Laguna Hills developer Barry G. Hon said Wednesday that he has ended his $275-million bid to buy a Riverside County parcel from Landmark Land Co., whose prize golf courses, resorts and residential acreage he also once coveted.
Hon, who only two months ago had agreed to buy most of Landmark's real estate holdings for $967 million, said it would be "too risky" to buy a 6,700-acre parcel called Oak Valley from Landmark's thrift subsidiary, Oak Tree Savings Bank in New Orleans.
The "current real estate recession," he said, made the price too steep.
Hon's decision leaves Oak Tree without its anticipated gains from the sale, which it needs to bolster its capital base, its final reserve against losses. By Monday, the thrift will fail to meet three federal criteria for adequacy of capital, said Gerald H. Barton, Landmark's chairman, president and chief executive.
Oak Tree would still be solvent, he said.
Barton said he met Tuesday with the New York investment banking firm Salomon Bros. to develop a new strategy to sell Oak Tree's three real estate divisions. That strategy will be part of a capital plan that he now must submit for approval by federal regulators.
He said he expects Salomon Bros. to line up buyers for the three divisions in a coordinated deal within three weeks.
Landmark is one of the most widely recognized names in golf course developments, and the company's properties include such gems as PGA West, La Quinta and Mission Hills Country Club, all in the Palm Desert area.
The company holds more than $1 billion worth of real estate through Oak Tree, but federal law enacted last August to bail out the thrift industry's deposit insurance system now requires S&Ls; to sell their interests in such investments by the end of 1994.
Though both Hon and Barton left open the possibility they might work out a deal later, neither side is seeking to negotiate any deal now.
Under Hon's original deal in mid-April, he agreed to buy Landmark's golf course and resort properties in three states and more than 10,000 acres of developable land. But the two-phase transaction required Oak Tree to provide roughly 75% of the financing, which regulators decided was too much. They blocked the deal.
Last month, Hon and Landmark revised the agreement to limit the sale to the Oak Valley property. Hon would put down $75 million by the end of July--and Oak Tree would finance the rest--for a planned golf course community at the Pomona Freeway and Interstate 10 near Beaumont.