The last visible icon of the Merry-Go-Round empire -- the defunct retailer's sprawling million-square-foot headquarters in Joppa -- was sold yesterday for $19 million in U.S. Bankruptcy Court in Baltimore.
May Department Stores Co., the giant St. Louis-based chain, acquired the complex to be used as a distribution center for its fast-growing Hecht's department store division.
"I believe the estate has been very fortunate to receive this price," said Deborah Hunt Devan, the court-appointed trustee overseeing the bankrupt company.
Under fluorescent lights, more than a dozen attorneys in dark suits yesterday took 56 minutes to dispense with the building's sale, striking a corporate contrast to the once-charmed multimillion-dollar company of nearly 1,500 stores founded on funky fashions and rollicking executives in torn jeans.
And with the sale, the fallen company formally severed its ties to 3300 Fashion Way in Joppa, moving its dwindling operations to a less auspicious site downtown -- some 4,000 square feet at 111 Water St. with six to eight employees.
"This is the last major tangible asset," said Joel I. Sher, the trustee's attorney.
XTC To help pay off Merry-Go-Round's more than 8,000 claims, the trustee has already raised $3.9 million from the sale of assets in a series of auctions from April through last weekend.
The sale of the complex will add about $5.3 million to the estate after the majority of the proceeds are placed in escrow to pay off the first-lien holder on the property and to pay Harford County taxes.
The deal was the best Merry-Go-Round could forge. The building was once estimated to be worth $30 million, but its value has been diminished by its 190,000 square feet of office space in a market with few large office users. An estimated $20 million worth of high-tech conveyors did little to enhance the complex's value because the equipment was designed specifically for the retailer's operations.
The sale price "represents the highest and best offer received by the trustee after extensive marketing and negotiating," said Richard M. Goldberg, an attorney for the trustee.
As many as 25 parties inspected the property, but only two others had come forward to buy the Joppa complex, and neither matched May's bid. Constellation Real Estate Group, a Columbia developer, offered slightly less than $16 million, the trustee said. And Gap Inc., the trendy national retailer out of San Francisco, offered about the same amount as May did, Devan said, but under less favorable terms. May, for example, was willing to pay more of the transfer taxes involved.
May had incentive to offer a sweeter deal. Hecht's already
employs nearly 1,400 workers at its three distribution centers, all in the region. But the department store chain is running out of room, having nearly tripled in size since 1990 with 71 stores on the East Coast, including eight in the Baltimore area.
Hecht's operates a 295,000-square-foot apparel distribution center in Baltimore, a 789,000-square-foot apparel warehouse in Washington and a 406,000-square-foot center in Savage, which moves big-ticket merchandise, such as televisions, furniture and mattresses.
Hecht's will use the Merry-Go-Round complex to move more big-ticket items, said Senior Vice President Nancy Chistolini, but the company has not worked out how many employees will be needed or how the space will be reconfigured. Chistolini declined to say whether Hecht's is considering moving its Arlington, Va., headquarters to the Joppa complex.
Pub Date: 8/20/96