Owners of Race Track Buy Into Retail Center

The company that owns Santa Anita race track said Tuesday that it has purchased a 75% interest in the Lumberyard, a shopping center in Encinitas, for $3 million.

The purchase is the first San Diego-area investment for Santa Anita Realty Enterprises, a publicly held, Los Angeles-based real estate investment trust that owns the race track property and operates the Arcadia facility through an affiliated company.

Santa Anita Realty has entered into a partnership with the Lumberyard’s developers, James Youngblood Sr. and James Youngblood Jr., with the partnership assuming $8 million in existing construction and mortgage debt, according to Royce B. McKinley, president of Santa Anita Realty Enterprises.

The deal is based on Santa Anita Realty’s assuming 75% of the $8-million debt, or $6 million, and paying $3 million to the Youngbloods. The company’s total $9-million stake represents 75% of the center’s $12-million total value, according to McKinley.

The Lumberyard, which opened in 1981, is an 84,850-square-foot, 11-building complex on 8.1 acres of land on U.S. 101 in downtown Encinitas.

The anchor tenant is a retail home-improvement store, but the complex also features other retail stores and several restaurants.

McKinley, in a telephone interview Tuesday, suggested that his company may invest in other San Diego projects.

“We’re very interested in San Diego and hope to do some other things there,” said McKinley. Projects could include shopping centers, industrial developments and apartment buildings, he added.

The company generated more than $18 million in revenues last year and about $13 million in earnings, McKinley said.

The earnings-to-revenue ratio is high because, as a real estate investment trust, Santa Anita Realty is exempt from corporate income taxes but must distribute 95% of its profits to shareholders.

Santa Anita Realty receives 1.5% of the bets wagered at the race track as a fee for operating the facility, said McKinley.