SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
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)
April 8, 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 4 Pages<PAGE>
This Amendment No. 3 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.
KAI has today filed an amendment to its Schedule 13D,
originally filed with the Securities and Exchange Commission on
October 24, 1996, which describes certain proposed transactions
relating to the Companies. In addition, KAI on April 4 filed
an amendment to the Schedule 13D, which describes certain
additional information relating to the proposed transactions
relating to the Companies. The amendments to the KAI Schedule
13D provides additional detail as to these matters. Each is
attached as an exhibit hereto and incorporated herein by
reference. It is expected, as reported in the amendment to the
KAI Schedule 13D filed today that, Gotham will purchase certain
securities in connection with the transactions described
therein, should such transactions proceed.
The Reporting Persons have not authorized any party to act
as their agent and neither of them is intending to create any
agency, partnership or similar relationship among with any
other person in connection with the KAI proposal. No voting
arrangement or understanding exists between Gotham and KAI or
any of its affiliates or other financing sources for the KAI
proposal in connection with the Reporting Persons' securities
of the Companies.
Separately, on April 13, 1997, the Companies announced
that they had entered into a definitive reverse merger
agreement under which Meditrust Corp. will be merged with the
Companies in a tax-free exchange of shares. The Companies
reported that, based on Meditrust's April 11 closing price of
$37.25 a share, Meditrust shareholders will receive 1.2016
Paired Shares for each Meditrust share, in a transaction stated
by the Companies to have an initial value to the Companies'
shareholders of $383 million.
The Reporting Persons cannot currently predict whether the
KAI proposal will or will not be pursued in light of the
announced Meditrust transaction. The Reporting Persons expect
to evaluate the proposed Meditrust transaction and their own
interest in securities of the Companies in light of pending
developments, including, in particular, developments with
respect to the KAI proposal. Subject to such developments and
other relevant matters, including the various matters set forth
in the penultimate paragraph of Item 4 of the Schedule 13Ds,
notwithstanding anything contained herein, the Reporting
Persons reserve the right to take any lawful action which they
deem desirable, including acquiring additional Shares and
Paired Shares or selling or otherwise disposing of all or some
of their holdings of Shares and Paired Shares, and including
actions which could result in the occurrence of any or all of
the matters or events referred to in the last paragraph of Item
4 of the Schedule 13Ds.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed as part of this Schedule
13D:
Page 2 of 4 Pages<PAGE>
(1) Amendment No. 4 to Schedule 13D, originally filed
with the Securities and Exchange Commission on
October 24, 1996, by Apollo Real Estate Investment
Fund II, L.P., Apollo Real Estate Advisors II, L.P.,
Koll Arcadia Investors, LLC, and Koll Arcadia, LLC.
(2) Amendment No. 5 to Schedule 13D, originally filed
with the Securities and Exchange Commission on
October 24, 1996, by Apollo Real Estate Investment
Fund II, L.P., Apollo Real Estate Advisors II, L.P.,
Koll Arcadia Investors, LLC, and Koll Arcadia, LLC
(together with all exhibits thereto).
Page 3 of 4 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.
April 15, 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
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
Page 4 of 4 Pages
EXHIBIT 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
Santa Anita Realty Enterprises, Inc.
Santa Anita Operating Company
(Name of Issuer)
Common Stock
(Titles of Classes of Securities)
801209206
801212101
(CUSIP Numbers)
W. Edward Scheetz
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
New York, New York 10019
Telephone: (212) 261-4000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Patrick J. Foye, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 735-2274
April 3, 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 statement 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>
SCHEDULE 13D
CUSIP No.
--------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
--------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
--------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------
4 SOURCE OF FUNDS
AF
--------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY -------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 989,900
PERSON -------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
--------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
989,900
--------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [_]
--------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
--------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
--------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No.
--------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE ADVISORS II, L.P.
--------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
--------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------
4 SOURCE OF FUNDS
WC, OO
--------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY -------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 989,900
PERSON -------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
--------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
989,900
--------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [_]
--------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
--------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
--------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No.
---------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KOLL ARCADIA INVESTORS, LLC
--------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
--------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------
4 SOURCE OF FUNDS
AF
--------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY ------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 989,900
PERSON -------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
--------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
989,900
--------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [_]
--------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
--------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
--------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No.
--------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KOLL ARCADIA LLC
--------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
--------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------
4 SOURCE OF FUNDS
WC
--------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [_]
--------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY -------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 989,900
PERSON -------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
--------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
989,900
--------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [_]
--------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
--------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
--------------------------------------------------------------<PAGE>
This Amendment No. 4 amends and supplements the
following Items of the Schedule 13D, as amended (the "Schedule
13D"), of Apollo Real Estate Advisors II, L.P., Apollo Real
Estate Investment Fund II, L.P., Koll Arcadia Investors, LLC
and Koll Arcadia LLC originally filed on October 24, 1996 with
the Securities and Exchange Commission with respect to the
Paired Common Stock of Santa Anita Realty Enterprises, Inc. and
Santa Anita Operating Company. Unless otherwise indicated, all
capitalized terms used but not defined herein have the meanings
set forth in the Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 is hereby amended to include the following:
On April 3, 1997, at the request of Morgan Stanley &
Co. Incorporated, financial advisors to the Companies ("Morgan
Stanley"), representatives of KAI and Colony and, at the
request of KAI and Colony, Gotham and Franklin Mutual Advisers,
Inc. ("Franklin"), participated in a conference telephone call
with representatives of Morgan Stanley in connection with the
proposed Recapitalization. Representatives of Morgan Stanley
had previously encouraged representatives of KAI and Colony to
resubmit and possibly revise their previously submitted
recapitalization proposal which expired by its terms on March
28, 1997. In response to this encouragement, representatives of
KAI and Colony separately indicated that they are continuing to
review and evaluate their respective proposals.
Representatives of KAI and Colony noted that they are presently
in discussions with representatives of Franklin with respect to
a proposed<PAGE>
forward purchase agreement relating to the purchase by Franklin
of equity of the LLCs in the event a transaction with the
Companies were consummated. In addition, each participant
expressed to Morgan Stanley (i) its desire for a rapid and
definitive resolution, (ii) its concern regarding the
Companies' ability to conclude a transaction (other than the
Recapitalization) that would garner significant shareholder
support and (iii) its present intention to support the
Recapitalization proposal (as it may be revised to include
Franklin's participation) due to its belief as a significant
shareholder of the Companies that it is in the best interest of
the Companies. There can be no assurance that any agreement
involving Franklin and KAI or Colony will be reached or as to
the terms thereof.
None of KAI, Colony, Gotham nor Franklin has
authorized any party to act as its agent and none of them is
intending to create any agency, partnership or similar
relationship among themselves. No voting arrangement or
understanding exists between such parties in connection with
their securities of the Companies.<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.
Dated: April 3, 1997
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.
Managing Member
By: Apollo Real Estate Capital Advisors
II, Inc.
General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President,
Apollo Real Estate
Capital Advisors II, Inc.
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors
II, Inc.
General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President,
Apollo Real Estate
Capital Advisors II, Inc.
KOLL ARCADIA INVESTORS, LLC
By: Apollo Arcadia LLC
Member
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
KOLL ARCADIA LLC
By: /s/ James C. Watson
Name: James C. Watson
EXHIBIT 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
Santa Anita Realty Enterprises, Inc.
Santa Anita Operating Company
(Name of Issuer)
Common Stock
(Titles of Classes of Securities)
801209206
801212101
--------------
(CUSIP Numbers)
W. Edward Scheetz
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
New York, New York 10019
Telephone: (212) 261-4000
--------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Patrick J. Foye, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 735-2274
April 8, 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 statement 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>
SCHEDULE 13D
CUSIP NO.
-----------------
- ----------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
- ----------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) |_|
- ----------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ----------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- ----------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 989,900
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
- ----------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
989,900
- ----------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ----------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
- ----------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- ----------------------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP NO.
-----------------
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE ADVISORS II, L.P.
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) |_|
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC, OO
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 989,900
REPORTING ------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
989,900
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- ---------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO.
-----------------
- --------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KOLL ARCADIA INVESTORS, LLC
- --------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) |_|
- --------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 989,900
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
989,900
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO. ----------------
- -------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KOLL ARCADIA LLC
- -------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) |_|
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- -------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 989,900
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
989,900
- --------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
989,900
- --------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- --------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.6% of Realty; 8.7% of Operating
- --------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------
<PAGE>
. This Amendment No. 5 amends and supplements the following
Items of the Schedule 13D, as amended (the "Schedule 13D"), of
Apollo Real Estate Advisors II, L.P., Apollo Real Estate Investment
Fund II, L.P., Koll Arcadia Investors, LLC and Koll Arcadia LLC
originally filed on October 24, 1996 with the Securities and
Exchange Commission with respect to the Paired Common Stock of Santa
Anita Realty Enterprises, Inc. and Santa Anita Operating Company.
Unless otherwise indicated, all capitalized terms used but not
defined herein have the meanings set forth in the Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 is hereby amended to include the following:
On April 8, 1997, KAI and Colony each submitted a revised proposal
to recapitalize the Companies (the "Revised Recapitalization"), providing
up to $28.50 per Paired Share in cash to the Companies' stockholders. The
proposals of KAI and Colony are separate and independent, and the
obligations of KAI and Colony in connection with the proposed Revised
Recapitalization are independent obligations and therefore not
conditioned on each other. Neither KAI nor Colony have authorized the
other to act as its agent and they are not intending to create any
agency, partnership or similar relationship between them prior to the
consummation of the Revised Recapitalization. KAI's and Colony's offers
to consummate the Revised Recapitalization will only remain open through
April 11, 1997. Principal terms of the proposed Revised Recapitalization
include:
RECAPITALIZATION CONSIDERATION. In the Recapitalization,
the Companies would (i) pay a special cash dividend of $11 per Paired Share
to all current shareholders (the "$11 Special Dividend") and (ii)
commence a self-tender offer to purchase up to 5,600,000 Paired Shares
(the "Self Tender") in which current stockholders of the Companies would have
the option, in addition to payment of the $11 Special Dividend, to (
x) retain their existing Paired Shares, (y) receive $17.50 in cash per
Paired Share or (z) receive per Paired Share an additional $12 in cash
together with one warrant to purchase one Paired Share at $16.25 per
Paired Share for a seven year period. None of KAI, Colony nor any of
their affiliates intends to tender any Paired Shares in the Self Tender.
In the Recapitalization, KAI and Colony would cause the Companies to
distribute up to an aggregate of $237.6 million to stockholders of the
Companies.
TRANSACTION STRUCTURE. In connection with the Transaction, two
newly formed limited liability companies will be formed by causing (i)
Realty to contribute substantially all of its properties and assets,
subject to substantially all of its liabilities, to a newly formed
limited liability company (the "Realty LLC"), and (ii) Operating and its
subsidiaries to contribute substantially all of their properties and
operating assets, subject to substantially all of their liabilities, to
another limited liability company (the "Operating LLC" and together with
Realty LLC, the "LLCs"). In exchange for contributing their assets to the
LLCs, the Companies shall receive the number of LLC units equal to the
current number of outstanding Paired Shares. Such LLC units would not be
publicly traded but would be subject to the same pairing restrictions as
the Paired Shares. Substantially all future business activities of the
Companies will be conducted through the LLCs as the operating entities.
TRANSACTION EQUITY FINANCING. To consummate the Recapitalization,
subsequent to the payment of the $11 Special Dividend, (i) KAI would
purchase 4,909,091 common units of the LLCs (the "LLC Units") at a price
equal to $11 per LLC Units, or $54 million in the aggregate, and (ii)
Colony would purchase 3,272,727 Units, or $36 million in the aggregate.
The LLC Units would be exchangeable on a one-for-one basis into Paired
Shares, subject to REIT ownership limitations.
In addition, (i) KAI would purchase 1,615,385 convertible pre-
ferred LLC units or shares of convertible preferred stock (the "Preferred
LLC Units") at $13 per Unit, or $21 million in the aggregate, and (ii)
Colony would purchase 1,076,923 Preferred LLC Units at $13 per Unit, or
$14 million in the aggregate. Distributions on the Preferred LLC Units
would accrue at 12% per annum for three years and then become payable on
<PAGE>
a current basis. The Preferred LLC Units would be convertible by the
holder into Paired Shares at $13 per share (a conversion ratio of
one-to-one) and will be convertible (at a conversion ratio of
one-for-one) at the Companies' option on or after the third anniversary
of the issuance date.
DEBT FINANCING. A nationally recognized financial institution has
indicated its interest in loaning up to $200 million to Realty LLC. Such
amount will include (i) a four year loan of $95 million, with interest
floating monthly at a premium over one-month LIBOR, secured by, among
other things, a first mortgage lien on the Santa Anita racetrack,
improvements (the "Racetrack") and surrounding land (the "Excess Land");
and (ii) a two year loan of up to $40 million, with interest floating
monthly at a premium over one-month LIBOR, secured by, among other
things, 100% of the proceeds from sales of certain non-core assets of the
Company, excluding the Racetrack and Excess Land. Approximately $60
million of such loan will be used for general business purposes. Realty
would guarantee such loans.
STAND-BY PURCHASE. Gotham Partners, L.P. has committed to pur-
chase on a stand-by basis up to 5,600,000 warrants, for $5.50 per
warrant, or up to $30.8 million in the aggregate (the "Gotham Warrants")
less specified fees. Each Gotham Warrant will entitle Gotham to purchase
one Paired Share or one LLC Unit, at the election of the Companies, for a
seven year period at $16.25 per security, as adjusted. To the extent that
Gotham purchases Paired Shares through the exercise of the Gotham
Warrants, the Companies will have the right to purchase a corresponding
number of LLC Units at $16.25 per LLC Unit, as adjusted. Pursuant to the
terms of the Letter Agreement, Gotham would purchase from the Companies
one Gotham Warrant for each Paired Share purchased by the Companies
pursuant to the $17.50 all cash election under the Self-Tender. It is not
expected that Gotham would tender any Paired Shares into the Self-Tender.
FORWARD PURCHASE. Pursuant to the terms of a letter of intent,
dated as of April 8, 1997, by and among KAI, Colony and Franklin Mutual
Advisors, Inc. ("Franklin"), Franklin will make a forward purchase
commitment to purchase from KAI and Colony at cost, immediately upon the
consummation of the Revised Recapitalization, 15% of the aggregate amount
of the LLC Units and Preferred LLC Units purchased by KAI and Colony
pursuant to the terms of the Revised Recapitalization (the "Franklin
Forward Purchase"). It is not expected that Franklin would tender any
Paired Shares into the Self-Tender.
In addition, Gotham has the right to purchase from KAI, Colony and
Franklin, at cost, immediately following consummation of the Franklin
Forward Purchase, $6.7 million in the aggregate of the LLC Units and
Preferred LLC Units purchased by KAI, Colony and Franklin pursuant to the
terms of the Revised Recapitalization and the Franklin Forward Purchase.
Furthermore, in the event the aggregate purchase price of the Gotham
Warrants to be acquired by Gotham less specified fees (such difference,
the "Net Equity Investment") is less than $20 million, then Gotham would
be entitled to co-invest on the same economic basis with KAI, Colony and
Franklin in the equity of the Companies and the LLCs for a total
investment in such equity of $20 million less the Net Equity Investment.
GOVERNANCE. Following the completion of the Recapitalization, the
Boards of Directors of the Companies would consist of 11 persons, of whom
(i) three would be representatives of KAI, (ii) three would be
representatives of Colony, (iii) three would be independent directors, (
iv) one is expected to be a representative of Gotham and (v) one is <PAGE>
expected to be a representative of Franklin. The LLCs will each have a
Board of Member Representatives which will replicate the composition of
the Boards of the Companies. In addition, upon consummation of the
Recapitalization, the Companies will appoint certain new executive
officers.
On April 10, 1997, a representative of KAI indicated that each of
KAI and Colony was prepared to enhance the terms of the Revised
Recapitalization by increasing to up to $30.50 the aggregate amount of
cash provided to the Companies' stockholders and increasing the purchase
price of the LLC Units from $11 to $13 per LLC Unit. A representative of
KAI also informed a representative of Morgan Stanley that such revised
offers would be open until 10:00 a.m., West Coast time on April 11, 1997.
Following the failure of the Companies to respond, KAI and Colony
allowed their enhanced offer to expire.
In light of the failure of the Companies to respond to KAI's
enhanced offer, KAI is considering various alternatives available to it.
Item 7. Material to be filed as Exhibits.
Item 7 is hereby amended to include the following:
(3) Letter, dated April 8, 1997, from KAI and Colony to the
Companies.
(4) Press Release, dated April 11, 1997.
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.
Dated: April 10, 1997
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.
Managing Member
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ Michael D. Weiner
-------------------------------
Name: Michael D. Weiner
Title: Vice President,
Apollo Real Estate Capital
Advisors II, Inc.
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors II, Inc.
General Partner
By: /s/ Michael D. Weiner
--------------------------------
Name: Michael D. Weiner
Title: Vice President,
Apollo Real Estate Capital
Advisors II, Inc.
KOLL ARCADIA INVESTORS, LLC
By: Apollo Arcadia LLC
Member
By: /s/ Michael D. Weiner
-------------------------------
Name: Michael D. Weiner
KOLL ARCADIA LLC
By: /s/ James C. Watson
------------------------------
Name: James C. Watson
<PAGE>
Koll Arcadia Investors, LLC Colony Capital, Inc.
4343 Von Karman Avenue 1999 Avenue of the Stars
Newport Beach, CA 92660 Los Angeles, CA 90067
April 8, 1997
Santa Anita Realty Enterprises, Inc.
Santa Anita Operating Company
Boards of Directors
285-301 West Huntington Drive
Arcadia, California 91066
Gentlemen:
On behalf of Koll Arcadia Investors, LLC ("KAI") and Colony
Capital, Inc. ("Colony"), enclosed please find copies of a formal
proposal from both KAI and Colony relating to their revised proposed
recapitalization (the "Recapitalization Proposal") of Santa Anita Realty
Enterprises, Inc. and Santa Anita Operating Company (together, the
"Santa Anita Companies").
We firmly believe that the Recapitalization Proposal provides
the stockholders of the Santa Anita Companies with superior value and is
in the best long term interest of the Santa Anita Companies.
KAI and Colony have each undertaken considerable effort and
expense to develop the Recapitalization Proposal. Accordingly, KAI's and
Colony's offer to consummate the Recapitalization Proposal shall remain
open through April 11, 1997. In addition, the Santa Anita Companies and
its affiliates hereby agree that during the 15 day period beginning on
the date the Santa Anita Companies execute this letter agreement, they
shall not, and they shall use their best efforts to cause their
respective officers, employees, agents and financial advisers not to,
directly or indirectly, (i) solicit, initiate or encourage the submission
of inquiries, proposals or offers from any corporation, partnership,
person or other entity or group, other than from KAI and Colony and their
respective officers, employees and agents, relating to any acquisition or
purchase of any of the assets (other than in the ordinary course of
business) of, or any equity interest in, the Santa Anita Companies or any
of their affiliates or any merger, consolidation, restructuring,
recapitalization or business combination involving the Santa Anita
Companies or any of their affiliates, (ii) participate in any discussions
or negotiations, including any existing or ongoing discussions and
negotiations, regarding the foregoing or furnish to any person or entity
information concerning the Santa Anita Companies or any of their
affiliates in connection with the foregoing, (iii) authorize any officer
or agent to do any of the foregoing or (iv) otherwise cooperate in any
way with, or assist, facilitate, encourage, or participate in any
effort or attempt by any other person or entity to do or seek any of the
foregoing.
KAI, Colony and their respective advisors are prepared to
meet with you and the Special Committees to answer any additional
questions you or the Special Committees may have. Please call Bill Scully
at (212) 261-4052 or Kelvin Davis at (310) 282-8820 at your earliest
convenience so that we may move the process forward.
<PAGE>
If you agree with the foregoing, please sign and return two
copies of this letter agreement, which will constitute our agreement
with respect to the subject matter of this letter agreement.
Very truly yours,
KOLL ARCADIA INVESTORS, LLC
By:_______________________________
Name:
Title:
COLONY CAPITAL, INC.
By:______________________________
Name:
Title:
Confirmed and agreed to as of
the date first above written
SANTA ANITA REALTY ENTERPRISES, INC.
By:________________________________
Name:
Title:
SANTA ANITA OPERATING COMPANY
By:__________________________________
Name:
Title:
cc: Ron D. Sturzenegger,
Morgan Stanley & Co. Incorporated
<PAGE>
TERM SHEET
Set forth below are the terms of a proposal by Koll Arcadia
Investors, LLC ("KAI") and Colony Investors II, L.P. ("Colony") relating
to the recapitalization (the "Transaction") of Santa Anita Realty
Enterprises, Inc. ("Realty") and Santa Anita Operating Company
("Operating", and together with Realty, the "Companies"). Although
presented together in this term sheet for ease of reference, the
obligations of KAI and Colony in connection with the proposed Transaction
are independent obligations and neither KAI nor Colony have authorized
the other to act as its agent and they are not intending to create any
agency, partnership or similar relationship between them prior to the
consummation of the Transaction.
Transaction Structure: In connection with the Transaction, two newly
formed limited liability companies will be
formed by causing (i) Realty to contribute
substantially all of its properties and
assets, subject to substantially all of
its liabilities, to a newly formed limited
liability company (the "Realty LLC"), and
(ii) Operating and its subsidiaries to
contribute substantially all of their
properties and operating assets, subject
to substantially all of their liabilities,
to another limited liability company (the
"Operating LLC" and together with Realty
LLC, the "LLCs"). In exchange for contribut-
ing their assets to the LLCs, the Companies
shall receive the number of LLC units equal
to the current number of outstanding Paired
Shares. Such LLC units would not be publicly
traded but would be subject to the same
pairing restrictions as the Paired Shares.
Substantially all future business activities
of the Companies will be conducted through
the LLCs as the operating entities.
Transaction Consideration: In the Transaction, the Companies would (i)
pay a special cash dividend of $11 per
Paired Share to all current shareholders
(the "$11 Special Dividend") and (ii)
commence a self-tender offer to purchase up
to 5,600,000 Paired Shares (the "Self-
Tender") in which current stockholders of
the Companies would have the option, in
addition to receiving the $11 Special
Dividend, to (x) retain their existing
Paired Shares, (y) receive $17.50 in cash
per Paired Share or (z) receive per Paired
Share an additional $12 in cash together
with one warrant to purchase one Paired
Share at $16.25 per Paired Share for a seven
year period (the "Warrant"). None of KAI,
Colony nor any of their affiliates in-
tends to tender any Paired Shares in the
Self-Tender. In the aggregate, KAI and
Colony would cause to be distributed up to
$237.6 million to the shareholders of the
Companies.
In the event any shareholder does not
participate in the Self-Tender and such
shareholder does not exchange Paired Shares
for units of the LLCs, and, as a result,
following the consummation of the Self-
Tender, such shareholder's percentage
ownership of Paired Shares could cause
Realty to fail to qualify or be disqualified
as a REIT, then the Companies, pursuant to
Section 7.5 of the By-Laws of Realty and
Section 6.5 of the By-Laws of Operating,
could call for purchase from such
shareholder such number of Paired Shares
sufficient to maintain or bring the direct
or indirect ownership of Paired Shares
into conformity with the REIT
requirements.
<PAGE>
Conversion of Paired
Shares to Units: KAI and Colony and/or Franklin Mutual
Advisors, Inc. ("Franklin") and Gotham
Partners, L.P. ("Gotham") will each exchange
currently owned Paired Shares or Preferred
Shares for LLC Units so that no person owns
an amount of the outstanding Paired Shares
upon consummation of the Transaction that
would jeopardize the REIT qualification
requirements.
Transaction Financing:
Investment by KAI and Colony
(i) KAI would purchase 4,909,091 common
units of the LLCs (the "LLC Units") at a
price equal to $11 per LLC Unit, or $54
million in the aggregate, and (ii) Colony
would purchase 3,272,727 LLC Units, or $36
million in the aggregate. The LLC Units
would be exchangeable on a one-for-one basis
into Paired Shares, subject to REIT
ownership limitations.
In addition, (i) KAI would purchase
1,615,385 convertible preferred LLC units or
shares of convertible preferred stock (the
"Preferred LLC Units") at $13 per unit, or
$21 million in the aggregate, and (ii) Col-
ony would purchase 1,076,923 Preferred LLC
Units at $13 per unit, or $14 million in the
aggregate. Distributions on the Preferred
LLC Units would accrue at 12% per annum for
three years and then become payable on a
current basis. The Preferred LLC Units
would be convertible by the holder into
Paired Shares at $13 per share (a conversion
ratio of one-for-one) and will be
convertible (at a conversion ratio of
one-for-one) at the Companies' option on or
after the third anniversary of the issuance
date.
Debt Financing
A nationally recognized financial
institution (the "Financial Institution")
has offered to lend up to $200 million to
Realty LLC. Such amount will include (i) a
four year loan of $95 million (the
"Racetrack Loan") secured by, among other
things, (a) a first mortgage lien on the
Santa Anita racetrack, improvements (the
"Racetrack") and surrounding land (the
"Excess Land"), (b) a first priority lien on
all excess cash flow from the racetrack, (c)
a first priority security interest in all
other tangible and intangible property of
Realty; and (ii) a two year loan of up to <PAGE>
$40 million (the "Non-Core Asset Loan" and
together with the Racetrack Loan, the
"Loans") secured by, among other things, (a)
100% of the proceeds from sales of certain
non-core assets of the Company, excluding
the Racetrack and Excess Land (the "Non-
Core Assets"), (b) 100% of the cash flow
from the Non-Core Assets, (c) 100% of the
excess cash flow from the Racetrack, except
to the extent required to conform to REIT
distribution requirements, and (d) cash on
hand at the time of purchase. The interest
rate on the Racetrack Loan will float
monthly at one-month LIBOR plus 412.5 basis
points. The interest rate on the Non-Core
Asset Loan will float monthly at one-month
LIBOR plus 412.5 basis points during the
first year and will float monthly at
one-month LIBOR plus 462.5 basis points
during the second year. Approximately $60
million of such loan will be used for
general business purposes. In addition,
the Companies will grant the Financial
Institution warrants to purchase up to
1,440,000 Paired Shares or a similar
number of LLC Units at a strike price equal
to $27 per share less any dividends paid to
existing stockholders of the Companies
contemporaneously with the Transaction for
four years. Realty will guarantee the
Loans.
Stand-By Purchase
Pursuant to the terms of a letter agreement,
dated as of January 28, 1997 (the "Letter
Agreement")(attached hereto as Exhibit A),
by and between Gotham and KAI, Gotham has
committed to purchase on a stand-by basis up
to 5,600,000 warrants, for $5.50 per
warrant, or up to $30.8 million in the
aggregate (the "Gotham Warrants") less
specified fees. Each Gotham Warrant will
entitle Gotham to purchase one Paired Share
or one LLC Unit, at the election of the
Companies, for a seven year period at $16.25
per security, as adjusted. To the extent
that Gotham purchases Paired Shares through
the exercise of the Gotham Warrants, the
Companies will have the right to purchase a
corresponding number of LLC Units at
$16.25 per LLC Unit, as adjusted. Pursuant
to the terms of the Letter Agreement, Gotham
would purchase from the Companies one Gotham
Warrant for each Paired Share purchased by
the Companies pursuant to the $17.50 all
cash election under the Self-Tender. It is
not expected that Gotham would tender any
Paired Shares into the Self-Tender.
<PAGE>
Forward Purchase
Pursuant to the terms of a letter of intent,
dated as of April 8, 1997, by and among KAI,
Colony and Franklin (attached hereto as
Exhibit B), Franklin will make a forward
purchase commitment to purchase from KAI
and Colony at cost, immediately upon the
consummation of the Transaction, 15% of
the aggregate amount of LLC Units and
Preferred LLC Units purchased by KAI and
Colony pursuant to the terms of the
Transaction (the "Franklin Forward
Purchase").
In addition, Gotham has the right to
purchase from KAI, Colony and Franklin, at
cost, immediately following the consummation
of the Franklin Forward Purchase, $6.7
million in the aggregate of the LLC Units
and Preferred LLC Units purchased by KAI,
Colony and Franklin pursuant to the terms of
the Transaction and the Franklin Forward
Purchase. In addition, in the event the
aggregate purchase price of the Gotham War-
rants to be acquired by Gotham less
specified fees (such difference, the "Net
Equity Investment") is less than $20
million, then Gotham would be entitled to
co-invest on the same economic basis with
KAI, Colony and Franklin in the equity of
the Companies of the LLCs for a total
investment in such equity of $20 million
less the Net Equity Investment.
Tax Treatment: The formation of the LLCs, including Realty's
contribution of its core assets (subject to
the Racetrack Loan) to Realty LLC, will
generally be treated as a tax-free capital
contribution to a limited liability company
for Federal income tax purposes. After the
formation of the LLCs, Realty will hold its
LLC units with the same aggregate tax basis
applicable to the core assets it contributed
to the LLC. Realty's tax basis in its LLC
units will not be reduced by the amount of
the Loans assumed by Realty LLC in the
formation because Realty will guarantee
the Loans.
Following the formation, Realty LLC will
hold the core assets at a tax basis equal to
that at which Realty held them prior to the
formation. On the occurrence of Realty LLC's
sale of the core assets or its payments of
principal with respect to the Loans, Realty
will realize gain or ordinary income,
respectively, in its capacity as a member of
the Realty LLC and the guarantor of such
debt. Pursuant to the REIT rules, Realty <PAGE>
will be required to distribute such gain
or income to its shareholders in the year
such gain or income is realized.
The $11 Special Dividend will be a tax-free
return of Realty's current shareholders'
basis to the extent Realty has no tax
earnings and profits from other sources in
the taxable year of the Transaction. To
the extent the $11 Special Dividend exceeds
a Realty shareholder's basis in its Realty
stock, it will be taxable as gain from the
sale or exchange of such stock. Such
capital gain will be long term if such
shareholder held such stock for more than
one year prior to the $11 Special
Dividend.
Each Realty shareholder selling shares
pursuant to the Self-Tender will recognize
capital gain or loss in an amount equal to
the difference between $17.50 and the tax
basis of the stock sold by such shareholder,
as adjusted to reflect the effect, if any,
of the $11 Special Dividend thereon. Such
capital gain will be long term if such
shareholder held such stock for more than
one year prior to the Self-Tender.
Existing Opera-
tions/Business Plan: Please see Exhibit C.
Future Share Valuation: KAI and Colony expect the post-
Transaction value of the Paired Shares to
reflect a well communicated strategy to
aggressively maximize value in three
distinct areas: (i) acquisitions of assets
which best utilize the paired share REIT
structure and KAI's and Colony's operat-
ing expertise, (ii) horse racing
efficiencies and (iii) development of excess
land owned by Realty.
KAI and Colony expect to achieve material
improvement in financial performance
beginning in 1998, after they have conducted
an extensive review of strategic
alternatives. See Exhibit C for two summary
pro forma scenarios for the Companies
through the year 2002 together with relevant
material assumptions.
KAI and Colony expect the post-Transaction
Paired Shares to trade on the basis of
anticipated future dividend yields and funds
from operations, consistent with valuation
parameters for other paired share REITs (see
Exhibit D). KAI and Colony do not expect
the Companies to pay dividends in excess of
those required to maintain REIT status. <PAGE>
Governance: Following completion of the Transac-
tion, the Boards of Directors of the
Companies would consist of 11 persons, of
whom three would be representatives of
KAI, three would be representatives of
Colony, three would be independent
directors, one would be a representative of
Gotham and one would be a representative of
Franklin. The Boards of the Companies will
each establish Executive Committees each
consisting of three directors, of whom two
would be representatives of Apollo and one
would be a representative of Colony. The
LLCs will each have a Board of Member
Representatives which will replicate the
composition of the Boards of the Companies,
including the establishment of Executive
Committees. In addition, upon consummation
of the Transaction, the Companies and LLCs
will appoint the officers set forth on
Exhibit C.
Exchange of LLC Units for Paired Shares: KAI
and Colony will each have the option at any
time after one year to tender all or any of
its LLC Units or Preferred LLC Units to
Realty and Operating. Tenders will be in
pairs representing the same percentage
interests in Realty LLC and Operating LLC.
If LLC Units or Preferred LLC Units are
tendered, the Companies will have the
option to deliver, in exchange for such
tendered units, either or both of (i) Paired
Shares representing ownership of the
Companies equivalent to the percentage
ownership of the LLCs, as represented by
the tendered LLC Units or Preferred LLC
Units, or (ii) cash equal to the market
value of such Paired Shares; provided,
however, that while Realty is a qualified
REIT it will not issue in an exchange Paired
Shares which would cause any person to own,
directly, indirectly or constructively, more
than 9.8% of the Paired Shares outstanding
at the time of the exchange.
Registration Rights: Holders of LLC Units or Preferred LLC Units
will have the right to cause resale of the
Paired Shares receivable upon an exchange of
LLC Units or Preferred LLC Units to be
registered under Federal and state
securities laws.
Transaction Protection: The Companies would agree not to initiate
any contact with, solicit, encourage or
enter into or continue any discussions,
negotiations, understandings or agreements
with, anyone other than KAI or Colony (a
"Third Party") with respect to, or furnish <PAGE>
or disclose any non-public information
regarding Realty, Operating or their
subsidiaries, including the LLCs, to any
Third Party in connection with any competing
transaction proposal from a Third Party.
Notwithstanding the foregoing, to the extent
the Boards of Realty and Operating could be
required by their fiduciary duties as
determined in good faith on the written
advice of the Companies' outside counsel, at
any time prior to the approval by the
Companies' stockholders of the Transaction,
(i) Realty and Operating may, in response
to an unsolicited request furnish non-public
information with respect to Realty and
Operating or their subsidiaries to any Third
Party pursuant to a customary
confidentiality and standstill agreement
and discuss that information but not a
Competing Transaction Proposal (as defined
in the Amended and Restated Formation
Agreement, dated as of October 24, 1996 and
as amended as of January 7, 1997 (the
"Amended Formation Agreement"), by and
among the Companies and Colony) with the
Third Party and (ii) upon the receipt by
Realty or Operating of a Competing
Transaction Proposal from a Third Party, if
the Board of each of Realty and Operating
has reasonably determined that the
transaction contemplated by the Competing
Transaction Proposal, if consummated, would
constitute an Alternative Transaction (as
defined in the Amended Formation Agreement),
then Realty and Operating may participate
in discussions and negotiations with the
Third Party regarding the Competing
Transaction Proposal.
At least ten business days prior to entering
into definitive agreements with respect to
an Alternative Transaction, Realty and
Operating will deliver an Alternative
Transaction Notice to KAI and Colony
advising both of the determination by the
Boards of Directors of the Companies that
the transaction contemplated by the
Competing Transaction Proposal would
constitute an Alternative Transaction, which
notice will include a summary of the
Alternative Transaction. During such ten
business day period, KAI and Colony may
propose an improved transaction to the
Companies.
Termination Fees/Expenses: If prior to the approval of the stockholders
of the Companies of the Transaction (i)
Realty and Operating have delivered an
Alternative Transaction Notice to KAI and
Colony as provided for above, (ii) the terms <PAGE>
of the Alternative Transaction are not
modified in a manner adverse to Realty or
Operating and (iii) Realty and Operating
have paid a termination fee equal to $6
million to each of KAI and Colony and
reimbursed KAI's and Colony's expenses
related to the Transaction (including, with-
out limitation, fees and disbursements of
its counsel, accountants and other
financial, legal, accounting or other
advisors and out-of-pocket expenses) up to
$1 million each, then Realty and Operating
may terminate their agreement with KAI and
Colony and enter into an agreement with
the Qualified Third Party (as defined in the
Amended Formation Agreement) with respect to
the Alternative Transaction described in the
Alternative Transaction Notice provided to
KAI and Colony as described above.
Documentation: Subject to the terms and conditions set
forth herein and changes to reflect a
change in control transaction as well as
such other changes as are mutually agreed,
KAI and Colony would anticipate entering
into a definitive agreement which contains
the representations and warranties and
closing conditions set forth in the Amended
Formation Agreement, and other provisions
substantially similar to the Amended
Formation Agreement; provided, however,
that such definitive agreement shall not in-
clude certain provisions and exhibits
which were part of the Amended Formation
Agreement, including, but not limited to,
(i) Section 6.4 of the Amended Formation
Agreement, (ii) Sections 6.5 and 6.7 of each
of the Realty Limited Liability Company
Agreement (Exhibit A to the Amended
Formation Agreement) and the Operating
Limited Liability Company Agreement
(Exhibit B to the Amended Formation
Agreement), (iii) the Services Agreement
(Exhibit F to the Amended Formation
Agreement) and (iv) the Standstill
Provisions (Exhibit L to the Amended
Formation Agreement).
Diligence Completed: KAI and Colony have completed significant
due diligence on the Companies, including
a review of company-supplied documents
available in the "war room" as of December
1996. KAI and Colony have not reviewed addi-
tional documentation provided as per the
revised index dated January 16, 1997 and
each received January 27, 1997 or done due
diligence on the SEC disclosure issue raised
in the Companies' recent press release but
believes that it could do so within 10
business days of entering into exclusive <PAGE>
negotiations. The information most
pertinent to valuation issues which has not
been received involves taxes (further detail
on basis for owned assets and partnership
properties) and operational data regarding
horse racing. Although it appears that
some of this data may have been provided in
the data room recently, it is likely that
KAI and Colony will require access to
additional detailed information and to
management responsible for racing operations
to complete our analysis of the racing
revenue and expense structure.
Upon entering into exclusive negotiations,
KAI and Colony will complete their
remaining due diligence on an expedited
schedule, predicated of course, upon the
full cooperation of the companies and their
respective personnel.
Authorizations: This proposal is not subject to further
internal approvals by KAI, Apollo or Koll,
or by Colony or any of its affiliates.
Public Announcements: All announcements regarding any agreed
transaction will be upon joint approval of
the parties, subject to each party's legal
obligations to make public announcements
as required by events.
Other Terms and Condi-
tions: The Companies will amend the Rights Agreement
to permit the commencement and closing of
the transactions which are the subject of
the Transaction without any such event or
the passage of time resulting in the
occurrence of the Distribution Date (as
defined in the Rights Agreement).
Within thirty days of executing definitive
documentation relating to the Transaction,
Realty and Operating shall (i) prepare and
file with the SEC a joint proxy statement to
solicit proxies in connection with a special
meeting of shareholders of the Companies to
vote on the Transaction and (ii) call a
stockholders meeting for the purpose of,
among other things, approving the Trans-
action and electing the KAI and Colony
director nominees.
The Companies shall grant Koll Arcadia LLC
options to purchase approximately 3% of
the post-Recapitalization Paired Shares or
LLC Units at an agreed exercise price on the
date of the grant increasing on a formula
basis over time.<PAGE>
Other Consider-
ations/Information: The Companies will indemnify offi- cers
and directors of the Companies and the LLCs
and vigorously defend any litigation
relating to the Transaction.
Independent Proposals: The proposals of KAI and Colony are separate
and independent. All negotiations relating
to this Transaction shall involve both KAI
and Colony.
<PAGE>
FOR IMMEDIATE RELEASE CONTACT: OWEN BLICKSILVER
FOR KAI AND COLONY
212-303-7603
KOLL ARCADIA INVESTORS, COLONY CAPITAL SUBMIT REVISED PROPOSALS
AND WILL CONSIDER OTHER OPTIONS FOR SANTA ANITA COMPANIES;
FRANKLIN TO BUY EQUITY IN RECAPITALIZED SANTA ANITA
NEW YORK/LOS ANGELES, April 11 -- Koll Arcadia Investors (KAI) and Colony
Capital, Inc. today each announced that they had submitted revised
proposals to recapitalize the Santa Anita Companies (NYSE: SAR), a
"paired share" REIT based in Arcadia, CA. The investors noted their
proposed transaction would provide up to $30.50 per share in cash to
Santa Anita Companies' stockholders -- an increase from $27 offered in a
proposal that expired on March 28.
The investors said they submitted a bid yesterday valued at $30.50 per
share, under the provision that the Companies responded by today. The
Companies have refused to respond to the enhanced proposal.
KAI and Colony said they were "shocked" at both the Companies' "failure
to respond and to conduct meaningful negotiations with their largest
shareholders, and the Companies continued silence about other potential
transactions they might be considering."
Independently, KAI and Colony have said they will review "various
alternatives available to them."
Under the terms of the latest proposal, KAI and Colony would contribute
an aggregate of $136.2 million in new equity capital and would cause the
Santa Anita Companies to distribute a special dividend of $11 per common
share to all shareholders from the proceeds of a new financing. In
addition, approximately $78.4 million of the $136.2 million would be used
to fund a self-tender for 5.6 million SAR shares in which existing
shareholders would be given the option to receive $19.50 in cash (in
addition to the $11 per share special dividend) for each share acquired
in the tender, or $14 in cash plus a warrant valued at $5.50. Gotham
Partners, L.P. has agreed to act as a standby purchaser to acquire
warrants from the Companies for stockholders choosing the cash option.
Accordingly, the KAI/Colony proposal will result in the distribution of
approximately $250 million to Santa Anita stockholders. KAI and Colony
would own approximately 71% of the recapitalized Companies following the
transaction, and will receive a majority of seats or the Boards of
Directors. Immediately upon completion of the transaction, Gotham will
purchase $6.7 million of the stake purchased by KAI, Colony and Frank-
lin Mutual Advisers, Inc. In addition, KAI and Colony have entered into a
letter of intent with Franklin pursuant to which immediately upon
completion of the transaction, Franklin will purchase from KAI and Colony
the equivalent of a 15% stake in the recapitalized Companies. Both
Franklin Mutual Advisers and Gotham Partners will also have a represen-
tative on the Boards.
Representatives of KAI and Colony said "we have always believed it was in
the best interests of all the shareholders for the Companies to engage in
meaningful negotiations in a forum that will provide the highest value to
shareholders. That requires putting all bidders on an equal playing
field."
The representatives added that "the investors have made a good faith
effort to submit a change of control bid that would put more equity into
the Companies, return more cash to shareholders, lead to significantly
accretive acquisitions, end seven months of uncertainty, and would be
assured of shareholder approval."
KAI is an investment partnership comprised of principals of the Koll
Companies and Apollo Real Estate Investors II, L.P., a $570 million
equity fund. KAI had previously made a recapitalization proposal to
the Companies and owns approximately 8.7% of the paired common stock of the
Companies.
Colony Capital, Inc. is a Los Angeles-based investment firm which invests
on behalf of Colony Investors II, L.P., a $625 million equity fund Colony
had previously announced a planned strategic alliance with the Companies
and owns approximately 8.0% of the paired stock of the Companies on a
fully diluted basis.
Gotham Partners, L.P. is a New York-based investment fund and 5%
shareholder of the Companies, which agreed to act as standby purchaser of
warrants as part of KAI's previous offer.
Franklin Mutual Advisers, Inc. ("FMAI") is an investment adviser regis-
tered under the Investment Advisers Act of 1940. Its clients include the
series of funds comprising Franklin Mutual Series Fund Inc. FMAI is a
wholly-owned subsidiary of Franklin Resources, Inc. ("FRI"), a
diversified financial services organization. FRI's subsidiaries,
including FMAI, manage over 120 of the investment companies comprising
the Franklin Templeton Group of Funds.
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