SunAmerica to buy $300 million RTC loan package at half price.

SunAmerica Realty Partners of Brentwood within the next 60 days will complete the purchase of two multi-family home loan portfolios with an aggregate face value of nearly $300 million, sources told the Business Journal last week.

The loans, originally issued by now-defunct savings and loans, are being bought from the Resolution Trust Corp. for about 50 cents on the dollar, revealed one source involved in the transaction.

Yikes! Fifty cents on the dollar? Makes you wonder if all this talk about "the worst is yet to come" in the thrift crisis might be true after all. Doomsayers have been insisting for months that U.S. banks haven't written down their non-performing real estate loans to actual value.

But what exactly does "actual value" mean in today's market? Few would argue that banks have taken substantial writedowns on their real estate portfolios. But whether or not those write-downs are to "actual value" is the subject of increasing debate.

The RTC loans being bought by SunAmerica are on multi-family residential projects throughout the Southwest, with most of those projects situated in Southern California, a source said.

The purchase of one portfolio, with a face value of about $110 million, will be consummated at a price of $55 million within the next 30 days. The other, a $185 million portfolio, will be consummated at a price of $93 million within the next 60 days.

Financing for both purchases is being provided by West Los Angeles-based Broad Inc., which co-owns SunAmerica in a partnership with JMG Properties.

SunAmerica was formed a year ago by Jeffrey M. Gault of JMG Properties and Broad for the purpose of acquiring distressed properties.

Also last week, the Wall Street Journal reported that SunAmerica purchased a $208 million package of distressed hotel loans from NationsBank in December for $108 million. News of that deal was revealed to the Wall Street Journal by Fredric J. Figge II, NationsBank's chairman of credit policy.

SunAmerica officials refused to comment to the Wall Street Journal last week. But the day after the WSJ article appeared, SunAmerica's managing director, Sims Brannon, was willing to discuss the deal with the Business Journal.

"NationsBank told us they wanted to keep the deal confidential, so we agreed, at their request," Brannon explained. "Then they (bank officials including Figge) turned right around and talked about it at length."

The NationsBank deal involved loans on eight hotels in the Southeast. SunAmerica plans to restructure the defaulted loans and will likely retain the current operators.

Brannon declined to confirm or deny the reported $108 million purchase price, but he did confirm the deal was SunAmerica's largest acquisition to date.

Later that same day, SunAmerica issued a prepared statement to the Business Journal, apparently to downplay industry skepticism about the wisdom of SunAmerica spending so much for what some consider very risky assets.

"From time to time, on a highly selective basis, SunAmerica purchases (loans) of the type in the NationsBank portfolio," the statement reads. "(These loans) can be acquired at a deep discount and then restructured into performing investments.

"Because the mortgages on these properties are purchased at values typically below their replacement costs," the statement continues, "they offer attractive returns with minimal risks. Mortgage investments of this type will remain a minimal percentage of SunAmerica's portfolio."

One source familiar with the NationsBank deal added, "The purchase price was set on the basis of actual 1991 performance, which was the worst year in recent history for the hospitality industry. SunAmerica looked at the market and concluded there was growth potential in those hotels."

SunAmerica's only other sizable acquisition so far was a $65 million construction loan on a Marin County shopping center, which SunAmerica bought from the RTC for about 60 cents on the dollar, sources said.

The developer of that shopping center recently filed for bankruptcy protection, however. So SunAmerica's loan is currently tied up in bankruptcy proceedings.