By the time American Invsco relinquished its unsold co-op apartments at the Promenade last week to Chase Manhattan Bank, the once mighty real estate giant more closely resembled a wizened dwarf.
Two years ago, American Invsco was cutting a wide swath across the country with the biggest, splashiest, most luxurious condo projects around.
It seemed as if nothing could stop the Gouletas siblings, owners of Invsco, dubbed the First Family of Condomania.
But today, the highly leveraged real estate outfit has toppled from its pinnacle, pushed by high interest rates and an economy that refused to march to Invsco's fast and furious beat.
"I give Invsco a year to liquidate all its major properties and two years to sell its remaining units," says Jay Strauss, president of the Abacus Group, a former lender to Invsco.
When the dust settles, what will emerge will be a shell of the privately held company's former self. None of the original entities under the parent company will be left intact. Instead, four decentralized regional offices will remain, and the company will have no more than 30 percent of the assets it held just a year ago.
Invsco has only five properties left, and its staff reportedly has been reduced from a peak of 700 salaried employes and 1,250 sales agents working on commission to about 60 salaried employes and 28 sales agents now.
By the time Chase Manhattan took over the Promenade, the story of an Invsco failure was a familiar one. Similar examples abound:
* Chicago Title & Trust Co. loaned the company $25 million to buy buildings in Des Plaines, a Chicago suburb. With Invsco substantially behind on payments, the properties were deeded to Chicago Title.
* The few remaining units in Chicago's 541-unit Hollywood Towers will go toward the same end with other local lenders.
* At the 184-unit Plaza Towers in Atlanta, Abacus Morgtage Investment Co., a unit of Abacus Group, took over four unsold units.
* At the 342-unit Park Lane in Denver, Majestic Savings & Loan of that city, which loaned Invsco $2 million to purchase the property, is "monitoring" the 18 unsold units, although there has been no foreclosure yet.
* At the 487-unit Hunters Ridge in Detroit, Bank of America, which loaned $37 million for its purchase and conversion, set up an Invsco account to which residents are paying their monthly rent. Although Bank of America says the account is not a device to pay off the debt, one executive claims the bank hopes it will "encourage" Invsco to do so.
Meanwhile, Bank of America is seriously considering an outside bid to purchase Hunters Ridge for an undisclosed amount. Originally a conversion project, that property stopped dead with about 55 units sold last winter, and marketing efforts are now directed almost exclusively at renting.
Former American Invsco president Douglas Crocker, who recently was replaced by executive vice president Robert Lester, concedes that, "When you get down to this level, the task is to get overhead in balance with the income that the remaining projects throw off. We sure have come a long way from where Invsco started."
Here's how the shrunken empire shapes up:
* American Invsco Development Management, the unit used for joint-venture development of new construction projects, has been phased out. Most recently, that company sold the last property, a 50 percent share in the $25 million Barclay Towers in Denver to partner Villacentres Properties Ltd. of Calgary, Alberta. Although the office portion of the two-tower complex has been completely leased, none of the 244 units in the condominium building has been sold.
This summer, the company divested its 50 percent interest in Chicago's Buckingham Plaza to partners Metropolitan Structures and Illinois Center Corp.
* Ambros Group, the brokerage arm that was to build a nationwide network of real estate sales offices, is defunct. Once considered the fastest-growing Invsco unit, it is last residential holding, Houston-based Jim West & Co., recently was sold to Henry S. Miller Realtors in Dallas.
The others, Chicago-area J-H Kahn Realtors, Koenig & Strey Realtors, Rich Port Realtors, Denver-based Perry & Butler Realtors and San Francisco-based Saxe Realty, already have been divested along with the one commercial firm, Fuller Commercial Brokerage Co.
* Acquest Group Inc., the property-acquisition arm of the parent company, has been phased out, a sure sign that Invsco's days of growth are over.
* National Property Management, which managed the converted condominiums, has been spun off and "sold" to Shelter Management, headed by the youngest Gouletas sister, Irene Gouletas D'Agnese.
Says the current manager of an Invsco conversion property, whose management was once handled by National Property Management, "Our board asked them to leave and terminated their contract two years ago. They were always late in paying bills and taxes. National never had a handle on its local offices."
Shelter has replaced National Property Management as the manager of a number of Invsco conversions, including the Carlyle in Lakewood, Ohio.
* Diversey Group, whose function was to acquire real estate investment trusts, never got off the ground and is virtually nonexistent. Most recently, it sold the Bellamah Group, an Albuquerque-based land development company. Bellamah was formerly a part of TAMCO, the privately held conglomerate founded by Gouletas brother, Victor Goulet.
* Home Marketing of America Inc., the sales and marketing entity used to convert apartments to condominiums, survives -- but practically in name only. Invsco has a handful of apartment units left to sell.
* American Invsco, the original purchaser and convertor of apartment buildings, clearly has eliminated that function from its operations.
But Invsco will continue.
Replacing the original company will be a bare-bones operation -- a decentralized system of four regional offices. American Invsco Realty of Chicago, Denver and New York eventually will be joined by a fourth office, probably in Houston.
"Each area will become self sufficient," says Crocker, now a consultant to Invsco. "From the liability standpoint, each will stand on its own two feet."
That's a far cry from the old Invsco, which retained all financial controls in the hands of the Chicago-based Gouletas family.
"Decentralized accounting could have saved them two years ago, but the Gouletas didn't want to release dollar responsibility from La Salle Street," Chicago's financial district, contends a former Invsco regional manager. "Nobody in their regional offices knew where we were at, because we had no controls over the accounting end of it. And the Gouletases could never let a dollar sit."
The Gouletases did buy and borrow. Estimates of Invsco's loans range between $300 million and $500 million, borrowed primarily from Continental Illinois National Bank and Trust Co. of Chicago, Chemical Bank and Chase Manhattan of New York and San Francisco-based Bank of America.
According to Crocker, most of the loans from its major lender, Continental -- pegged at $100 million to $200 million -- and from second-tier banks have been paid off with money from the sale of properties and units to third-party investors or by handing over property deeds to the banks themselves. He contends that the only substantial debts outstanding are to Chemical and Chase Manhattan. However, he insists that those are being taken care of, as Chase Manhattan's inheritance of the Promenade clearly indicates.
Meanwhile, overhead is being slashed drastically. In Chicago alone, operations in its home office have shrunk to half of one floor from almost three floors. Close to 40 people were laid off recently, and warning signals are up that the axe will continue to fall.
Invsco expects to keep only five prime properties:
* Chicago's Lake Point Towers, the Pavilion and Countryside Apartments rental units.
Invsco is most determined to hold on to the 879-unit Lake Point, dubbed Invsco's "jewel" by the Gouletas family. Located on Chicago's lakefront, the tower -- now a rental property -- has potential to be Invsco's most lucrative conversion property. Apartments in Lake Point could command a whopping $200 plus per square foot.
However, the company first must acquire the land beneath the structure. In Chicago, a condominium conversion can take place only if building and land are in common ownership, and Lake Point now sits on acreage owned by Chicago Dock & Canal Trust. In addition, any deal made regarding Lake Point must have the seal of approval from Continental Bank, which maintains the subordinate mortgage position.
New York's Continental Towers, a rental property.
* 191 Presidential Condominiums in Bala Cynwyd, Pa., outside Philadelphia.
In addition, some commercial space--particularly ground-floor retail space in former Invsco-owned condominiums--and the Market Square shopping center in Lafayette, Ind., will be retained.
"We may sit for a year and just manage those assets until the picture in the real estate industry and economy gets clearer," says Crocker.
But in the end, concludes Abacus' Strauss, "For all practical purposes, the company will be a shadow of its former self."