HomeFed’s Biggest Borrower in Arrears
HomeFed Bank, the San Diego savings and loan that has seen its loan problems mount in recent months, said Tuesday that its largest borrower is delinquent on a $70-million office building loan.
Unless La Jolla office developer Jack Naiman brings the loan current within 30 days, it stands to be formally classified as a nonperforming asset, which could push HomeFed’s bad-loan total beyond 4% of assets, a dangerously high ratio.
The loan, the largest on HomeFed’s books, has been delinquent since Aug. 30. It has not been classified as nonperforming because it is not 90 days delinquent, the S&L; said Tuesday. The loan is secured by a first mortgage on the Naiman Tech Center, a nine-building, 635,000-square-foot office and research park in the Sorrento Valley area of San Diego.
The news comes at a bad time for HomeFed, which has struggled to control its bad loans as its stock price has plummeted. HomeFed has seen its nonperforming assets rise to $749 million or 3.92% of its $19 billion in assets as of Sept. 30, up from $462 million, or 2.6% of assets, on Dec. 31 last year.
Loan portfolio problems and general investor skittishness about California real estate has sent HomeFed stock plummeting since June. The stock closed at $4.75 a share Tuesday on the New York Stock Exchange, down from as high as $33.25 on June 12. Other California S&L; stocks have also been hurt in recent months.
Naiman, a patron of various arts organizations in San Diego, was unavailable for comment Tuesday.
Despite the loan problems and loss reserves, which resulted in a $108-million second-quarter net loss and more than 300 staff cuts this year, HomeFed’s capital is still above minimum regulatory requirements.
In response to its growing bad-loan problems earlier this year, HomeFed announced that it would no longer make commercial real estate loans such as the one to Naiman.
HomeFed Bank President Robert Adelizzi refused to discuss the specifics of the Naiman loan. Nor would he give the specific date when the loan becomes 90 days delinquent or formally nonperforming. The disclosure of Naiman’s delinquency came in a filing with the county recorder’s office.
