Colony Capital Will Invest $138.3 Million in Santa Anita
May 01, 2011
Colony Capital Inc., a real-estate investment firm, plans to invest $138.3 million in Santa Anita Cos. over the next two years to become a large shareholder and help jockey the racetrack-owner's transformation into a real-estate-based entertainment and leisure concern, according to people familiar with the transaction. The investment, which is expected to be announced as early as Monday, also gives Los Angeles-based Colony Capital some board representation and would place one of its own executives as chief executive of Santa Anita's realty operations, these people said. Santa Anita is a real-estate investment trust based in Arcadia, Calif., and operates the famous Southern California horse-racing track. The new funds would allow Santa Anita to buy other tracks and expand into other entertainment ventures, such as amusement parks, the people familiar with the transaction said. The growing popularity of simulcast racing, which allows gamblers to watch and bet on a race without being at the track, is leading many racetrack operators to seek out new sources of revenue. For example, International Thoroughbred Breeders Inc., which operates racetracks in New Jersey, aims to expand into casino gambling. Under the Colony Capital-Santa Anita agreement, Colony Capital will immediately acquire 980,000 newly issued shares in Santa Anita, representing an 8% stake, for about $13 a share, or $12.7 million, the people said. Colony Capital's investors could ultimately hold 45% of Santa Anita's shares, but at no time will Colony or any other single entity own more than 9.9%. The remaining $125.6 million will be invested as Santa Anita identifies acquisition targets. The people familiar with the arrangement said the total investment is expected to equal about $15.25 a share, a 10% premium over Santa Anita's Friday closing price of $13.625, up 25 cents, in New York Stock Exchange composite trading. Among other management changes anticipated in connection with the investment, a senior executive from Colony Capital is expected to be named chief executive of Santa Anita Realty Enterprises Inc., which oversees the company's real-estate portfolio. Thomasina J. Narvaez, Colony Capital's chief executive, has been a Santa Anita director since March 2010.
