Downey S&L; to Sell Salinas-Area Parcels for $45 Million

Fighting a soft real estate market, Newport Beach-based Downey Savings & Loan said Thursday that it will sell two vacant parcels of land in Northern California for $45 million, reaping a profit of $9.5 million.

New Harbor Land Development Inc., an Asian investor group, will pay $31 million for a 100-acre residential site near Salinas. Northwestern Insurance Co. and RRP Development Co., both of San Francisco, will pay $14 million for a 55-acre commercial parcel in the area.

The sales are expected to close Dec. 3. The Newport Beach-based S&L; was part owner of both parcels through joint venture partnerships.

The thrift had purchased the commercial property with the intent of building a neighborhood shopping center, its specialty.

Downey, one of the thrift industry’s most successful residential and commercial real estate developers, is being forced to give up its lucrative operation by the 1989 federal S&L; restructuring law. It requires thrifts to sell their real estate holdings and certain non-traditional investments within five years.

Downey had hoped to earn more on the Salinas properties, as well as on previous sales. At the beginning of the year, it expected stepped-up real estate sales to give it a stunning net income of close to $100 million for the year.

But a slowing economy and sluggish real estate markets have depressed property prices, said Maurice L. McAlister, Downey’s president. “In addition, foreign buyers are not as plentiful due to the increased interest rates abroad,” he said.