Vegas lender’s business booms

Jennifer Robison

Tuesday, June 11, 2002 | 10:54 a.m.

Vestin Group Inc. of Las Vegas said today that its subsidiary, Vestin Mortgage, originated $118 million in loans in May.

The total set a monthly record for the company, surpassing the previous high of $75 million in October 2001.

Vestin Chief Executive Mike Shustek said just one of Vestin's May transactions -- a $48 million loan to the Cannery hotel-casino in North Las Vegas -- was made in Southern Nevada.

The remaining $70 million in loans went to projects in Colorado, California, Texas, Florida and Arizona. Among the projects that will be financed with Vestin money in those states are hotels, office buildings and residential neighborhoods, Shustek said.

Shustek said banks remain leery of offering conventional loans to commercial and residential builders, a factor that continues to propel loan volume for hard-money lenders like Vestin.

"Since 9/11, it's been very, very hard for developers to get money from banks," Shustek said. "But we believe the economy is still strong, and the real estate market is still strong. Our loan-to-value ratio still averages 54 percent. The Cannery was appraised at $93 million, and we loaned them $48 million, so that's a 51 percent loan-to-value ratio.

"There's still plenty of equity in our deals, and our properties are still strong. Vestin is raising $1.2 million to $1.3 million a day. As the shakeout of stock markets continues, people are getting more conservative and investing in real estate."

Vestin is becoming better known in the real estate lending industry with a national advertising campaign featuring Joe Namath, who encourages people to invest in Vestin. Shustek then uses those investment funds to make real estate loans. The company now has $455 million in loans outstanding.

Vestin also said today it would distribute to its shareholders one third of its earnings generated in the first quarter in the form of a cash dividend. Shareholders will be paid 2 cents per share next month, a drop from the 10 cents-a-share dividend Vestin paid in April.

Shustek said the dividend drop was due to a slower first quarter for Vestin.

"We don't want to get into the old-fashioned way (of dividend distribution) where companies say they'll pay a specific amount, and then they don't have the money. So we pay one-third of our earnings every quarter. The first quarter is traditionally slower for us -- everyone is coming off Christmas break, and people are busy with other things. Projects don't get going until this time of year, as the weather clears."

Separately, Vestin filed suit Thursday in Clark County District Court against three managers of Arroyo Heights Golf Club LLC, alleging the three defaulted on a $10 million construction loan for Paradise Canyon, a luxury residential development in Mesquite.

Vestin said the $10 million loan was secured by a deed of trust on Arroyo Heights, which is now known as Falcon Creek Golf Club, and nearby residential and commercial land.

The defendants -- Douglas and Judith Clemetson and Dennis Rider -- allegedly agreed on June 27, 2001 to guarantee the loan, and are accused of refusing to honor the loan's obligations.

The defendants could not be reached for comment.