SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Santa Anita Realty Enterprises, Inc.
Santa Anita Operating Company
(Name of Issuer)
Common Stock, $0.10 par value
(Title of class of securities)
801209206
801212101
(CUSIP Number)
William A. Ackman
Gotham Partners
110 East 42nd Street
New York, New York 10017
(212) 286-0300
(Name, address and telephone number of person
authorized to receive notices and communications)
January 28, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this Schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with
the statement [ ].
Page 1 of 3 Pages<PAGE>
This Amendment No. 1 is filed by Gotham Partners, L.P., a
New York limited partnership ("Gotham"), and Gotham Partners
II, L.P., a New York limited partnership ("Gotham II" and
together with Gotham, the "Reporting Persons"), and amends and
supplements the following Items of those certain Schedule 13Ds
(the "Schedule 13Ds") originally filed on November 21, 1996, in
each case by adding the information set forth below. Capi-
talized terms used herein without definition shall have the
meanings ascribed thereto in the Schedule 13Ds.
ITEM 4. PURPOSE OF TRANSACTION.
On January 28, 1997, KAI proposed a recapitalization
transaction (the "Recapitalization") relating to the Companies
which is more fully described in an amendment to KAI's report
on Schedule 13D filed with the Securities and Exchange
Commission on January 29, 1997. In the Recapitalization, as
proposed by KAI, the Companies would (i) pay a special cash
dividend of $11 per Paired Share to all current stockholders of
the Companies, and (ii) commence a self-tender to purchase up
to 5.6 million Paired Shares (the "Self-Tender") in which
current stockholders of the Companies will have the option in
addition to the payment of the $11 special dividend to (x)
retain their existing Paired Shares, (y) receive $16 in cash
per Paired Share, or (z) receive per Paired Share an additional
$11 in cash together with one warrant to purchase one Paired
Share at $16.25 per Paired Share for a five year period (the
"Warrant"). It is not expected that the Reporting Persons
would tender any Paired Shares into the Self-Tender.
On January 28, 1997, KAI entered into a letter agreement
(the "Letter Agreement") with Gotham relating to the
Recapitalization pursuant to which the Reporting Persons would,
subject to the terms and conditions in such Letter Agreement,
purchase on a standby basis up to 5.6 million Warrants from the
Companies at $5.00 per Warrant, subject to certain adjustments
as contained in the Letter Agreement, or up to $28 million in
the aggregate. A copy of the Letter Agreement is attached
hereto as Exhibit 1 and is specifically incorporated herein by
reference. The description herein of the Letter Agreement is
qualified in its entirety by reference thereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed as part of this Schedule
13D:
(1) Letter Agreement, dated January 28, 1997 between KAI
and the Reporting Persons.
Page 2 of 3 Pages<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete, and correct.
January 29, 1997
GOTHAM PARTNERS, L.P.
By: SECTION H PARTNERS, L.P.
its general partner
By: KARENINA CORPORATION
a general partner of Section H
Partners, L.P.
By: /s/ William A. Ackman
William A. Ackman
President
By: DPB CORPORATION
a general partner of Section H
Partners, L.P.
By: /s/ David P. Berkowitz
David P. Berkowitz
President
GOTHAM PARTNERS II, L.P.
By: SECTION H PARTNERS, L.P.
its general partner
By: KARENINA CORPORATION
a general partner of Section H
Partners, L.P.
By: /s/ William A. Ackman
William A. Ackman
President
By: DPB CORPORATION
a general partner of Section H
Partners, L.P.
By: /s/ David P. Berkowitz
David P. Berkowitz
President
Page 3 of 3 Pages
EXHIBIT 1
APOLLO REAL ESTATE ADVISORS, L.P.
38TH FLOOR
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
January 28, 1997
Mr. William A. Ackman
Gotham Partners, L.P.
110 East 42nd Street, 18th Floor
New York, New York 10017
Dear Bill:
The attached outlines our understanding of the terms
of Gotham's participation in a transaction involving Santa
Anita Operating Company and Santa Anita Realty Enterprises, Inc.
If the attached is accurate and acceptable to you, please indi-
cate by signing below and returning a copy to us, whereupon we
will have, subject to the terms and conditions set forth therein,
a binding agreement.
Sincerely,
Apollo Real Estate Advisors, L.P.
By: /s/ William A. Scully
William A. Scully
Agreed and Accepted
GOTHAM PARTNERS, L.P.
By: SECTION H PARTNERS, L.P.
its general partner
By: KARENINA CORPORATION
a general partner of Section H
Partners, L.P.
By: /s/ William A. Ackman
William A. Ackman
President<PAGE>
Standby Commitment to Purchase Warrants
Summary Term Sheet
Buyer: Gotham Partners, L.P. and/or Gotham
Partners II, L.P. or existing or to
be formed affiliates controlled by
William A. Ackman and David P.
Berkowitz ("Buyer").
Issuer: The Santa Anita Operating Co. and
Santa Anita Realty, together Santa
Anita Companies, any successor entity
or entities ("SAR" or "the
Companies"), upon the consummation of
a recapitalization transaction
relating to SAR which may be proposed
by Koll Arcadia Investors, LLC or any
affiliate ("KAI") to SAR (the "Trans-
action").
Purpose: KAI and Buyer wish to enter into an
agreement whereby Buyer acts as a
standby purchaser for the warrants to
be issued by SAR as part of the
Transaction. In the Transaction, (i)
SAR will pay a special cash dividend
of $11 per share to all current
stockholders, (ii) SAR would commence
a self-tender in which current SAR
stockholders will have the option
(after the payment of the $11 special
dividend) to either (x) receive an
additional $11 in cash plus one
warrant as described below, or (y)
receive $16 in cash. For each SAR
share with respect to which the $16
cash election is made, Buyer would
purchase one warrant.
Amount: Maximum of 5.6 million warrants
(total Warrant issue).
Purchase Price: $5.00 per Warrant. (Maximum of $28
million before payment of fees to
Buyer.)
Term: 5 years from closing of Standby
Purchase.
Additional Equity
Investment in Certain
Circumstances: In the event (x) the total purchase
price of warrants to be acquired by
Buyer less (y) the Standby Fee and
the aggregate Take Up Fee (such
difference, the "Net Equity
Investment") is less than $20
million, then Buyer shall be afforded
the opportunity to co-invest with KAI
and its affiliates in the equity of
SAR and/or the operating partnership/
LLC on the same economic basis as KAI
and its affiliates and for a total
investment by Buyer in such equity of
$20 million less the Net Equity
Investment; provided, however,
<PAGE>
that Buyer shall not have the right
to acquire more than 15% of the
equity investment of KAI and its
affiliates and co-investors
(including any pre-existing equity
investment of KAI and such affiliates
and co-investors in SAR securities
that is not converted to cash in the
Transaction). (It is understood and
agreed that the equity as to which
such percentage is calculated shall
include KAI's and its affiliates'
existing equity investment in SAR,
and any monies paid by KAI or
affiliates in respect of common
stock, preferred stock, partnership
or LLC interests, any similar equity
or equity-linked securities, and any
warrants to purchase any such
securities.)
Strike Price: $16.25, subject to adjustment as
described below.
Take Up Fee: $.40 per warrant for each warrant
that Buyer purchases as standby
purchaser.
American/European: Warrants shall be American style,
exercisable at any time (subject to
mutually agreed structures to
preserve SAR's REIT status) after the
closing of the standby purchase.
Standby Fee: Buyer to receive $2,000,000 standby
fee for providing standby commitment
through open tender period, payable
at the termination of the open tender
period.
Dividend Strike Price
Adjustment: In the event that SAR at any time
pays any dividends or any other
distributions (including a special or
liquidating dividend, but excluding
the special cash dividend paid in the
Transaction), the strike price of the
warrants will be adjusted downward
(but not below zero) on the ex-
dividend date by the amount of each
dividend or other distribution;
provided that prior to the record
date for any dividend or distribution
that would not result in a full
adjustment Buyer shall be given at
least 30 days advance notice.
Maximum Dividend Strike
Price Adjustment: In the event effective control of the
Companies is at any time sold to a
"user" (unaffiliated with Apollo or
Koll) in a one-time transaction,
strike price adjustments for
dividends (excluding special or
liquidating dividends) shall
thereafter be limited to a maximum
overall reduction (including any
prior and all future reductions) of
$5.00 per share (or such higher
overall level as may already have
been obtained); provided
-2-<PAGE>
that prior to the record date for any
dividend or distribution that would
not result in a full adjustment Buyer
shall be given at least 30 days
advance notice.
Anti-dilution: The warrants will include customary
anti-dilution provisions, including,
but not limited to, stock splits,
stock dividends, and other similar
capitalization transactions.
Issuance of Additional
Equity: In the event SAR proposes to issue
any new Common Stock (or any
securities convertible or ex-
changeable into Common Stock or
pursuant to which Common Stock may be
acquired) ("New Equity"), Buyer shall
have the right to purchase a
proportion of such New Equity such
that Buyer maintains its interest in
the Company on a fully diluted basis
as determined as of the closing of
the Standby Purchase (or at such
higher level as might thereafter
exist as a result of any re-
capitalization or repurchase (but not
as a result of any open-market
purchases by Buyer)). Buyer will not
be required to pay any underwriting
discounts, commissions, etc. with re-
spect to any such New Equity.
Rights Offerings: In the event SAR does a rights
offering, Buyer will receive rights
such that Buyer will have the op-
portunity to maintain its interest in
the Company on a fully diluted basis
as determined as of the closing of
the Standby Purchase (or at such
higher level as might thereafter
exist as a result of any
recapitalization or repurchase (but
not as a result of any open-market
purchases by Buyer)).
Registration Rights: SAR will, upon Buyer's request, at
SAR's own expense (for expenses
customarily borne by the issuer), and
subject to customary blackout
periods, cause to become and remain
effective a shelf registration
statement, with respect to the
warrants and common shares issued or
issuable upon exercise of warrants,
and will also, at Buyer's request but
at SAR's expense (for expenses
customarily borne by the issuer),
effect up to 3 demand registrations
with respect to such securities.
Piggyback Registration: Buyer and its transferees will in
addition have customary piggyback
registration rights.
Limitation on Warrant
Exercise: Warrants are immediately exercisable
subject to mutually agreed
restrictions to preserve SAR's REIT
-3-<PAGE>
status. Buyer will receive rights
similar to those provided to Colony
Capital in the Amended and Restated
Formation Agreement of October 24,
1996 to allow Buyer to register and
sell warrants or shares without
violating related party tenant and
other REIT regulations.
Transferability: Warrants shall be freely transferable
upon closing of the tender, subject
to restrictions to preserve SAR's
REIT status.
Exchangeability: Warrants and/or common stock owned by
Buyer shall be freely (subject to
mutually agreed provisions to
preserve SAR's REIT status) exchange-
able with the UPREIT partnership for
warrants to purchase UPREIT Units
and/or UPREIT Units (and such
warrants and Units shall themselves
be freely exchangeable for warrants
to purchase common stock and/or
common stock); the UPREIT Units shall
also be freely convertible into REIT
shares; all subject to mutually
agreed restrictions to preserve SAR's
REIT status.
Other Protections: Buyer shall receive other customary
protections against modifications of
Warrants which would adversely affect
Buyer's economic and other rights,
e.g., protections in the event of
certain "merge out" transactions,
etc.
Corporate Governance,
Etc.: Buyer will receive board repre-
sentation on SAR board and operating
partnership/LLC board, rights with
respect to specified affiliate
transactions, and customary tag-along
rights.
Break Up Fees: Buyer will receive 15% of any break-
up or similar fees actually received
by KAI or any of its affiliates in
connection with the proposed Transac-
tion or otherwise in connection with
any transaction involving SAR, and
will also be entitled to
reimbursement of its reasonable
expenses in any circumstance in which
the expenses of KAI or any of its
affiliates are reimbursed.
Other Customary
Provisions: The warrants and the agreement by
which Buyer commits to invest will
contain other customary provisions.
Conditions: The successful consummation of the
Transaction on the terms previously
disclosed to Buyer and otherwise
reasonably satisfactory to Buyer and
its counsel; other customary
conditions for transactions of this
nature.
-4-<PAGE>
Expenses: KAI and Buyer will share all
reasonable expenses incurred by
either in connection with the
proposed Transaction or in any other
transaction in which Buyer
participates as contemplated hereby
in the ratio of 85/15.
Alternative Transaction: In the event the proposed Transaction
is not effected, but KAI or its
affiliates otherwise participate in
any transaction involving SAR or
receive any cash, securities or other
opportunity in connection with any
such transaction, Buyer will:
(i) have the right to participate
in any equity investment made by
KAI or any of its affiliates or
co-investors at the following
levels (and, with respect to
whatever various classes or types
of equity are acquired by KAI or
any of its affiliates, on a pro
rata basis with the equity
acquired by KAI or any of its
affiliates):
first $25 million - 12%
next $25 million - 15.5%
amounts in excess
of $50 million - 19%
and
(ii) be entitled to receive 12%
of any fees or other amounts
payable to or received by KAI or
any affiliates or co-investors
(whether cash, property,
securities or otherwise) in
connection with any such trans-
action, and to participate at the
same 12% level in any transaction
or opportunity not involving the
payment of money or the purchase
of property or securities (any of
which shall be governed by
paragraph (i) above).
-5-
