Las Vegas real estate lender posts more losses

VEGAS INC Coverage

The Vestin real estate funds in Las Vegas reported more losses in the third quarter on continued weakness in the economy.

The funds, known as hard money lenders, match investors with developers and real estate buyers.

The borrowers are typically seeking short-term financing with the goal of later obtaining long-term takeout financing. These hard money loans are typically riskier than standard commercial bank loans.

The losses reported this week by the three Vestin real estate investment funds were smaller than those during 2010, but Vestin commented, “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.”

Vestin Realty Mortgage II, the largest fund with $103 million in assets, said it lost $1.73 million in the third quarter on revenue of $401,000 vs. the $7.4 million lost on revenue of $357,000 in the year-ago quarter.

Illustrating the difficult economic environment, the fund said that of its $56 million in real estate loans, $18.9 million were non-performing or past due as of Sept. 30.

Vestin Realty Mortgage I Inc. posted a loss of $642,000, an improvement from the $1.546 million lost in the year-ago quarter. This year’s loss was driven by a $608,000 provision for loan losses.

That fund has $21 million in assets.

Vestin Fund III LLC, with $3.5 million in assets, reported a loss of $275,000 vs. a loss of $364,000 in the year-ago. This year’s loss included a $215,000 provision for loan losses.

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