Item 2.06 Material Impairments.

Vestin Realty Mortgage I, Inc. announced that it will incur a loss on the Sheraton Ft Worth Hotel owned by 1701 Commerce, LLC, ("1701 Commerce") which is owned by the Company and Vestin Realty Mortgage II, Inc. On February 7, 2012, 1701 Commerce entered into a Deed in Lieu Agreement with a borrower resolving the foreclosure of a secured second position loan which had matured on December 31, 2011, with a principal balance of approximately $11.8 million, of which the Company's portion was approximately $0.9 million. On March 26, 2012, 1701 Commerce filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Texas, Ft. Worth Division, to reorganize its financial affairs. The current balance on the loan to the first position lien holder is approximately $46 million with up to an additional approximately $3 million owed to unsecured creditors.

On September 24, 2012, 1701 Commerce entered into an asset purchase agreement to sell its assets in consideration of $55 million. The buyer terminated its offer and it appears that based on current negotiations that any offer to purchase the assets will be at a price substantially below $55 million. Currently there is a pending non-binding offer of approximately $49 million. On February 22, 2013, the Company impaired approximately $0.9 million on its balance sheet for the upcoming Form 10-K for the year ended December 31, 2012.

Item 8.01 Other Events.

Due to the anticipated loss, the Company and Vestin Realty Mortgage II, Inc. have put on hold their proposed merger. The Company anticipates renewed discussions regarding the anticipated consideration to be paid by Vestin Realty Mortgage II, Inc. in any merger transaction once the 1701 Commerce situation has been clarified. There can be no assurance that an agreement between the Company and Vestin Realty Mortgage II, Inc. will be reached.

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