Stein-Brief Poised to Sign $68-Million Loan Accord

Stein-Brief Group Inc. said Thursday that it expects to sign an agreement, perhaps as early as today, for a $68-million loan that could solve the real estate developer’s financial woes and end foreclosure proceedings on its giant Monarch Beach development.

The expected agreement with Southmark Mortgage Corp. of California would restructure Stein-Brief’s finances and retire all outstanding debt on its planned 550-acre resort community in Laguna Niguel. Stein-Brief also said the deal would provide the funds “needed to continue the development of Monarch Beach.�

Stein-Brief spokesman Chris Townsend declined “to disclose in public� the terms of the financing arrangement or whether it would give Southmark Mortgage Corp. an equity position in the coastal development, where the construction of 2,620 homes, as well as hotel, recreation and retail projects, is planned.

“We are still the master developer in charge of implementing the plan,� Townsend said.

None of the other parties to the transaction could be reached Thursday for comment. Late in the afternoon they were still in discussions at First American Title Insurance Co. in Santa Ana. Stein-Brief said in a prepared statement that “the financing arrangement is expected to be funded by Friday or Monday at the latest.�

The companies opened escrow April 1 in anticipation of the refinancing agreement, which has taken much longer to complete than was expected.

In a separate transaction, one of Stein-Brief’s current lenders, Mission Viejo-based Beverly Hills Savings & Loan Assn., has agreed to acquire two residential parcels and 27 custom home sites from Stein-Brief in Monarch Beach. The amount of land involved in the sale and its price were not disclosed. Townsend said the savings and loan firm will sell the land for development.

Stein-Brief has been in a financing crunch for some time. On April 17 its largest creditor, San Diego-based Avco Community Developers, filed notices of default on a $49-million loan, secured by about 400 remaining undeveloped acres in Monarch Beach. At that time Avco President Paul Zimmer said Stein-Brief had failed to make a $4.3-million loan payment that was due to Avco in December.

In addition to Avco’s action, four other companies have filed $485,715 in mechanic’s liens against the Monarch Beach property for unpaid bills.

In the prepared statement released by Stein-Brief on Thursday, Zimmer was quoted as saying that it would be repaid “in full� by the new financing arrangement. In addition, Stein-Brief said that its other lenders on the Monarch Beach project--Beverly Hills Savings & Loan Assn. and Western Saving & Loan Assn. of Salt Lake City--also will be fully paid.

Stein-Brief’s prospective new lender is a subsidiary of Southmark Corp., a Dallas real estate and financial services network with more than $10 billion in assets that has been forging a major presence in Orange County in recent years. In 1984, Southmark purchased the remaining 2,400 acres of the Anaheim Hills project in Anaheim from Texaco Inc. and followed up the next year by acquiring Newport Beach-based J. M. Peters Co., one of Orange County’s largest home builders.

Joe Grosz, president of Southmark Mortgage, said, “Our loan will allow the Stein-Brief Group to continue with their exciting plans. . . .�

David Stein, an influential Democratic activist, and builder Barry Brief grabbed the development community’s attention in September, 1983, when they bought the Monarch Beach property for about $80 million in leveraged financing --thus consummating one of the biggest land buys in Orange County history.