SAN MATEO, CA-Stockbridge Real Estate Fund has taken out a $50-million loan on the Bay Meadows Racetrack here as it ponders the future of the 83-acre property. The three-year, floating rate first financing from Fleet Bank was sourced for Stockbridge by Holliday Fenoglio Fowler.Stockbridge, which recently assumed direct management of the facility, is currently seeking entitlements for a major redevelopment of the property in 2007, but also may decide to delay those plans indefinitely if a proposed statewide ballot measure to legalize slot machines at California’s major racetracks is ultimately approved by the voters this November. Stockbridge VP Kristin Gardner tells that the financing was “a process used in place of investor equity (that) gives us ability to run the racing while pursuing the development entitlements.”The proposed redevelopment would eliminate the racetrack and replace it with as much as 1.5 million sf of office space, 1,250 homes and three blocks of upscale commercial buildings built around a proposed CalTrain “express stop” and 29.5 acres of open space. Then again, if the ballot measure legalizing slot machines were approved, Bay Meadows would receive up to 3,000 slot machines that could generate an estimated $77 million per year for Stockbridge. If that occurs, Gardner says, “It is sufficient to say that we would take a significant step back and re-evaluate our alternatives.”Paine Webber acquired 173 acres that included the racetrack in 1997 for redevelopment. It broke off 90 acres that held a practice racetrack and stables and began selling off pieces to owner-users and developers. Franklin Templeton Investments built its world headquarters on some of the acreage. Texas-based JPI built a 575-unit apartment complex on another big chunk, and Ryland Homes acquired some of the acreage for a mix of town homes and single-family residences.United Bank of Switzerland acquired the property as part of its Paine Webber purchase in 2000. Spearheaded by Terry Fancher, who worked for Paine Webber, Stockbridge took over the property last year in a $500-million transaction funded largely by a group of mostly pension-fund investors. The largest is believed to be Pennsylvania Public School Employees, which reportedly has a $368 million stake. Bay Meadows Land Company and Bay Meadows Racing Association are subsidiaries of Stockbridge.In January 2003, across from the apartment complex, Stockbridge opened Park Place, a 7.2-acre mixed-use development with 190,000 sf of office, about 85,000 sf of retail and 19 live-work condominiums. Pending completion of leases currently under negotiation, the development is 92% leased, says Gardner. Fleet holds the first mortgage on that development as well.

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