04/02/2009 11:00PM

Second developer interested in Md. tracks


A second suitor for the Maryland tracks owned by the bankrupt racetrack operator Magna Entertainment Corp. has emerged.

Carl Verstandig, the chief executive of America's Realty, a real-estate development company, said Friday that his company is in discussions with Magna's bankruptcy adviser, Miller Buckfire, about a bid to buy Laurel Park and Pimlico Racecourse. But Verstandig said that the company would not bid on the Preakness Stakes, the second leg of the Triple Crown, which is held annually at Pimlico in Baltimore every year.

America's Realty is interested in acquiring the properties for their real-estate potential, Verstandig said, but the company also plans to continue to operate the racetracks as long as the company can reach an agreement with a separate company to refurbish Pimlico "to match the quality of the development we are considering at the property."

"We'd welcome the state or another bidder coming in and entering into a land-lease arrangement at Pimlico so that we can continue to run the racetrack and the Preakness," Verstandig said.

Verstandig contradicted earlier reports that the company intended to bulldoze Pimlico if its bid was successful.

"It's our intention to upgrade the track, upgrade the facility, bring it into the next century, because it's an aging building and it needs improvements," Verstandig said. "We think both tracks can be profitable."

America's Realty is the second developer to indicate that it will bid on the Maryland tracks. On Thursday, David Cordish, the president of Cordish Cos., said that his company planned to bid on the two tracks and Magna's Bowie Training Center, also in Maryland. Cordish, which is seeking a slot-machine license near Laurel that would provide state-mandated subsidies to the racetracks, said the company intended to continue operating both racetracks.

Pimlico sits on 116 acres in a distressed area of Baltimore. Laurel sits on 236 acres at a site midway between Baltimore and Washington D.C. on a major highway connecting the two cities.

Verstandig said that Miller Buckfire had not objected to the plans by America's Realty to separate the Preakness from its bid for the two tracks. The Preakness is an unusual asset for Magna's bankruptcy because of a Maryland law that allows the state to match any bid for the race if it is in danger of being moved out of state or discontinued.

It is unclear if the bankruptcy court will agree with the characterization of the Preakness as an asset, but bankruptcy courts have wide discretion to supersede state law if the characterization is not considered to be in the best interests of the company's creditors.

Magna filed for bankruptcy on March 5 and has asked the court to approve auction processes for its properties. The Maryland properties, so far, are the only ones to attract any public interest, aside from a deal that Magna has reached with its parent company and largest creditor, MI Developments, to submit a stalking-horse bid for a bundle of its tracks. That bundle does not include the Maryland properties.

On Friday, U.S. Bankruptcy Judge Mary Walrath scheduled a hearing for April 20 to resolve Magna's auction plans and its proposal to obtain $62 million of financing from its parent company while it reorganizes. Walrath also approved the transfer of $2.5 million of the $62 million to provide Magna with operating cash until the April 20 hearing.