Member] | ||
Principal Payments | $ 30,395,000 |
Fair Value (Detail) - Valuation Of Financial Assets And Liabilities on Recurring Basis - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Assets | ||
Investment in marketable securities - related party | $ 262,000 | $ 461,000 |
Investment in real estate loans | 2,148,000 | 5,167,000 |
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Assets | ||
Investment in marketable securities - related party | $ 262,000 | $ 461,000 |
Investment in real estate loans | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets | ||
Investment in marketable securities - related party | ||
Investment in real estate loans | ||
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Investment in marketable securities - related party | ||
Investment in real estate loans | $ 2,148,000 | $ 5,167,000 |
Carrying Value on Balance Sheet [Member] | ||
Assets | ||
Investment in marketable securities - related party | 262,000 | 461,000 |
Investment in real estate loans | $ 2,161,000 | $ 5,187,000 |
Fair Value (Detail) - Changes in our Financial Assets and Liabilities - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Balance, Beginning | $ 5,187,000 | |
Sales, pay downs and reduction of assets | ||
Balance, End, 2015/2014, net of temporary valuation adjustment | 2,161,000 | $ 5,187,000 |
Real Estate Investment [Member] | ||
Balance, Beginning | 5,167,000 | 7,867,000 |
Purchase and additions of assets | ||
New mortgage loans and mortgage loans acquired | 5,217,000 | 14,269,000 |
Purchase from third parties | 200,000 | 498,000 |
Sales, pay downs and reduction of assets | ||
Collections of principal and sales of investment in real estate loans | (5,971,000) | (6,546,000) |
Sale of assets to VRM I | (2,823,000) | |
Sale of assets to third parties | (2,472,000) | (8,060,000) |
Temporary change in estimated fair value based on future cash flows | 7,000 | (38,000) |
Balance, End, 2015/2014, net of temporary valuation adjustment | $ 2,148,000 | $ 5,167,000 |
Segment Information (Detail) - Financial Data For The Company's Operating Segments - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Revenues | $ 5,216,000 | $ 2,116,000 |
Total Assets | 54,368,000 | 68,915,000 |
Investment in real estate loans [Member] | ||
Revenues | 2,820,000 | 1,737,000 |
Operating expenses | 1,096,000 | 1,098,000 |
Total Assets | 4,203,000 | $ 5,190,000 |
Investment in real property held for sale [Member] | ||
Revenues | 1,830,000 | |
Operating expenses | 4,000 | $ 32,000 |
Total Assets | 55,427,000 | |
Investment in real estate management [Member] | ||
Revenues | 566,000 | 379,000 |
Operating expenses | 4,659,000 | 2,317,000 |
Corporate activities [Member] | ||
Operating expenses | 7,968,000 | 4,399,000 |
Corporate assets [Member] | ||
Total Assets | 5,242,000 | 8,298,000 |
Total [Member] | ||
Revenues | 5,216,000 | 2,116,000 |
Operating expenses | 13,727,000 | 7,846,000 |
Total Assets | $ 54,368,000 | $ 68,915,000 |
Income Taxes (Detail) - Schedule of Components of Income Tax Expense Benefit - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current Taxes | ||
Federal | ||
State | ||
Total Current Taxes | ||
Change in Deferred Taxes | $ (5,042,900) | $ (375,700) |
Change in Valuation Allowance | $ 5,042,900 | $ 375,700 |
Provision for income tax expense (benefit) |
Income Taxes (Detail) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Tax Assets: | ||
Provision for Loan Losses | $ 834,000 | $ 834,000 |
Impairment on asset held for sale | 3,672,000 | |
Impairment on investment in MVP Advisors | 2,095,000 | $ 2,095,000 |
Impairment on investment in marketable securities-related party | 41,000 | 41,000 |
Recovery of allowance for doubtful notes receivable | 204,000 | 391,000 |
Conversion from straight line rental revenue to actual | 48,000 | 48,000 |
Net operating loss carryforward | 75,372,000 | 76,942,000 |
Total Deferred Tax Assets | 82,266,000 | 80,351,000 |
Valuation allowance | $ (82,266,000) | $ (80,351,000) |
Deferred Tax Assets, net of valuation allowance | ||
Non-current portion | ||
Current portion |
Summary Of Significant Accounting Policies (Details Narrative) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Nov. 17, 2014 |
Mar. 21, 2007 |
|
Advertising Expense | ||||
Stock Repurchase Authorized | $ 500,000 | $ 10,000,000 | ||
Real Estate Loans And Real Estate Investments [Member] | ||||
Concentration Risk Percentage | 97.00% | |||
Working Capital Cash Reserve [Member] | ||||
Concentration Risk Percentage | 3.00% |
Investments In Real Estate Loans (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Three Loans - Variable Interest Rate | 6.55% | 6.55% |
Three Loans - Balance | $ 300,000 | $ 300,000 |
Real Estate Loans, Weighted Average Interest Rate, performing loans | 11.79% | 10.37% |
Real estate loans | $ 2,161,000 | $ 5,187,000 |
Investment in real estate loans, allowance | 2,450,000 | 2,450,000 |
Real Estate Loans, extensions, our portion | 45,000 | 5,100,000 |
Non-Performing Loans [Member] | ||
Real estate loans | 0 | 0 |
Investment in real estate loans, allowance | $ 2,500,000 | $ 2,500,000 |
Investment In Delaware Statutory Trust (Details Narrative) |
Dec. 31, 2015
USD ($)
|
---|---|
Notes to Financial Statements | |
Investment in Delaware Statutory Trust | $ 1,800,000 |
Investment In Marketable Securities - Related Party (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Purchase of marketable securities - related party | $ (125,000) | |
VRM I [Member] | ||
Shares in Related Party | 134,545 | |
Percentage of Shares Owned in Affiliate | 10.40% | |
Related Party, Share Price | $ 1.02 | |
Other Than Temporary Investment Impairment | $ 300,000 | |
Other Than Temporary Investment Impairment Recognized | $ 300,000 | |
VRM I [Member] | Minimum [Member] | ||
Related Party, Share Price | $ 1.02 | |
VRM I [Member] | Maximum [Member] | ||
Related Party, Share Price | $ 5.87 | |
MVP REIT II [Member] | ||
Shares in Related Party | 5,000 | |
Purchase of marketable securities - related party | $ 125,000 |
Investment In MVP REIT II (Details Narrative) |
Dec. 31, 2015 |
---|---|
MVP REIT II [Member] | |
Ownership, percentage | 60.00% |
Employee Benefit Plan (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Compensation and Retirement Disclosure [Abstract] | ||
Contribution Plan Description | The Company provides for an employer matching contribution equal to 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation contributed by each employee, which is funded in cash. All contributions vest immediately. | |
Matching 401(k) Contribution Expense | $ 39,000 |
Legal Matters Involving The Manager (Details Narrative) |
Sep. 27, 2006
USD ($)
|
---|---|
Legal Matters Involving Manager | |
Fine | $ 100,000 |
Legal Matters Involving The Company (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Net Of Allowance For Loan Loss | $ 9,900,000 |
Net Of Allowance For Loan Loss, Our Portion | $ 9,000,000 |
Income Taxes (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Tax Rate Used For Calculation Of The Deferred Taxes | 34.00% |
Valuation Allowance Against Deferred Tax Assets | $ 82,266,000 |
Subsequent Events (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Date of Event | Jan. 29, 2016 |
Description of Event | On January 29, 2016, we closed on the sale of our interest in three office buildings that we owned with VRM I through various subsidiaries. The first building was owned by Building C, LLC and is located at 8930 West Sunset Road, Las Vegas, Nevada (the "8930 Building"). The second building was owned by SE Property Investments, LLC and is located at 8905 West Post Road, Las Vegas, Nevada (the "8905 Building") and the third building was owned by ExecuSuite Properties, LLC and is located at 8945 West Post Road, Las Vegas, Nevada (the "8945 Building"). The sales price for the 8930 Building is $12.1 million less the current debt on the property of approximately $8.1 million, which was assumed by the purchaser for a net of approximately $4.0 million of which our share was approximately $2.9 million. The sales price for the 8905 Building is $5.6 million less the current debt on the property of approximately $3.3 million, which was assumed by the purchaser for a net of approximately $2.3 million of which our share was approximately $1.6 million. The sales price for the 8945 Building is $5.0 million less the current debt on the property of approximately $3.0 million, which was assumed by the purchaser for a net of approximately $2.0 of which our share was approximately $1.4 million. We and VRM I, through its subsidiaries, have the right, for a period of one year from the Closing Date, to repurchase one or more of the buildings at a price equal to (i) the sales price for each building, plus (ii) $65,000 for the 8930 Building, $30,000 for the 8905 Building and $30,000 for the 8945 Building, plus (iii) twelve percent less any profit realized by the purchaser of the building being repurchased. Stable Development, LLC, a limited liability company is the manager of and owns a 15% interest in each of the purchasers. Lance Bradford, the former President of MVP REIT is the owner of Stable Development, LLC. |
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