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Feds Make Short Work of Auction of Failed Thrift Property

November 22, 1991

CATHEDRAL CITY, Calif. (AP) _ It took a federal agency about 90 minutes to auction off foreclosed commercial property in six states that was seized from failed savings and loans.

More than 800 bidders, some from countries as far away as Switzerland, England and Japan, attended Thursday’s distress sale, one of the biggest ever.

The Resolution Trust Corporation netted $106 million from the sale of real estate in California, Arizona, Texas, Missouri, Ohio and Florida. The amount was half what the thrifts had estimated their real estate was worth.

But the Resolution Trust Corporation, which was established in 1989 to manage and recover taxpayers’ money from failed S&Ls insured by the federal government, said the total was 28 percent higher than the lowest acceptable bids.

″It’s a good day for the taxpayers and the investors,″ said Rick Wolf, RTC’s real estate sales coordinator for the western region. ″I think everybody is pleasantly surprised.″

The auction site itself, the DoubleTree Resort and Desert Princess Country Club in Cathedral City, hauled in $18.1 million, twice the minimum bid but less than the estimated value of $34.9 million.

The DoubleTree hotel was confiscated from defunct Gibraltar Savings in Simi Valley, Calif.

The RTC sold AmeriFirst Bank’s headquarters in surburban Kendall, Fla. - five two-story office buildings surrounded by a large lake and valued at $50 million - for $12.8 million to an unidentified purchaser.

Another AmeriFirst property, a $13 million shopping center in Jupiter, went for $9.5 million. Its reserve price was $6.9 million.

AmeriFirst, the nation’s oldest federally chartered savings and loan, was seized last March after it failed to find a buyer for its 54-branch system.

All told, the sale of 13 of 14 seized commercial pieces netted considerably less than the book value of $210 million. However, failed S&Ls often inflated the value of their holdings, the RTC said.

A bid of $5.5 million on two office buildings in Kansas City, Mo., the 14th property, did not meet the $9.9 million minimum and is still being considered, the RTC said.

Some bidders were stunned by the pace of sales.

″We were prepared in the $15 million range. But it went from $15 million to $16.5 million before we had time to say ‘hello.’ ″ said Robb MacMillan, vice president of Sperry Van Ness investment real estate, referring to his intention to bid on the Doubletree Resort.

″I think the recession may be over and we don’t know it yet,″ he said.

Asif Yusuf of Yusuf and Associates in Chicago, paid $7.6 million for three Executive Hills office buildings in Kansas City.

″It was a fair price. It wasn’t a giveaway,″ he said. ″I think it was within five percent one way or the other.″

Thursday’s auction was an important step for the RTC after an even bigger asset sale fell through two months before it was scheduled to occur last year.

The auction, set for last September, was a much-promoted international satellite sale of 71 Dallas properties valued at $300 million.

The RTC has been criticized for its handling of seized properties by some who say real estate was priced too high to sell at earlier auctions and that minimum bids were not set.

Thursday’s RTC asset sale was its biggest so far, but marked the beginning of a string of planned high-stakes real estate auctions.

Two sales next month will offer 85 commercial properties valued at more than $210 million plus $75 million worth of residential properties.

Among the offerings next month are the Santa Ana, Calif., branch office of Lincoln Savings and an $8.9 million Anaheim, Calif., apartment building.

Former Lincoln chief Charles Keating Jr. is on trial for criminal fraud in the collapse of Lincoln, the costliest in history. The jury was deliberating this week on 18 counts against him.

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