Real estate investor Shustek proposing to delist company

Las Vegas real estate investor Michael Shustek is proposing to delist his company Vestin Realty Mortgage II from the Nasdaq exchange in what the company says is an attempt to save on expenses and management time.

“The board has decided that the costs of being a SEC reporting company outweigh the benefits and, thus, it is no longer in the best interests of the company or of our shareholders,” Vestin Realty Mortgage II said in a December Securities and Exchange Commission statement. Delisting “would free management and staff time to focus on long-term business objectives.”

Vestin Realty Mortgage II, which invests in real estate loans and properties, would save $160,000 a year in listing expenses, according to the company’s SEC filing. That compares with company expenses of $1.03 million on seminars, $490,000 on travel and $1.8 million on wages over the first nine months of 2016, according to a November SEC filing.

“We don’t make comments to the press,” Vestin Realty Mortgage II CFO Ed Bentzen said through a spokeswoman when contacted by the Review-Journal to discuss the delisting.

Shares of Vestin Realty Mortgage II, which trades under the ticker VRTB, have lost more than 90 percent of their value since being listed on Nasdaq in 2006. VRTB’s current market capitalization is $5.6 million. Shustek is VRTB CEO and chairman.

VRTB will first ask shareholders at its annual meeting scheduled for March 9 to vote in favor of a reverse stock split that would convert 1,000 existing VRTB shares into one new share.

If approved, investors owning less than 1,000 shares of VRTB would receive a cash consideration of $2.70 per share rather than a fractional share. Their shares would then be canceled, reducing the number of VRTB stockholders to 291 from 1,744, according to the SEC filing.

According to Nasdaq rules, a public company can delist from the exchange if the number of shareholders falls below 300. VRTB shares could continue to trade on the over-the-counter market if the Nasdaq delisting is approved.

The buyout price is 14 percent above the last trading price of $2.35 per share. However, the book value of VRTB shares — or the amount of money each investor would get if the fund sold off all its assets and paid down its debts — was $2.88 as of Sept. 30.

Despite the rebound in U.S. real estate prices in recent years, VRTB reported losses of $18 million in 2015 and $3.85 million over the first nine months of 2016, according to the SEC filings. The company hasn’t paid a dividend since 2008.

VRTB is managed by Vestin Mortgage Inc., which is majority owned by Shustek. Vestin Mortgage received $1.1 million in management fees from VRTB for 2014 and 2015, according to the SEC filings.

Upon delisting, VRTB would no longer be required to file periodic reports with the SEC, potentially reducing shareholders’ ability to track financial developments at the company.

Despite the continued losses, Shustek, it seems, sees value in VRTB. He has increased his stake in the company from 19.7 percent to 21.5 percent, according to a comparison of SEC documents posted in November and December. His stake would rise to 25.5 percent after the reverse split and cancellation of stock.

Vestin Realty Mortgage II was listed on the Nasdaq on May 1, 2006, after Shustek was unable to meet massive redemption demands from investors in his closed real estate fund Vestin Fund II.

Shustek raised nearly $400 million from investors for that closed fund between June 2001 and June 2004, according to a 2016 marketing document. The fund intended to invest in short-term mortgage loans of one to two years.

Shustek allowed redemptions of no more than 10 percent a year from the closed fund. However, as the redemptions poured in, a decade-long wait ensued for his investors.

“The redemption demands have exceeded [the limit], resulting in fully subscribed redemption requests through 2016,” according to a VRTB SEC document in 2005.

Converting the closed fund into a publicly traded company enabled disgruntled investors to sell their shares on the market immediately, though at a loss.

Contact Todd Prince at Follow @toddprincetv on Twitter.

Business Videos
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
LVCVA/Boring Company Press Conference
The Las Vegas Convention and Visitors Authority announced a collaboration with Elon Musk's The Boring Company to develop and operate an autonomous people mover system for the Las Vegas Convention Center District.
International Pizza Expo includes green and gluten free
The International Pizza Expo at Las Vegas Convention Center included companies focused on vegan and gluten free, and plant-based pizza boxes. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
International Pizza Expo kicks off in Las Vegas
The first day of the International Pizza Expo at Las Vegas Convention Center is everything Pizza. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
T-Mobile program aids guests with sensory needs
A program at T-Mobile Arena is designed to provide a more sensory friendly experience for guests.
Photo Booth Expo
Danielle May talks about how Simple Booth transformed her Volkswagen bus into a business.
Nevada Gaming Commission's highest fines
The highest fines assessed by the Nevada Gaming Commission, according to commission Chairman Tony Alamo: 1) Wynn Resorts Ltd., $20 million, 2019 2) CG Technology (then known as Cantor G&W Holdings), $5.5 million, 2014 3) The Mirage, $5 million ($3 million fine, $2 million compensatory payment), 2003 4) Stardust, $3 million, 1985 5) Santa Fe Station, $2.2 million ($1.5 million fine, $700,000 compensatory payment), 2005 6) Las Vegas Sands, $2 million, 2016 7) CG Technology, $1.75 million, 2018 8) CG Technology, $1.5 million (also $25,000 in escrow for underpaid patrons), 2016 9) Caesars Entertainment, $1.5 million, 2015 10) Imperial Palace, $1.5 million, 1989 11) Peppermill Casinos, $1 million, 2014
Tiny Pipe Home vs Shipping Crate
A Tiny pipe home was displayed at the International Builders Show this week in Las Vegas.
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
Local designers’ picks for the Las Vegas Market
The trends that local interior designers are noticing at the Las Vegas Market this year. (Rachel Aston/Las Vegas Review-Journal)
Home Front Page Footer Listing