PAGE   22                                      

                         New Mexico Business Journal                                                     
April, 1985

SECTION: Vol 9; No 4; Sec 1; pg 22

LENGTH: 2345 words

HEADLINE: The New Horizon: New Capital, New Management Rebuild a Troubled 
Land Company

BYLINE: Bob Hagan

DATELINE: NM; US

 BODY:    Horizon Corp., one of the largest land-owners in the state and 
an active force in Southwestern real estate through the 1960s and '70s, 
has scarcely been heard from in recent years.

   This year, however, the company is emerging from hibernation.  Backed 
by fresh capital and run by a new management team, Horizon has a whole 
new strategy for developing the tens of thousands of acres which it still 
owns in New Mexico, Texas and Arizona.

   So fundamental are those changes that old friends -- and old opponents 
-- of the company will scarcely recognize the new Horizon.  The company 
is scrapping plans, plats and strategies, some of them 20 years old, for 
a whole new business plan.  Although to some extent those changes have 
been forced on the company by the federal government, more fundamentally 
they represent a belated recognition of changing marketplace conditions.  
Southwestern real estate development is an entirely different ball game 
than what it was when Horizon was launched by visionary real estate 
magnate Joseph "Jerry" Timan a quarter of a century ago.

   In New Mexico's long, colorful, and sometimes disreputable history of 
real estate speculation and development, Timan represents the passing of 
an era.  His career and the history of his corporation bridged the 
transformation from the free-wheeling Frontier days of the old-time 
promoters like the heirs of the Maxwell Land Grant to the modern day 
developers like the builders of Sun City in Arizona.

   Beginning even before New Mexico became a U.S. territory following the 
Mexican War, large scale land sales in the Southwest were fundamentally 
speculative -- based on projected future value of the property rather 
than present realities.  Although time and again that strategy has landed 
both buyers and sellers in legal and financial hot water, new players 
have always stood ready to take their places in the game.

   At the turn of the century, for example, the promoters of Hagan, New 
Mexico, -- then a mining camp with a total population of 49 men, one 
woman, several horses, mules and dogs and one pig -- felt no scruples 
about proclaiming their creation "the Pittsburgh of the Southwest." 
Potential investors and settlers, inured to the overblown hype of Western 
land developers, presumably took such

                                                                       
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outrageous claims with several large grains of salt.

   When Timan, a former New York real estate lawyer transplanted to 
Tucson, launched Horizon Corp. in 1959, echoes of that old tradition 
still lingered. Although the company promoted and to some extent 
developed as retirement and leisure communities, its land sales pitch was 
basically speculative: thousands of out-of-state buyers were sold lots 
not on the basis of present value but because of what they might be worth 
someday.

   Horizon was certainly not alone in that sales strategy.  Several other 
equally large companies and dozens of smaller "developers" energetically 
pursued the same course.  And for Timan and his corporation, it was 
successful: at the time, Horizon controlled nearly half a million acres 
in three states.

   But even as such land sales giants as Horizon and AMREP were entering 
their boom sales years of the later 1960s and early 1970s, the world was 
changing. Buyers were becoming more sophisticated, federal and state 
governments were becoming less tolerant of inflated claims and 
overenthusiastic sales pitches -- and the rapid population growth in the 
Southwest was substituting real development opportunities for imagined 
cities in the clouds.

   AMREP Southwest, Horizon's chief rival in selling New Mexico lots to 
out-of-state buyers, began to adapt to those changes in the mid-'70s and 
has evolved into New Mexico's largest home builder and developer.  
Horizon Corp., handicapped by management conflicts and stockholder 
dissidence, almost didn't make the transition at all.

   Horizon's two major properties in New Mexico were Paradise Hills, on 
Albuquerque's West Mesa, and Rio Communities to the south of Albuquerque 
at Belen.  The company also had planned developments at Horizon City near 
El Paso, Sun Sites and Rancho del Lago in Arizona, and another site north 
of Houston. Most successful of the Horizon developments was Paradise 
Hills, which in 1973 boasted a greater population than AMREP's 
neighboring Rio Rancho Estates to the north.

   But in 1975 the FTC issued complaints against a number of real estate 
sales companies marketing property in the Southwest and South, 
particularly in Arizona, Colorado, Florida, New Mexico and Texas.  The 
companies, Horizon and AMREP among them, were accused of misrepresenting 
the potential value of the lots they were selling via aggressive 
telephone solicitation and ad campaigns.

   In 1981, after nearly six years of hearings and appeals, Horizon 
aquiesced to an FTC ruling ordering the company to cease and desist the 
alleged deceptive practices and to pay back $ 14.5 million to some 38,000 
buyers of Horizon lots. Horizon agreed to pay the money into a trust fund 
in six annual installments of $ 2.4 million each.

   Although that sum represented only about 12 percent of the total 
revenues received by Horizon for the properties over the years, the 
settlement represented a serious drain on cash flow for the corporation.  
At the same time, the rapidly rising interest rates of the latter 1970's 
bled demand for Horizon lots.  As sites for second homes or as investment 
properties, the demand for such land was much more severely impacted by 
high interest rates than the real estate market as a whole.


                                                                       
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   Floyd Bailey, who was in charge of Horizon's New Mexico division from 
1967 to 1973 and left to become executive vicepresident of AMREP's New 
Mexico division in '73, says Horizon's top management made some "bad 
decisions" in the '70s.

   Timan retired in 1975, and the top management split in factions 
favoring different strategies.  Bailey says.  As a result the corporation 
was unable to formulate a coherent strategy to adjust to changing market 
conditions.  AMREP, by contrast, shifted its emphasis from lot sales to 
home-building for the rapidly growing Albuquerque-area market and quickly 
became the biggest home-builder in New Mexico.

   But Horizon was not as successful in following AMREP's lead, and the 
company entered the 1980's in an unstable condition aggravated by a 
bitter proxy fight that forced changes in top management.

   Bailey rejoined the company in 1980 as president and CEO.  While under 
his direction, the company sold large tracts of acreage in bulk in an 
attempt to raise cash to finance the development of the remaining land 
and to pay off the FTC-ordered settlement, but continuing slow sales and 
the multi-million dollar drain caused by the FTC order didn't leave the 
company much elbow room for changes in operation.

   In the fiscal year ended May 31, 1983, the corporation reported a net 
loss of $ 1,949,000; for the year ended May 31, 1984, the loss was $ 
1,219,000.

   In July of last year, Horizon concluded an agreement with MCO 
Holdings, Inc., for that California-based real estate conglomerate to 
exercise its option to acquire 678,304 shares of of unissued Horizon 
stock at $ 5 per share.

   MCO had previously acquired 339,152 Horizon shares at $ 8.27 per share 
and obtained a five-year option on the other shares.  MCO also arranged 
for a $ 25 million line of credit for Horizon with First National Bank of 
Boston.  The infusion of capital and credit allowed Horizon to become 
current with its payments under the FTC order and undertake new plans for 
development of the 30,000 acres it still controlled in New Mexico, 
Arizona and Texas.

   In August, Bailey resigned his positions as president and chairman of 
the board.  Dr.  William C. Leone,  president of MCO Holdings Inc., was 
named chairman of Horizon's board, while the office of the chief 
executive was temporarily occupied by a triumvirate drawn from both 
corporations.

   The new chief operating officer, named in December, is John D. Spaugh, 
a real estate investment and management professional imported from BSB 
Ventures Corp. of La Jolla, Calif. Dr. Leone, whose MCO Holdings controls 
total assets of about $ 516 million, remains chairman of the board, 
president and CEO of Horizon.

   The new manager of Horizon's New Mexico division -- named last August 
before Bailey's departure -- is James L. Leymon, a former vice-president 
of research and development for the Bellamah Corp., one of New Mexico's 
most successful developers.

   The latest addition to the Horizon New Mexico team is Jack H. Corder 
II, who has been hired as marketing manager for Horizon's properties in 
Paradise Hills and Rio Communities.  Corder came to Horizon's Albuquerque 
offices from Las Cruces, where he managed sales for Candlelight Homes and 
more recently

                                                                       
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directed marketing services for Binns Construction and Realty there.

   Horizon's new management team has devised an entirely new marketing 
strategy for the corporation's properties, according to Spaugh and 
Leymon.

   Horizon is refurbishing its previously dormant Waterwood development 
at Lake Livingston, about 80 miles north of Houston, and is re-opening 
sales of finished lots there, Spaugh says.  The corporation has 12,000 
acres at that Texas site, with about 2,000 acres currently under 
development.

   Development activity is also resuming at the company's two projects in 
Arizona, Spaugh says.  Rancho del Lago, near Tucson, is approximately 
2,000 acres planned as a recreation resort with a major hotel envisioned 
as the centerpiece.  Arizona Sun Sites, 80 miles south of Tucson is a 
3,000-acre retirement community planned around an 18-hole golf course.  
Both developments were in abeyance during Horizon's re-organization and 
recapitalization.

   In New Mexico, Horizon has big plans both for its land on 
Albuquerque's West Mesa and its properties east of Belen, according to 
Leymon.

   Horizon still owns a scattering of lots within the developed area of 
Paradise Hills, and will be marketing those to builders this year.  That 
is chiefly a matter of cleaning up any problems that impede building on 
those lots and putting the infrastructure in place to make them more 
attractive to potential builders, Leymon says.

   The corporation also owns approximately 12,000 acres beyond Paradise 
Hills.

   But the real focus of Leymon's attention on the West Side is the 400 
acres Horizon owns immediately adjacent to Paradise Hills north of Irving 
between Lyons and Golf Course Road.  Horizon has banded together with 
seven other property owners in that area to form a planned development 
district that will encompass a master plan for approximately 700 
contiguous acres.

   The new master plan involves going back to square one and starting 
over for much of the property that was platted 20 years ago, according to 
Cliff Spirock, president of Community Sciences, the firm that has been 
contracted by Horizon to develop the new plan.

   "We've sacrificed substantially all of the old lots and streets," he 
says. "We're erasing what has gone before and re-doing it by today's 
rules."

   That means a re-alignment of the transportation network, new drainage 
management plans, and allowance for more open space in line with the 
requirements established in the Comprehensive Plan adopted by Albuquerque 
in 1975.

   The plaintiff work is complicated by the overlapping jurisdictions who 
must approve the final plan, including the Paradise Hills Zoning Board, 
Bernalillo County, the city of Albuquerque, and various state agencies.

   To be called Paradise North, the new subdivision will be complementary 
to the existing Paradise Hills development, but planning and layout will 
reflect contemporary standards of design.  "In '61, the typical lot was 
50 to 60 feet wide and houses were selling for around $ 11,000," Leymon 
notes.  "The trend

                                                                       
PAGE   26                New Mexico Business Journal  1985 UMI/Data 
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since the latter part of the 1970s has been to shrink lot sizes down."

   Paradise North will also include more of a mix of single-family and 
multi-family housing, he continues.  "The market is moving more toward 
townhouses and away from single-family detached homes," he says.

   Although Horizon will not be prepared to submit the new master plan to 
the appropriate agencies for some time, the corporation has already 
received approval from Paradise Hills Zoning Commission for an "early 
development area" nested within the planned development district.  The 
sub-area will contain 220 single-family detached lots and 92 townhouse 
lots.  Horizon is in the process of having the plats approved by the City 
of Albuquerque and Bernalillo County and could be ready to market the 
properties sometime this year.

   For its Rio Communities near Belen, Horizon has also begun to draw up 
a new land use plan.  Although the company's holdings are extensive in 
that area, Leymon is focusing on the 3,000 acres immediately adjacent to 
the already developed land.

   Also, plans are in the conceptual stage to erase the large-lot 
residential platting of a 1,200-acre tract now called Enchanted Mesa and 
re-designing the area as a hightech industrial park in line with the Rio 
Grande Research Corridor concept, Spirock says.

   Unlike AMPEP, Horizon will not be building on its re-designed 
properties, Leymon says, and neither will the corporation be retailing 
lots to individual buyers as it has in the past.

   "Horizon is a community developer," he emphasizes.  "We're more 
interested in the total community than in any single subdivision 
development.  With so much acreage to dispose of, we have to take a 
long-range view of our activities."

   Horizon's role will be to plan the use of its properties, provide the 
necessary infrastructure in terms of roads, drainage systems, utilities 
and open space, and then work with other developers and builders to 
insure that the final product lives up to the standards set in the 
overall plan, he continues.

   Although Horizon doesn't anticipate a return to profitability at least 
through the end of its current fiscal year, Spaugh, Leymon and Corder are 
all enthusiastic about the company's prospects.

   "We have our business plan in place now," Spaugh says, "and we're 
moving forward once again."

SUBJECT: Real estate companies; Real estate developments; Corporate 
reorganization; Corporate planning

NAME: Joseph Timan; Floyd Bailey; James L. Leymon; John D. Spaugh

GEOGRAPHIC: Mountain Region; Albuquerque; NM; US

COMPANY: Horizon Corp; DUNS: 00-940-3577; SIC: 6552; TICKER: HZN AMREP 
Southwest Inc; DUNS: 05-818-8871; SIC: 6552 MCO Holdings Inc; DUNS: 
00-690-8156; SIC: 6552; TICKER: MCO


                                                                       
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LOAD-DATE-MDC: December 11, 1989





                                                                       
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