West Hollywood Property Sale Could Cut Losses for Perpetual Savings
Perpetual Savings Bank, an insolvent Santa Ana thrift operating under regulatory control, has reached agreement to sell a 2.75-acre commercial property in West Hollywood in a deal that could help halt the flow of red ink at the savings and loan.
The names of the investors, who signed a purchase agreement Friday, and the amount they agreed to pay were not revealed.
The purchase price, however, is slightly less than $17 million, according to a source familiar with the deal. Perpetual already has invested more than $17 million and will likely end up with a loss close to $1 million, far less than first expected when regulators seized the S&L; in March, 1987.
By selling the property, Perpetual could start to break even operationally and could look good to a potential buyer, the source said.
The parcel, known as the Melrose-Doheny Triangle, represents about a third of the S&L;’s $50 million in assets and has been costing Perpetual about $75,000 a month in debt service and related costs.
12 Buildings on 7 Lots
The 120,000-square-foot triangle, which starts where Doheny Avenue runs into Melrose Avenue at Santa Monica Boulevard, contains 12 buildings on seven lots and such businesses as a flower shop and a gasoline station.
The S&L; is expected to open escrow with the group of investors sometime this week, said Michael G. Rombold, Perpetual’s president. Assuming that no hitches develop, Rombold said, the sale would close sometime in the fourth quarter.
The deal came together only five days after Rombold took over as the S&L;’s new president from John R. Faires, who had worked on selling the triangle property.
When regulators seized Perpetual, they hired Great American First Savings Bank in San Diego to manage it. Great American hired Rombold recently as a first vice president to replace Faires, another first vice president at the San Diego thrift. Faires returned to San Diego to work on a business coalition opposed to slow-growth initiatives there.
Rombold spent 13 years at Great American before joining Household Bank in Newport Beach in June, 1985, as that S&L;’s president. He left Household in April during a restructuring that moved his post to Chicago.
In assuming his new duties, Rombold also took over Faires’ job as president of First California Savings Bank, an insolvent S&L; in Orange that regulators seized in October and also turned over to Great American.
Under Faires, Perpetual stopped making loans because he believed that an insolvent institution kept open by regulators should not compete with healthy S&Ls; for good quality home loans. But Perpetual’s staff of 12 employees has been bringing in revenue by buying loans made by other lenders.
Perpetual lost $7.5 million last year, and its liabilities exceed its assets by $10 million.
One of the lots in the middle of the Melrose-Doheny Triangle was owned by one of the S&L;’s co-founders, Andrew E. Stevens. He turned the lot over to the S&L; recently to settle an $8.75-million fraud and racketeering suit that regulators had brought against former directors, officers and shareholders.
