At Heritage USA, no high-tech passion plays, mass baptisms, or televised church services disturb the quiet. The closed religious theme park in South Carolina was once the showy centerpiece of evangelist Jim Bakker's empire, attracting 6 million visitors a year. With Bakker convicted of bilking his followers and tarred in a sex scandal, the place had fallen into the clutches of bankruptcy court. Creditors figured they didn't have a prayer of unloading the 2,150-acre resort for anywhere near their $48 million in claims against Bakker's defunct ministry.
Then they turned to Martin W. Taplin, a Surfside (Fla.) real estate workout specialist, who sold the place in December for $50 million in cash. How did he pull it off? First, he spent six months finding out how the park operated. He interviewed former workers, watched videotapes of religious events, and sorted through records. Although the creditors had considered selling Heritage in parcels, Taplin concluded that the park's best shot was to stay intact--and that its best sales prospects were other evangelists. The buyer, California TV minister Morris Cerullo, plans to reopen the park this summer.
HEAVEN-SENT. Taplin admits that dealing with fervent believers made him jittery: At one meeting of Bakker followers who had bought $1,000 memberships, a woman who had kept her eyes closed the entire time got up and headed for him. But then, recalls Taplin, "she thanked God for sending me as a rescuer."
With real estate disasters littering the landscape, there's a growing demand for rescuers such as Taplin. Workout specialists do many things that foreclosing banks have little expertise in. They fix tangled finances, find tenants for empty buildings, unload white elephants, and finish uncompleted construction. Says Michael J. Shapiro, a lawyer dealing in workouts for New York's Shereff, Friedman, Hoffman & Goodman: "Lenders know nothing about what the price of concrete is this month." Sometimes, consultants are extricating real estate from foreclosure. At other times, they're scrambling to prevent a property seizure. With more and more property falling into federal hands because of the thrift crisis, Washington is signing them up, too.
Workout pros are well paid for taking on these headaches. Taplin has been working far from his native Florida during the past year, usually for at least 0.5% of the asset value--he cleared $1 million on the Heritage deal (table).
Although they sport plenty of expertise, workout consultants' chores often involve plain horse sense. Like when Morris E. Lasky, head of hotel consultant Lodging Unlimited Inc., was hired to shape up an ailing hotel near Zenith Electronics Corp.'s headquarters outside Chicago. Zenith used to rent dozens of rooms for visitors, but then patronage evaporated. "Nobody had ever asked Zenith why that had happened," says Lasky. Answer: The hotel had installed RCA TVs. Lasky put in Zenith sets, and business picked up.
With the recession sapping earnings, a subspecialty is developing in the workout profession: consultants who negotiate lower leases for cash-strapped companies. "We go to landlords and show them just how weak the tenant is," says Michael L. Silver, head of Chicago's Equis Corp. Occasionally, though, that isn't enough. Laventhol & Horwath, beset with a business downturn and huge legal-defense bills, signed up Silver to slice rental costs for the accounting firm's office space. For its Chicago offices, he negotiated a 50% reduction in a $6 million yearly tab. Nonetheless, L&H's cash-short woes forced it to file for Chapter 11 in December.
The workout industry won't lag anytime soon. Taplin has 50 projects on his desk. The 52-year-old consultant, a lawyer whose father was a developer, is constantly hammering away at problems such as the 27-story East Brickell Tower in Miami. It was unfinished when Pittsburgh-based Equibank foreclosed in 1987. Taplin completed the construction and sold it for $7.1 million, a decent price in a down market. The worse the market gets, the better he likes it.
HOW TAPLIN FIXES PROBLEM PROPERTIES
The religious theme park in South Carolina went bankrupt after scandal hit evangelist Jim Bakker. Lenders wanted the 2,150-acre park broken up, but Taplin felt it would fetch a better price intact. Last year, he found another evangelical group to buy it for $50 million, more than lenders anticipated
The 24-story headquarters of a Knoxville bank was seized by federal regulators in 1985 after the bank failed. Taplin enticed tenants to the empty building, then unloaded it last year for $17 million, 40% over earlier offers
This 1,800-acre vacant tract in Colorado, held by a troubled thrift, also went to the feds. Developers avoided it because of zoning curbs. Taplin got these removed and sold the land in 1990 for $20.5 million, twice the previous bids