The Record from Hackensack, New Jersey • 28

AUGUST 5. 2001 B-6 THE SUNDAY RECORD 1S EOTIM 'PROBLEM' PROPERTY SPECIALIST Dod Mm if rehabroiig Real estate firm hits on successful formula Volvo, Jaguar packing their bags Automakers shift base to California JIl mjk t. i I Ml mi i i An early project: this building near Bryant Park in Manhattan. By KATHLEEN LYNN Staff Writer hen Mountain Development Corp. of West Paterson i I i pv A I 'ft 11 A 1 I hi hi I "'yt bought the Focusing on core of the business Drug-maker sheds orthopedics unit By LEWIS KRAUSK0PF Staff Writer Bristol-Myers Squibb shareholders will soon own an orthopedics devices company as welL The New York-based drug-maker, with operations and thousands of employees spread throughout New Jersey, is expected to complete the spinoff of its Zimmer orthopedics unit Monday.

Bristol-Myers investors receive one share of Zimmer for every 10 shares of Bristol-Myers they own. Warsaw, Ind-based Zimmer is expected to begin trading Tuesday on the New York Stock Exchange under the ticker symbol "ZMH." The spinoff is nearly a year in the making and part of a new strategy at Bristol-Myers, summed up in two words: just drugs. In September, Bristol-Myers management told investors that it would get rid of Zimmer and Clairol, its beauty care unit, to focus on the highly profitable business of making and marketing prescription medicines. In May, the company sold Clairol to Procter Gamble for $4.9 billion, and the following month, Bristol-Myers said it would buy Du Pont's drug business for $7.8 billion. Bristol-Myers' moves come during a difficult time for the drug-maker.

Its highly anticipated blood-pressure drug has endured setbacks, while its big-selling cancer and diabetes treatments face generic competition. Becoming more of a "pure-play" drug company makes sense, said Gir-ish Tyagi, an analyst with ABN Amro. "The idea is they're leaner, they're more efficient," Tyagi said. "Slow growth in one section can hamper overall growth in the company." Tyagi notes that Bristol-Myers is not the first big drug-maker to discard its medical devices unit. Indianapolis-based Eli Lilly Co.

spun off Guidant Corp. in 1994, while Pfizer of New York sold its Schneider Worldwide division to Boston Scientific Corp. in 1998. Standard Poor's last week welcomed newly solo Zimmer into its well-known stock market index of 500 widely held stocks. But the company is not new to orthopedic surgeons.

Founded in 1927, Zimmer was a privately held company when Bristol-Myers bought it in 1972. "The way we see them is they have phenomenal brand-name recognition," said Rosanne Ott, an analyst who covers medical device companies for Lehman Brothers. "They are very well known among orthopedic surgeons." With $1 billion in sales in 2000, Zimmer becomes a leading player in the $11 billion worldwide orthopedic industry, analyst Katherine Martin-elli of Merrill Lynch wrote in a report opening her coverage of the company. Zimmer's product line includes reconstructive implants for hips and knees, devices such as plates and screws to fix fractures, and other orthopedic devices such as braces and casts. Zimmer employs more than 3,200 workers, mostly in the Midwest and the South.

Unlike Bristol-Myers, Zimmer operates no major facilities in New Jersey. About 195 million shares of Zimmer are outstanding, millions of which have already been traded conditionally, said Zimmer spokesman Brad Bishop. The share price will be set by buyers and sellers when trading begins Tuesday. Staff Writer Lewis Krauskopf's e-mail address is krauskopfnorthjersey.com By HUGH R. MORLEY Staff Writer Observers passing by the Volvo car company's spacious Rockleigh headquarters next Sunday might see history in the making when a line of 20 Volvo wagons noses out into the street en route to Irvine, Calif.

The trail of vehicles, dubbed a "wagon train" by the company, marks the start of the departure of the company's top officers from Bergen County after more than 25 years in the community. About 40 employees, led by Volvo President Vic Dolan, will make the drive to their new offices, stopping along the way on the six-day public relations trip at several dealerships to talk shop with salesmen and customers alike. The company will officially move its corporate headquarters across the continent on Aug. 22. The cross-country transition is part of an effort by Ford, which owns Volvo, to consolidate its luxury car lines under one roof, a building in Irvine.

Also moving its top officers to the California location is another Ford-owned marque, Jaguar, which will shift 38 people from its Mahwah headquarters, officially taking up residence on the West Coast on Aug. 15. Simon Seroule, spokesman for Jaguar, said the company would retain about 136 employees at the Mahwah office. It now has 174. About 161 Volvo employees will switch coasts in the move, although the company's Rockleigh office will remain open to house the company's Northern region with a staff of about 300.

The switch will mean the departure of the car company's main office from Bergen County after more than two decades here, first in Leonia and later in Mahwah, where the company has been since about 1990. Other parts of Ford's luxury vehicle branch, the Premier Automotive Group, moving to California are the headquarters of Aston Martin, Land-rover, and Lincoln, none of which is now in New Jersey, said Seroule. "Los Angeles, is arguably the car capital of the world in terms of design trends, styling trends, culture," Seroule said. "A lot of what we see there influences cars in the future." But, Seroule added: "We need to keep the East Coast office, because we need a strong presence on the East Coast because it's our second-largest market." By putting all five luxury car companies under one roof, Ford would gain significant synergy in operations, he said. An East Coast base also is needed, he said, because the eight-hour time difference between California and Jaguar's London headquarters is too great.

Neither Rockleigh Mayor Roberta Adams nor Mahwah Mayor Richard Martel could be reached for comment. Rockleigh Councilmen Nicholas Langella said he was unaware of Volvo's move. And Councilman John Mender said he did not know the details. "We don't care if they move, as long as they keep the buildings," he said. Like Seroule, Volvo spokesman Roger Ormisher said Volvo would maintain a strong presence in Bergen County.

The East Coast offices are needed, he said, to cope with communication between the company's American operation and the Swedish headquarters, a time difference of six hours. "We will have two corporate headquarters," he said. Staff Writer Hugh R. Morley's e-mail address is morleynorthjersey.com ED HILLSTAFF PHOTOGRAPHER "We enjoy the creativity of taking a problem property and turning it around," says L. Robert Lieb, left, owner and chairman of Mountain Development with the company's president, Michael Seeve.

Givaudan-Roure fragrance research building in Clifton for $2.5 million, the interior was filled with scores of what looked like high school science labs, complete with Bunsen burners, safety showers, and sinks. Eighteen months and $10 million in renovations later, the 30-year-old, building is now a mix of sleek offices and open, raw space, awaiting new high-tech tenants. Mountain Development specializes in buying an old property at a bargain price, extensively renovating it, then seeking tenants for long-term leases. "We enjoy the creativity of taking a problem property and turning it around, especially in an urban center, where you can change people's lives," says L. Robert Lieb, 60, of Livingston, owner and chairman of Mountain Development.

"Building a new building is much easier than rehabbing an old one, but a rehab gives you a sense of satisfaction because you have more impact on the community." One example is 100 Hamilton Plaza, which at 14 stories is Paterson's largest office building. Only 40 percent leased when Mountain bought it at the fire-sale price of $1 million in 1995, it is now almost fully leased. And Mountain Development President Michael Seeve is now chairman of the downtown Paterson special improvement district "They've done wonders with that building," says Gary Melchiano, Paterson's director of economic development. "They took the time to renovate it. A lot of developers aren't interested in coming into Paterson." Similarly, in 1998, the company bought a tired, 35-year-old shopping mall in Springfield, that was losing retail tenants and shoppers to a larger, newer mall nearby.

Mountain Development added a 16-screen movie theater and spruced up the mall, which is now almost full. Lieb, a lawyer, got into real estate in the late 1970s, when a client asked him to be a partner in buying 17 acres on Garret Mountain overlooking Route 80. They bought the land and built two office buildings, called Garret Mountain Plaza. Mountain Development's headquarters are in one of the buildings. Lieb and Seeve's late father then invested in a 140-year-old building overlooking Bryant Park in midtown Manhattan.

Lieb now serves as co-chairman of the Bryant Park Management Corp. Mountain Development has 150 employees and 3 million square feet of space in 15 buildings and Mountain Development Corp. Location: 3 Garret Mountain Plaza, West Paterson Services: Real estate development and management, with an emphasis on buying and rehabilitating existing properties Owner and chairman: L. Robert Lieb Business established: 1979 Source of revenue for start-up: Bank loans and investments from institutional investors Number of employees: 150 Value of properties owned (with partners): $400 million to $500 million Mission: To buy properties at a good price, then renovate and lease Development to some developers. Seeve and Lieb work closely, sharing a single large office.

On the windowsill are model airplanes belonging to Lieb's teenage son. On Seeve's desk are 11 Rolodexes in a horizontal row. Seeve, 31, started in the business digging ditches as a college student more than a decade ago; Lieb says he is "like another son to me." They've found that the renovation business can bring surprises hidden fireplaces, skylights, and frescoed ceilings, and even a secret passageway behind paneled wood walls. The landlord business has its moments, too. There are the exasperating tenants, including the New York designer who won't pay her rent at the Bryant Park building.

See MOUNTAIN Page B-8 thrive even in sleepy real estate markets because its lower costs let it offer better prices to tenants. The old Givaudan building, now called Mountain Technology Center, will test that theory. Allied Office Products has taken the top two floors of the building. But five floors are still empty. Seeve is hoping that a financial institution will snap up the empty space priced in the low $20s per square foot for computer-dependent back-office operations.

Clifton City Manager Robert P. Hammer says that during the Givaudan redevelopment, Mountain Development was professional, open, and easy to deal with. "There seems to be a willingness on their part to resolve issues, as opposed to litigating or becoming adversarial," Hammer says, comparing Mountain shopping centers. Its holdings, many owned with partners, are worth a total of $400 million to $500 million. The company does not compile revenue figures as a whole.

Instead, each project is a separate venture. Each building is expected to return about 15 percent to 20 percent annually on the investors' equity, which is equal to about half the value of the properties (the rest is borrowed money). Not all projects work out. In 1980, the company bought 26 Journal Square in Jersey City, hoping the neighborhood would be revived. But they were ahead of their time.

In the early 1990s, the bank called in the loan on the property, forcing it into foreclosure. Although the economy has slowed this year, Seeve insists that Mountain Development can Emotions can shape a family's mortgage decision off you might not be able to qualify for a loan. Lauren Locker, a fee-only financial planner in Totowa. Questions are answered by The Record's Investment Mailbag Committee, a group of local professionals who are volunteering their time. If you have a question, drop a note to: Investment Mailbag, The Record, 150 River Hackensack, N.J.

07601. Or e-mail newsroomnorthjersey.eom or fax (201) 646-4164. The Investment Mailbag is Intended to provide general responses to questions. For more specific Information about your situation, consult a financial adviser. uid assets in an emergency fund for living expenses.

Remember that a mortgage is also a "forced" savings. If you had an additional $874 per month available, would you invest it every month, or would you be tempted to spend this money? Paying off the mortgage gives you more equity in your home. But if you need the money in the near future, that may not help much. You could always apply for a home equity loan, but if conditions in your personal life change for example, if you are laid real savings would be only $4,036.50, or 4.48 percent. If you could earn more than 4.48 percent, after income taxes, on your $90,000, it would be better not to prepay your mortgage.

I am also assuming that when you say you have $125,000 in savings, notes, and CDs, college savings is not included in this amount. I would also expect that you already are contributing the maximum amount into your 401(k), that you have no credit card debt, and that if you paid off your mortgage, you would still have at least three months' worth of very liq Q. My wife and I own a home and have four children, ages 4 to 10. We have a 6.5 percent mortgage with 12 years remaining and about $90,000 left to pay off. Our monthly payment is $884.

The house is valued at $375,000. We have about $125,000 in liquid assets (savings, notes, and certificates of deposit). Should we pay off the mortgage with the available money or invest it In something else? I've gotten mixed opinions on this hot topic. A.P., Cresskill have nowhere else to put your money? Or are you just trying to get a better return on your money? Very often, there is an emotional issue related to a financial issue. Both need to be considered.

If you prepay the $90,000, youU save roughly $5,850 in interest for a one-year period (6.5 percent of However, if you are in the 31 percent tax bracket, you could lose a maximum deduction of $1,813.50 (31 percent of $5,850) on Schedule A of your income tax return. So your Ai Let's start by exploring some of the reasons you want to pay off the mortgage. Will it give you peace of mind not to have that monthly payment hanging over your head? Is job security an issue? Do you have so much discretionary income that you.