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.

Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like