MYRTLE BEACH — Land that was once supposed to be the site of a hotel for the now defunct Hard Rock Park will be sold at Horry County’s foreclosure auction Monday, with court filings revealing more details about how optimistic developers were about the project.
The 27-acre tract along the Intracoastal Waterway was bought by Myrtle Property Owners II, LLC for $8 million in October 2005, about three years before Hard Rock Park opened and then closed after one, failed summer in 2008.
The still vacant property – dubbed the “waterway parcel” and sold by Rosen Investments, whose manager Dick Rosen also was an investor in the theme park -- was intended for a Hard Rock hotel to support the theme park, according to court documents.
Myrtle Property Owners said in court filings that Rosen Investments and the theme park developers “consistently and egregiously misrepresented financial and other details of the theme park project as well as its overall likelihood of success.” MPO also said in court filings that it wouldn’t have bought the property if it hadn’t been for those claims.
“We don’t think any of that took place,” said John Copeland, a Myrtle Beach attorney representing Rosen Investments. “We don’t think any of that has any basis in fact.”
Attorneys in New York and Myrtle Beach who represent MPO in the case couldn’t be reached for comment. MPO made those claims against Rosen and the theme park developers in requesting the case go to arbitration in New York, which was denied.
The auction of the land is the latest in the fallout from the twice-failed theme park off U.S. 501 in Fantasy Harbour, near the Intracoastal Waterway.
Hard Rock Park, which officials said cost $400 million to build, opened for the summer 2008 and shut down for good after the season. It was bought out of bankruptcy for $25 million in early 2009 and reopened as Freestyle Music Park, which also failed after one summer and ended up in bankruptcy.
The Hard Rock theme park’s developers expected several million thrill-seekers would visit the park during its first year and that its earnings before interest, tax, depreciation and amortization -- a measure of a company’s operating performance -- would hit $61.8 million that first year – projections that MPO and others look back on and say where outlandish.
Developers expected 3.09 million people to visit the theme park during its first year in 2008 and projected that would increase by 9.3 percent in 2009, 4 percent in 2010 and 3 percent in 2011 before leveling off with a “conservative growth rate thereafter of 1.4 percent through 2017,” according to a feasibility study MPO said it was provided before buying the waterway land for the Hard Rock hotel, which was never built.
“Twenty-five percent of the people who visit Myrtle Beach would visit the park? When you put it in those terms, it does seem rather unreasonable,” said Horry County Councilman Gary Loftus, pausing to break the numbers down further. “We are talking 10,000 people a day, each and every day of the year – and that includes January, February and March. There is no way they are going to get 10,000 [visitors] October through March.”
In 2005, Rosen, the former CEO of then-Myrtle Beach based electronic parts maker AVX Corp., approached individuals, including Amnon Bar-Tur and real estate developer Ziel Feldman, about investing in Hard Rock Park and the land for the hotel, according to the court filings. Bar-Tur -- cofounder and managing partner of Safe Harbor Capital Partners, which has invested millions in real estate in the United States and United Kingdom -- and other investors eventually formed Myrtle Property Owners I to invest in the theme park, and Myrtle Beach Property Owners II to buy the land for the hotel.
Those committing millions of dollars to a project should do their research before signing any checks, said Loftus, who wasn’t involved with the theme park project.
“If you didn’t do due diligence, is that my fault?” he said.
Since the park’s failed season, experts have said that the ticket price was too high for this market, though in the feasibility study cited in the court filings the developers said the $47 ticket price “is attainable and probably conservative for 2008.”
“As planned, the theme park was far too high-end, sophisticated and expensive for the anticipated market,” MPO said in its court filings. “The inaccuracy of Rosen’s representations was something that was known to South Carolina local residents such as Rosen, but not to claimants, who did not live in South Carolina.”
Rosen and theme park developers provided MPO projected budgets and performance estimates in 2005 for the Hard Rock Park that “were inaccurate and misleading, and used them with the intent to deceive” Myrtle Property Owners I and II, which borrowed $5 million for the deal, and two of its investors personally guaranteed $2 million so MPO II could purchase the waterway lot, according to court documents.
Myrtle Property Owners said in court filings that it was given false information about the park’s budget and projections and that the hotel was a “necessary condition for the theme park project to be realized.” Bar-Tur also invested in the theme park.
The feasibility study given to Myrtle Property Owners II said that, as a result of the development of the Hard Rock hotel, an additional 59,670 visitors annually would go to the theme park, according to court filings.
“In fact, Rosen simply desired to sell a parcel of land for which he had no other use. The hotel was not a necessity, but merely a pretext for Rosen to dump the waterway parcel,” MPO said in court filings.
Copeland said that wasn’t the case.
About a year ago, Rosen filed a case in Horry County seeking payment for the waterway lot where the hotel was planned, saying Myrtle Property Owners owed the $8 million purchase price and $960,865.57 in interest from Sept. 3, 2008 to April 17. Past due notices were mailed to Myrtle Property Owners on May 12, 2009 and June 3, 2009, Rosen said in court filings.
“The money wasn’t paid,” Copeland said. “It’s just a straight sale that the buyer didn’t pay for.”
The land for the hotel will go to the highest bidder at Horry County’s monthly foreclosure auction at 11 a.m. Monday in Courtroom 3B at the Horry County Government and Justice Center.
Copeland said he wasn’t sure how much the property might go for.
“Your guess is as good as mine,” he said. “Anybody who wants to bid can.”
Theme park fallout
The park, including its signature roller coaster that twists along George Bishop Parkway, has sat idle since fall 2009 when it shut down after its failed summer as Freestyle Music Park.
The mortgage holder, FPI US LLC, took back the property in August during the county foreclosure auction. Officials had aimed to find a buyer and reopen the park for this summer, but that didn’t happen.
At the end of last year, the former Waccamaw Pottery building, which was to have been demolished to make way for a planned “Paradise City” mixed-use development tied to the theme park, sold at the end of last year to investors aiming to rehab and restore the former shopping hub with new shops, restaurants and attractions. One new business, Block Party Nightlife, has moved in.
Loftus said that if Hard Rock Park had been successful, it could have given the beach a much-needed major new attraction that could have jumpstarted growth in the industry.
“That’s what we were hoping the Hard Rock Park would be,” he said. “I wish it would have made it because it could have been helpful all the way around.”
Contact DAWN BRYANT at 626-0296.