ISC may sell Staten Island land
An $80 million deal with KB Marine Holdings LLC could finally extricate International Speedway Corp. from its ill-fated plan to build a racetrack on Staten Island, while giving the company cash it can spend on a proposed Kansas City, Kan., casino project.
ISC announced the deal late Thursday. The transaction is scheduled to close before Feb. 25. And KB Marine can receive a $5 million credit if the deal closes before Dec. 31.
“We are very excited, but we are not there yet,” said Dan W. Houser, ISC’s chief financial officer. “KB Marine still has to work on its equity commitments. So we are cautiously optimistic. But this is not a done deal yet.”
ISC bought the 676-acre waterfront property in 2004, paying $114 million. But Houser said the company hit “head winds” — including a lack of political support, problems obtaining land-use changes, operational restrictions and prohibitive constructions costs — that eventually forced ISC to kill the plan.
“It just became too much of a stretch,” he said.
KB Marine agreed to buy all the interest in 380 Development LLC, a wholly owned subsidiary of ISC and the owner of the Staten Island property.
“We are very pleased to announce the execution of this agreement, as it has been our intention to find a buyer interested in redeveloping this site to its highest and best use, which would be for port-related and logistic activities,” said Brian K. Wilson, ISC’s vice president of corporate development. “KB Marine plans to do exactly that, which will benefit economic development and job creation in Staten Island, New York City and the region as a whole.”
In 2007, Colorado-based ProLogis agreed to buy the Staten Island site for $100 million, but that deal fell through.
On Thursday, Houser said the original plan for a Staten Island speedway was sound, and the company entered the deal knowing it would hold “a liquid asset” — the real estate — it could sell if things went sour.
“We were very excited to be in the New York metro market,” he said. “It was a good strategy. And where we are today, given the unforeseen developments in the macroeconomic environment, we are coming to a suitable close on this property.”
Houser said ISC has adjusted the value of the Staten Island land on its books as real estate values nationally declined. The $80 million purchase price matches the value ISC placed on the site.
“We will get some tax benefit on the loss that will bring our total value for the property to $110 million to $115 million,” Houser said.
If the deal closes, the proceeds will go into ISC’s cash reserves, where it could be used to pay down a $75 million revolving credit account or go toward the required equity needed for a proposed half-billion-dollar casino and hotel project in Kansas City, Kan.
ISC and Penn National Gaming Inc. await a Dec. 28 decision from the Kansas Lottery Gaming Facility Review Board on their plan to build and operate a casino overlooking Turn 2 of Kansas Speedway.
By JIM WITTERS