Originally created 07/12/98

Merry Land seeking new niche



Sometimes, one company's future is revealed in another company's past.

In 1981, Merry Brothers Brick & Tile Co. sold its brick works and holdings to Boral Bricks, and a new company -- Merry Land & Investment Co. -- was born. It started with 4,700 acres of clay lands that Boral didn't want.

This week, Merry Land & Investment Co. announced it will merge with Chicago-based Equity Residential Properties Trust in a $2.2 billion deal.

A new company, Merry Land Properties, will emerge with the same 4,700 acres of clay lands that Merry Land & Investment Co. started with, and a few other holdings that Equity Residential doesn't want.

"It's deja vu," said W. Tennent Houston, Merry Land's president and chief executive, who joined the company the year it was formed. "Merry Land & Investment Co. exploited the noncore assets of one company that was acquired by another. Merry Land Properties is being formed for the exact same reason."

The deal is subject to shareholders approval, but if all goes as planned, Merry Land Properties will emerge with about $63 million in assets.

The company will be headquartered in Augusta, in Merry Land's current offices on Ellis Street and focus on property investment, development, management and rehabilitation, Mr. Houston said.

Merry Land Properties has more assets now than Merry Land & Investment Co. started with, he said. But both had similar beginnings.

The new company's holdings will include commercial property in downtown Augusta, five apartment complexes in Savannah and Charleston, S.C., and the thousands of acres of clay lands -- some of which could become frontage road on Bobby Jones Expressway when the Interstate loop is expanded.

It will be headed by Mr. Houston, who will be chairman and chief executive officer; and Michael Thompson, Merry Land's chief operating officer, who will be president. Boone A. Knox, Merry Land & Investment Co.'s chairman, will serve as a director.

For now, Merry Land Properties' strategy will be based on what officers see as a trend -- baby boomers retiring and moving to coastal resorts and communities.

The new company will develop apartment residences for middle-income workers servicing the retirees.

"We intend to invest in or develop apartments or other properties for the service industry," Mr. Houston said. "We do not intend to be resort developers."

Merry Land & Investment Co. used its starting assets to grow.

It bought its first apartment complex in 1982. It gained real estate investment trust, or REIT, status in 1987, and launched an ambitious plan to acquire apartments in the early 1990s.

"I have always felt we should be buying Equity Residential," Mr. Houston said. "I always felt Merry Land would be the dominant model for successful apartment REITs."

When it did not appear that would happen, the company agreed to sell.

The merger deal with Equity Residential was in the works for about two months, he said. Before that, the company looked at several options to increase shareholder value. But this is the one the corporation settled on.

"I am disappointed that we were not able to achieve our goal of being the dominant apartment company in the country," Mr. Houston said. "It is sad to see an organization comprised of such fine people broken up."