Condominium (17 page)

“Explain to me.”

“I’d rather he sketched it all in for you.”

“Can I know his name, at least?”

“Why not? His name is Sherman Grome and he is C.E.O. and Chairman of the Board of Equity Mortgage Management Shares, with headquarters in Atlanta.”

“On the big board? The REIT?”

“One and the same.”

“A fellow who does some of my personal stuff, he says the REITs are heading into big trouble.”

Fred Hildebert shrugged his big soft shoulders. “The ones without
good management, certainly. Sherm is a very smart young man. He made a good record running a group of mutual funds, fantastic capital appreciation. When the Atlanta group put EMMS together they went shopping for the best talent they could find. Besides, Marty, why should you sweat about the future of the real estate investment trusts? What you want is their money.”

“What makes you think this Sherm buddy of yours will want to loan money to build Harbour Pointe?”

“I was talking to him about other matters and I brought up this problem of financing you and he seemed receptive. I told him the good record you have with us.”

“What do I have to do? Go to Atlanta?”

“Sherm has the use of a leased Lear. I’ll check with him and get back to you and make sure the time is okay with you.”

“I’ll make myself available anytime, Fred. As a favor to you.”

Sherman Grome was tall. He was very tan. He had a hard protruding shelf of brow above deep-set eyes. His hairdo was spray-shaped to cover his ears and most of his forehead. His nose was imperial. He wore a brushed denim leisure suit and a blue work shirt open at the throat. His manner was one of total indolent assurance and half-concealed amusement. He wore oval sunglasses with blue lenses. To get to the Athens Airport lounge they had to pass the car rental desks. The rental girls glanced at him, came to attention and stared. Sherm had the celebrity look.

He said, “Thanks for the invitation, Mr. Liss, but I’m running on so tight a schedule, if we can find a quiet corner right here, we can see if there’s any way we can do business.”

Mr. Grome was accompanied by a slight man in his middle years, plump, neat and expressionless, carrying a black dispatch
case. Grome had not attempted to introduce him. There was a room beyond the lounge, roped off. “In there, Dud,” Grome said to his man. Dud intercepted the waitress. Marty saw her object, then accept what Dud gave her, and hurry to unhook the rope and let them in. She rehooked it and made no attempt to take an order, so evidently Dud had told her they would not need service. They sat at a round table by a big window. From his chair Martin Liss could look over toward the private plane area and see the white droop-nosed Lear parked near the end of the taxi strip.

Without preamble Sherman Grome said, “Fred briefed me on your project, Mr. Liss. Since then I have verified his estimate of your ability with other persons and confirmed your track record. Is that the feasibility study there? Good. Dud, put it away and give it to me to look at on the way to Houston. I’ll use it as a basis for board approval, Mr. Liss, but that’s only a formality, you understand.”

“Sure, but—”

“Let me lay this out for you in its entirety. You estimated an eleven-million line of credit needed for your upcoming project, and you have related your needs to the construction loans and the unit sales as you go along. I suggest that EMMS loan you twelve million dollars immediately. At ten percent. Out of that twelve million you immediately pay us one million two hundred thousand dollars as prepaid interest for one year. We do not want any part of the loan amortized until after the second anniversary of the loan.”

“But that gives me one hell of a—”

“Not as bad an interest expense as it might look. You can estimate your cash requirements over your construction period and use the overage in the early stages to buy certificates of deposit for appropriate periods.”

“In the Athens Bank and Trust?”

“I have to put that kind of a string on it. However …”

“I see what you mean. It still increases my cost of doing business.”

“There’s something else I would like you to do.”

“Such as?”

“You are acquainted, of course, with Tropic Towers?”

“South of the village. Who isn’t? A bad plan, bad design, bad construction, rotten administration, lousy sales job. Less than half sold, less than thirty percent occupancy. A disaster, Mr. Grome. The jerk who put that package together is bad news. Jerry Stalbo. From what I hear, he’s ready to jump off the top of it.”

“He’s in default on a loan to us, a first-mortgage loan.”

“How did you get suckered?”

“Let’s say I had bad local advice. And I did not handle it personally. The amount outstanding is one point two million, plus a hundred thousand back interest. We’ve talked to Stalbo. He’ll sell out his equity for a hundred thousand cash.”

“I should think so!”

“He wanted more, but some associates have had discussions with him.”

“What has this got to do with me?”

“You have a competent team, Mr. Liss, and a good track record. If you would form a new corporation to take over Tropic Towers and assume the existing first mortgage at the very favorable eight-percent rate, we would loan you an additional five hundred thousand at ten percent. You would use that money to buy out Stalbo, pay up the back interest and have some left as working capital.”

“It’s a dog. I don’t see how you can even give away those empty condominiums.”

“I think you could price them to move.”

Martin Liss thought it over. He did not like the sound of it. It
would be a joyless distraction. He shook his head slowly. “There would have to be some sweetening.”

Sherman Grome looked at Dud and nodded. Dud got up and left, ducking under the rope with an unexpected agility. Grome had a disconcerting habit of looking directly at Martin Liss, unwaveringly, expressionlessly, motionlessly.

Martin Liss knew he should wait Grome out. But the stillness and the silence of the large man unnerved him. “Some kind of sweetening,” he said unsteadily. “The deal narrows my margin and increases my risk.”

“Who holds title to the option on the bayfront tract you plan to build on, Mr. Liss?”

“What do you mean?”

“In what legal entity does the option reside?”

“Oh. I own it. Me, personally. Martin Liss, citizen.”

“Then you are setting up a personal capital gain?”

“Nothing greedy. I paid twenty-eight thousand for the option twenty months ago. To buy for $1,252,000 more, from a bank as executor for an estate. The value is there. Even without the permissions, the zoning is okay so the value is there. With the land clearing and the boat-basin permissions going along with the deed, I am perfectly in the clear selling my option to the Marliss Corporation for
two hundred
and twenty-eight thousand, and let the corporation close.”

“Or a
million
and twenty-eight?”

“You’ve got to be kidding! A million capital gain on a twenty-eight-thousand-dollar option?”

“You brought up sweetening, Liss.”

“But not the kind of sweetening where Uncle comes back on me for fraud. No thanks. Taxwise, I am a very cowardly person.”

“Fourteen waterfront acres? Let me see. That would bring a
per-acre total to a hundred and sixty-two thousand. I can’t see that as excessive. In fact, I could mention the opportunity to a couple of large developers on the East Coast—incidentally, people with whom I have no business relationship at the present time—and I am quite sure they would make appropriate offers. In writing.”

Martin Liss thought it over. “And of course I would take the offer from the company in which I own stock. But at an established fair-market value. Mmm. I would have to talk that over with my associates.”

“All it means really is that we loan thirteen million instead of twelve, to cover your profit on selling your option to Marliss.”

“Can’t you loan it to me as I need it?”

“We have to have our money out and working,” said Sherman Grome.

“So what’s your security?”

“Oh, the certificates of deposit you’ll buy from Fred Hildebert. They can’t be cashed in without EMMS approval.”

“So it’s my money but it’s your money?”

“I look forward to a productive working relationship.”

“How soon will all this happen?”

“I’ll set it in motion when I get back from Houston tomorrow. You’ll be contacted. You can fly up with your attorneys, and all the requisite documents can be signed at our headquarters.”

“I don’t like taking over Tropic Towers.”

“I beg your pardon?”

“I said I don’t like taking over Tropic Towers!”

Sherman Grome stood up. He smiled. He did not offer his hand. “We’re through negotiating, Mr. Liss. And I am not very interested in your likes and dislikes.”

“What’s the percentage in being snotty, Grome?”

Grome smiled again. “It saves a lot of time, Mr. Liss.”

•  •  •

Martin Liss watched from the observation deck when the small white jet took off. It slanted up at a very steep angle, dwindled to a glittering speck and was soon invisible. If it doesn’t fall out of the sky, he thought, I pack away one million private and personal money. If it does fall out of the sky, I don’t have to worry about taking over that damned dog project Tropic Towers, and I don’t have to worry about most of the profit being skimmed off Harbour Pointe. So should it fall or shouldn’t it? He looks like some kind of cowboy. Those goddam blue glasses. He is making me old before my time.

Martin had called Lew Traff and Benjie Wannover into his office and had told Drusilla no interruptions except for class A emergencies. At one point during the discussions Benjie made a call to a stockbroker whose opinions he respected.

After he hung up he said, “The way the real estate investment trusts like Equity Mortgage Management Shares work, of course, is that they have to distribute almost all income quarterly to the shareholders or lose their tax status. EMMS has three and a half million shares of common stock outstanding. Last year they paid dividends of two dollars and forty cents, which was eight percent of the market value of the stock, which was thirty dollars. Management, meaning Sherman Grome, has predicted the same or better this year. But because all the REITs took a beating in the market, EMMS shares are down to twenty bucks, nineteen and five eighths as of today’s close. The first quarter they paid a dividend of sixty-two cents. That annualizes at close to two dollars and a half which would be … a return of twelve and a half percent. Now
what we’ve got is, we’ve got this Grome character running around making funny deals to clean up his own books so he can hold the dividend rate high enough to keep the stock in some kind of reasonable range. I’d say that what he is doing is like a fellow taking timbers off his foundations to patch his leaky roof. After he takes away enough support, the whole thing comes down. He has a reputation for smart. So he knows what he is doing. If he is going to make himself look like a dummy, there has to be compensations. If he can give away a million dollars to you, Marty, then he has to have a way of giving a lot more than that to himself.”

“How is it given away if it gets paid back?”

“How can
he
be as sure as
you
are, as we are, that it can be paid back? The way the industry looks, any new project now is going to run into trouble. And right here let me say that I am not so damn sure it is going to be paid back. That is one hell of an interest load.”

“Like always, Benjie, I value your advice. And yours too, Lew. But I want to go ahead with this.”

“Regardless?” Lew Traff asked.

“But I want to limit the risk.”

“Oh?” said Lew.

“It’s something Grome can’t object to. He was the one suggested a new corporation to take over Tropic Towers and try to sell it out and pay it off. So what I want to do is stuff the Harbour Pointe project into the new corporation too. We’ve got too many goodies tucked into the Marliss Corporation to take a chance of it going down the tube. How soon can you set one up?”

Lew Traff scowled at the ceiling for a moment. “We’ve got a shell we can use. I was going to close it out and then I thought, What the hell, it might come in handy. It’s the one you had me set up three or four years ago on that fried chicken franchise that didn’t work out. The charter is broad enough. Let me see now.
You’ve got five hundred and two shares, Marty, and Benjie and I’ve got two hundred and forty-nine each, and there’s a thousand unissued.”

“Can we transfer all the rights and permissions we’ve acquired?”

“Why not? They go with the parcel. Except for the building permit, and we haven’t gone after that yet.”

“What’s the name of the shell?”

“The Letra Corporation.”

“What the hell does that mean?”

“Marty, you’re hurting me. This one you said I could name after me. Like Marliss, Le from Lew, and Tra from Traff. Maybe that’s why I didn’t let it die.”

Marty said, “Benjie, if it doesn’t work out, if Harbour Pointe doesn’t work out out, Letra files bankruptcy.”

“There would be a stink.”

“But we’d be out of reach. Right, Lew?”

“Out of reach. Except it won’t be easy to get back into any size operation no matter what name you use, not for a while.”

“Lew? Benjie? Let’s take a vote. If Harbour Pointe goes under, things are going to be so bad all over we don’t have to worry about new projects anyway. And I will make sure you two don’t get hurt in any way, no matter what. Affirmative? Good. And we are going to have a couple of months of work ahead like you’ve never seen before. So let’s—”

“Martin?” Benjie said. “There’s something we shouldn’t overlook. This Sherman Grome is playing little games to hold up the quote on EMMS shares, like a man holding up a tent while he can crawl out under the flap. Maybe through some kind of dummy setup, or friends, or some fund, he is easing out of a position in EMMS, selling off from five hundred to two thousand shares a day whenever there’s a little strength in the stock market.”

“So?” said Martin Liss, frowning.

“So if it is a good bet the smart money is selling, then it is time to sell. We should sell short. It would cost six hundred thousand to take a thirty-thousand-share short position, if you can find a house that can borrow that size block under present conditions. If he goes sour all the way, which something tells me it might, it’s a nice double.”