DVL Inc 2010 Annual Report & Website Info & Other Updates

Any follower of DVL Inc (Pink Sheets: DVLN) will be aware of the recent 1 for 7500 reverse stock
split that was approved by shareholders in late January 2011 and implemented in mid February.

Shareholders of fractional shares have been cashed out around March.

This brief blog entry purports to update on a few disclosures that have been made since by the company to keep its shareholder base informed of financial progress at their company.

In the events leading up the the reverse split and deregistration with SEC, DVL Inc. made a commitment to its shareholdrers to put up a website and to keep them informed annually about the financial results at their company.

As a third party investigator of DVL Inc. I was at first sight a bit skeptical. Having witnessed before many small companies that deregistred with SEC via reverse split and never communicated again with their shareholders.

I am relieved to inform fellow DVL Inc shareholders that DVL Inc managers have upheld their commitment without any special reminders.

On April 7, 2011, DVL uploaded a website informing in very succinct terms about its business purpose, contact details and providing a link to the most recently completed fiscal year, which is fiscal 2010, which had not previously been published to shareholders.

Thus, without any further ado and interpretations, I provide here the website link for further perusal.

DVL Inc website is (drum rolls, please): www.dvlninc.com

This website uploading has not been specially communicated to shareholder via press release, but there it is.. what we have all been waiting for and the best kept secret of 2011.

The Annual Report 2010 in PDF format is very informative to begin with.

I encourage shareholders to read through it carefully. It provides a few new data points.

Such as:
More detailed info on the 11 first lien mortgages ( 9 to Wal-Mart properties) a some info on the 6 wrap-around mortgages. Apparently, the properties leased to Wal-Mart have terms ranging from 2011 to 2017. This is news to me and great clarification and confirmation that certain cash flow bonanza from mortgages will continue for a couple of years.

There is also updated info on how much money was borrowed to undertake share buybacks.. Give and take around 500,000 dollars. at interest rate of 5%. all of which was borrowed from an unaffiliated bank. No money was borrowed from Pemmil. The annual report will inform on how many shares were bought back through reverse split and how many shares were bought back in board authorized share buybacks from third party investors who wanted to get out at 14 cents.

All in all some 3.5 millions shares (more or less) were bought back. Of this amoung. 1.1 million shares was from an unaffiliated shareholder who wanted to part with his holding.. (goodbye sissy... - and thanks to DVL boad members for buying them out at good price, thereby creating more value to the remaining shareholders).

All in all, after the reverse split, there are now 5100 shares outstanding.

JG Wentworth had a warrants package entitling to purchase of 3 million shares at 20 cents.
of these warrants, 2 million became exercisable in Feb 2011 and JG Wentworth did not exercise.
they still have 1 millino warrants (before giving effect to reverse split) that can be exercised in
August 2011. I am kind of surprised that JG Wentworth did not exercise them. It is a rational decision though to buy them in the open market on the cheap, if volume allows. at 20 cents pre-split price, JG Wentworth could for the longest of time buy the shares cheaper on open market. I am skeptical though that they engaged in this trade. Evidently, JG Wentworth is not exactly a long term investor but originator and securitizer of papers. And they changed ownership so many times that I bet you that nobody is stickign out their necks to suggest any DVL equity investment on behalf of corporate treasury. This means, no dillution for DVL shareholders. and if the other 1 million warrants go unexercised in August 2011, the share count will drop to around 4900 and change.

At current share count I calculate the fully adjusted Book Value per share at 5078 dollars, giving full effect to the share buyback and how it impacted the equity position.

Lastly the annual report also provided news on the fiscal year and on the Q4 2010 quarter. there was no management discussion of financial results but in my own research I found out that DVL took advantage to take a 1.2 million writedown of mortgage assets in Q4 2010. They stepped up the loan loss/impairment reserve. Without giving much detail on why and where. There was no foreclosure happening in Q4.

Free cash Flow for 2010 was excellent and they managed to further pay down liabilities. Primarily mortgage payables and notes payables.

the Notes Payables are not due till 2020-2021 according to the annual report. But it appears that if they continue at the pace they paid down in 2010, the notes payable could be paid off in 4 years (give and take 2014-2015)

There is no progress to report from Kearny, NJ.

IN fact they are still working on eminent domain issues in Kearny and it appears that town of Kearny is working with them. It appears that the local leaseholders are not parting from those leases in easy ways.

Enclosed is a link that I found relating to Kearny that is new info not further discussed in DVL 2010 annual report. It merely goes to illustrate how it is not that easy to secure all the parcels of land they need for this redevelopment.

I would say that time is on their side making diamonds of coal. In a way, shareholders can be happy with any temporary delays, as this will further improve the company's balance sheet before any Kearny development plans can take shape in earnest.

The passage of time could clarify the economic prospects of a Kearny redevelopment. And whether to do it and when.


http://www.nj.com/news/index.ssf/2011/03/nj_high_court_gives_commercial.html

http://www.northjersey.com/news/crime_courts/118221719_Change_made_in_eminent_domain_law.html?mobile=1

http://caselaw.findlaw.com/nj-supreme-court/1559683.html

http://njlp.org/news/partynews/latestnews/1109-eminent-domain-threats-in-new-jersey


Well, DVL Shareholders, that was it for an update on this little puppy.

At least the waiting was worth it and there are lot of things to report on.

I will in the future simply post any DVL related updates on this special situations blog
that I plan to update more frequently in the future.

Looking forward for your feedback and involvement to keep this DVL thread informative
in the future. As indicated in this post, I have not had any contact with DVL managers and board
members since December 2010 when I had a conference call with Mr. Casnoff.

The way I see things, I plan to be around for the next 2 decades on this name. So far, the last 4-5 years have been very interesting to say the least.

Good luck on your on your investments and feel free to spread the joy of this blog with whoever you feel it could be useful to.

Cheers,
Chris AKA GB