Downey S&L; Plans to Sell Real Estate Investments : Thrifts: The Newport Beach company says it will start behaving more like a commercial bank.

Capitulating to new federal rules governing thrift industry investments, Downey Savings & Loan Assn. said Monday that it will sell nearly $600 million worth of real estate investments over the next five years.

And as it unloads its real estate holdings, Downey will begin acting “more like a commercial bank than a thrift,” stressing short-term commercial and consumer loans and downplaying residential mortgage lending, said Maurice L. McAlister, president and co-founder of the 33-year-old thrift.

Downey, with $4.1 billion in assets, has 47 branches in California. Based in Newport Beach, the company is the fourth-largest S&L; headquartered in Orange County.

McAlister said Downey continues to meet all three of the new capital requirements imposed by the S&L; bailout measure last year.

He also said the S&L; will establish nearly $21 million in additional reserves for 1990--a year in which such a charge won’t detract much from earnings because of tax benefits Downey will realize from its acquisition of the insolvent Butterfield S&L; in Santa Ana.

Despite the increased reserves, McAlister said Downey expects 1990 to be a profitable year, in part because of earnings it will realize from the sale of “a substantial amount” of its commercial and retail properties.

That property is carried on Downey’s books at a gross value of $590 million, McAlister said, but it has a fair market value of $763 million.

McAlister also said Downey will report a profit for 1989. The thrift posted a $27-million profit for the first six months, followed by a $3.7-million loss for the third quarter because of a new accounting requirement that forced it to write down the value of a block of mortgage-backed securities it was holding for investment purposes.