Vestin Foreclosing REO as REITs Cut Losses

LAS VEGAS-Vestin REITs Realty Mortgage I and Realty Mortgage II, working through REO and properties that it plans to foreclose on, reported narrower first-quarter losses in comparison with the first quarter of last year, the mortgage REITs reported in recent SEC filings. At the end of the quarter, Realty Mortgage I had commenced foreclosure proceedings on four of its nine non-performing loans and Realty Mortgage II had started foreclosure proceedings on six of its 12 non-performing loans. Both REITs said they were conducting workout discussions with some of the borrowers on the non-performing loans.

Vestin I said that its nine non-performing loans totaled $21.2 million and that they were part of a total of 19 loans totaling $32.3 million that it owned at the end of the quarter. Vestin II said that its 12 non-performing loans totaled an aggregate principal amount of approximately $68.3 million. The 12 loans and $68.3 million were part of 27 real estate loans outstanding with a balance of approximately $115.3 million that were in the company's portfolio at the end of the quarter.

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

Vestin I reported a net loss of approximately $300,000 and five cents per share for the three months ended March 31, compared with a net loss of approximately $1.5 million and 23 cents per share for the three months ended March 31, 2009. Vestin II reported a net loss of approximately $2.5 million or 19 cents per share for the three months ended March 31 compared with a net loss of $6.4 million and 46 cents per share for the three months ended March 31, 2009.

Both REITs attributed their narrower losses this quarter to reductions in the provision for loan losses and in interest expense.