HomeFed Reports Biggest Borrower Late on Payment

SAN DIEGO —  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 San Diego’s Sorrento Valley.

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, 1989.

Loan portfolio problems and general investor skittishness about California real estate have 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 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 staff cuts of more than 300 this year, HomeFed’s capital is still above minimum regulatory requirements.

Earlier this year, in response to its growing bad-loan problems, 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.

If the loan was classified as nonperforming, the stock market would react negatively “because of heightened sensitivity about California real estate,” said Campbell Chaney, a thrift analyst Sutro & Co. investment bankers in San Francisco.

“Every dollar of increase in nonperforming assets is bad news, especially in this market, which is keenly sensitive to increases in nonperforming assets,” Chaney said.

Completed in 1984, the Naiman Tech Center is in an area of San Diego that has seen significant overbuilding in recent years. As a result, lease rates have dropped as competition for tenants among building owners has intensified, said Andy La Dow, an office space broker with the Coldwell Banker office in La Jolla.

The office portion of the Naiman development is about 73% occupied, but Naiman is offering to lease space at a rental rate that is about 30% lower than when the building opened six years ago, La Dow said.