Magna Entertainment’s debt-reduction sale of what it deems excess assets is under way with at least four properties already listed with real estate agents.
Included in the mix is Great Lakes Downs, the Muskegon, Mich., facility which carries an asking price of $9 million with a real estate group in nearby Grand Rapids.
Among other listings are $28 million being asked for nearly 260 acres in Dixon, Calif.; $22 million for about 490 acres in Ocala, Fla.; and $960,000 for about 788 acres in Porter, N.Y.
The properties are the initial offerings from MEC, which in recent months has unveiled plans to produce up to $700 million in asset sales to reduce company debt. The current lineup of assets considered for sale were outlined during an earnings conference call earlier in November.
Great Lakes Downs, which Nov. 6 finished its announced final meet under MEC operation, has drawn initial looks from racing interests, said Thomas P. DeBoer of Grubb & Ellis/Paramount Commerce, which carries the listing.
“To my surprise, the people coming out of the woodwork a little bit are actually horse racing enthusiasts who have been in it in some capacity before,” DeBoer said, citing at least one prospect who carries aspirations of eventually turning the 87-acre property into a racino.
Separately, at least one suitor from Flint, Mich., Winfield Cooper III, went as far to request 2008 racing dates from the state, but later withdrew his application when he couldn’t work out a deal to purchase Great Lakes Downs, the Muskegon Chronicle has reported.
Ron Cooper, the supervisor of Michigan’s Fruitland Township, where the track is located, said he is also working with buying groups bent on keeping the facility open as a racetrack.
“It brings in purse money that is won and spent here,” Cooper said. “It’s an economic benefit. Plus, we are becoming more a tourist destination, and the more variety of entertainment, the better the destination.”
Cooper, who seeks inquiries from any prospective investors, believes the $9-million price tag is fair, estimating MEC has at least $20 million invested in the facility.
A subsidiary of MEC paid $1.8 million for the facility in 2000, but sold it for $4.2 million to Richmond Racing in 2004 as the company pursued the development of a new Michigan racing venture near the Detroit-area city of Romulus. Richmond Racing is managed by Jack Brothers, who is a longtime associate of MEC chairman Frank Stronach. The purchase agreement carries a buy-back option.
State law prevented MEC from holding two licenses at the same time, but MEC operated Great Lakes Downs on a lease-back arrangement with Richmond Racing. MEC in August announced it was relinquishing its license for the Romulus track.
Consultant Thomas Hodgson, the former chief executive officer of MEC who is spearheading the company’s debt-reduction plan, did not return a call seeking comment for this article.
DeBoer said he consulted with MEC officials on the asking price for Great Lakes Downs, which was developed in 1989 as a harness track called Muskegon Race Course. He believes the location of the facility, which is bordered by two major highways, lends itself to commercial enterprise.
“Most likely, the highest and best dollar use for this property is going to come out of retail redevelopment,” DeBoer said.
The other three listed properties are all being marketed by the national firm CB Richard Ellis:
* The property in Dixon was previously budgeted by MEC for a racing complex called Dixon Downs, but the project met with local opposition and was dropped earlier this year. According to MEC filings, the company’s initial investment into the property, which is located off Interstate 80, was about $6.6 million.
* The Ocala land was also informally targeted by Stronach for a racing and entertainment complex, which was rumored to be called Sunshine Meadows. Subsidiaries of MEC paid a little more than $7 million for several parcels in 2002, according to public records. The property sits at the northeast corner of Interstate 75 and U.S. 27.
* MEC acquired the New York property near Porter in several transactions from 1998 to 2000, according to the Niagra (N.Y.) Gazette. The more than 800 acres located near Lake Ontario includes a separate second parcel of 39 waterfront acres the Town of Porter has agreed to purchase for $1 million, according to the newspaper. MEC public filings indicate the company invested about $725,000 in initial costs into the entire acreage.
Other MEC assets mentioned as sale candidates include Remington Park in Oklahoma, Thistledown in Ohio, and the company’s interest in Oregon's Portland Meadows, as well as land adjacent to Gulfstream Park in Florida, Laurel Park in Maryland, and the Magna Racino in Austria.
Hodgson said in the conference call earlier this month that financial giant Bear Stearns has been contracted to handle sales queries on Remington Park and Thistledown, and the company is initially “gratified by the level of interest in each.”