The filings for both REITs attributed the losses in large partto non-performing loans and the continued deterioration in realestate values. The Vestin REITs invest in commercial real estateloans and also are involved in asset management, real estatelending and other financial services through subsidiaries.

Vestin I had 19 loans outstanding with an aggregate principalamount totaling $32.3 million at the end of the year, with $21.3million of that total considered non-performing. The company hasstarted foreclosure proceedings on five of the non-performing loansand is conducting workout discussions with certain non-performingborrowers. As of Dec. 31, the REIT owned 11 properties that itacquired through foreclosure, compared with eight properties ownedat the end of 2008.

Vestin II had 26 loans outstanding with an aggregate principaltotaling $112.1 million at the end of the year, of which 12 loanstotaling approximately $68.3 million were considerednon-performing, and the company has started foreclosure proceedingson seven of them. As with the non-performing loans of Vestin I,Vestin II is conducting workout discussions with some of thenon-performing borrowers. The company owned 17 REO properties atthe end of the year, compared with 11 properties at the end of2008.