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The Honolulu Advertiser
Posted on: Monday, March 29, 2010

Old Island raceway site has new owner

by Andrew Gomes
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Paul Giovanetti, left, was president of Hawaii Raceway Park in 2006, when it closed, and Tom Bryant, was vice president of the Hawaii International Racing School.


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A company affiliated with New York-based investment firm Angelo Gordon & Co. has acquired the former site of Hawaii Raceway Park in Kapolei.

The company swooped in prior to a final foreclosure auction proceeding last week to purchase the property, upsetting an attempt by Honolulu-based Alexander & Baldwin Inc. to acquire the 66-acre parcel zoned for industrial use.

Angelo Gordon is an investment advisory firm that began investing in commercial real estate in 1993. The company focuses on investment opportunities outside the mainstream, and since 1993 has acquired more than $11 billion of property.

Often Angelo Gordon purchases real estate with local partners, but it's unclear what role the company has in acquiring the Hawaii Raceway parcel.

A representative of the firm didn't respond to a request for comment last week.

According to business records, two affiliates of AG/CW Raceway Holdings LLC acquired the raceway property. AG/CW's mailing address is Angelo Gordon's New York headquarters.

AG/CW Raceway arranged to purchase the property and pay off a delinquent mortgage just before an auction sale was to be finalized last week.

California development firm Irongate Capital bought the property from Campbell Estate in 2006 for $13.2 million with a side deal to pay the former racetrack operator for an option it held to buy the property.

Irongate planned to develop a 90-lot industrial subdivision on the site and got the land rezoned for such use, but ran into financial trouble before it could realize its development plan.

Two lenders, MKA Real Estate Opportunity Fund I LLC and iStar FM Loans LLC, filed foreclosure lawsuits to repossess the property in 2008 and 2009.

Prior to a preliminary foreclosure auction in February, A&B purchased the primary loan from iStar for a discount and used the value of the roughly $12.7 million mortgage debt to make an $11 million credit bid for the property.

The move by A&B was its first foray into buying distressed debt secured by real estate, and was a strategy to acquire ownership of the land.

Meanwhile, MKA had assumed Irongate's position as landowner by acquiring the deed to the property in lieu of its foreclosure case.

But before a court confirmation hearing of the A&B (former iStar) foreclosure sale last week, AG/CW Raceway arranged to buy the property from MKA and pay off the mortgage held by A&B for an undisclosed sum.

An A&B spokeswoman confirmed that A&B no longer has an interest in the Hawaii Raceway parcel, though the company is believed to have profited from its loan purchase.