Maryland Business

A new, luxury rental development opening in Owings Mills and Gov. Martin O’Malley announcing early successes during his trade mission to India are among the most-read business stories of the week. Also making the list is Disney pulling out of National Harbor and the auction of undeveloped lots in Camden Crossing. Here are the Top 5 stories of the week:

1. Doctors now can’t profit from sending patients for MRIs — by Ben Mook

Nearly nine months after a ruling by the state’s highest court took effect, the Maryland Board of Physicians has fully implemented a ban on orthopedists, cardiologists and other doctors from referring patients for treatment on MRI or CT machines in which the doctors have a financial interest.

State law prohibited such self-referrals, but it took a supporting decision by the Court of Appeals in January before the physicians board could move forward with ensuring compliance with the law. A subcommittee of the Maryland Senate this week began a review of the board, which is a semi-independent division of the Department of Health and Mental Hygiene, amid concerns of its performance as the agency overseeing physician misconduct.

2. Luxury rentals open in Owings Mills — by Melody Simmons

The first residents in a new 375-unit luxury rental development in Owings Mills are moving in following completion of phase one of construction at The View at Mill Run.

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Almost all of this week’s top 5 stories in business had to do with real estate, and most of them were centered around property by the Inner Harbor. Here are the top 5:

1. Former McCormick site at Inner Harbor auctioned for $11.5M – by Rachel Bernstein

The former McCormick & Co. Inc. factory site, one of the most valuable properties in the Inner Harbor, was sold at auction Tuesday for $11.5 million.

The site sits at a crucial spot for downtown Baltimore, and the sale of the property is an indicator of a positive moving economy, members of the city’s real estate community said.

2. State Center project on hold – by Melody Simmons

The $1.5 billion redevelopment of State Center, scheduled to break ground later this month with construction of a parking garage, is indefinitely on hold, a state economic development official said.

Robert C. Brennan, executive director of the Maryland Economic Development Corp., said a $33 million bond sale scheduled for this week to fund most of the construction of a 928-space parking garage at State Center was canceled pending resolution of a lawsuit filed by downtown property owners last month.

3. H&M officially signs on at Harborplace – by Rachel Bernstein

General Growth Properties has signed clothier H&M as a new tenant in Harborplace’s Light Street Pavilion, with its retail store expected to open this spring as part of a number of changes coming to the landmark.

The popular clothing store will take approximately 20,000 square feet near the Urban Outfitters store on both the first and second levels. The store is due to open in April or May, depending on construction.

4. Four undeveloped parcels at HarborView to be sold – by Melody Simmons

Four parcels of prime waterfront property at HarborView near the Inner Harbor that could hold a total of 1,548 residential units were listed for sale Monday.

The land is part of the 42-acre community, a multi-faceted, luxury residential development located off Key Highway marked by a high-rise condominium tower built in the early 1990s.

5. Port of Baltimore does record cruise business in 2010 – by Rachel Bernstein

The Port of Baltimore has again posted record numbers for cruise passengers coming through the city in one year.

Last year, 210,549 people sailed on 91 cruises from the Cruise Maryland Terminal, the Maryland Port Administration said Wednesday.

That number beats 2009’s record of 167,235 passengers — good for a 25 percent increase — on 81 cruises.

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I spoke to Joseph De Francis last night regarding today’s story about his loss of gaming rights to Laurel Park, and the former owner of Maryland’s thoroughbred race tracks said while he was disappointed in the judge’s decision, he was not surprised.

He also added that what he thought was more significant was Magna Entertainment Corp.’s request for the delay of the auction of Maryland’s tracks by nearly two weeks.

“That’s what we’ve all been waiting for,” he said. Now it’s that much longer that the tracks “will be under the cloud of bankruptcy.”

When Magna’s attorney Brian Rosen told the judge on Tuesday they’d like to move the auction back to Jan. 21, I was disappointed (after all, we’ve been waiting for this thing for more than nine months) but not at all surprised. After all Magna has requested to move back just about every date related to the Maryland race tracks, it was only a matter of time before the auction got moved.

On a side note, the auction is closed to the press — which means we’ll get to tell you who the winning bidder is but won’t get to see and relay to you the auction day’s antics firsthand.

The reason for privacy given to me by the New York firm running the auction was that it was for the protection of the bidders — the auction had been advertised as a private affair. Also, the proceedings will be taking place on private grounds, so it’s sound reasoning.

Still, I think Marylanders who are following this story would be curious about how the new owner pulled it off and who came just a hair shy of beating him — a story we won’t get to really know if the auction is closed. Does that disappoint anyone?

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With all the buzz this week about Magna Entertainment Corp.’s stalking horse bid (being delayed, then pulled altogether), we in the newsroom started wondering where in the heck the term “stalking horse” came from.

In this case with Magna, the term is used to characterize a bid that basically serves at the benchmark bid — it’s one that the company in bankruptcy feels is as a good price for its assets. The stalking horse bid was to be the measuring stick competing bidders should use to form their own offers.

But we wondered why “stalking horse”? Why not something more literal like “starting bid”? So I did a little Internet sleuthing.

According to word-detective.com, the term comes from horses used in hunting. “‘Stalking horses’ were trained to allow a hunter to dismount and then use the horse as a blind to conceal his presence as he ’stalked’ the game (which apparently did not notice that it was being approached by a six-legged horse),” the author writes. “The term was expanded fairly quickly to cover any sort of portable blind.”

The explanation makes sense for the use of “stalking horse” in the context of being a decoy, such as a stalking horse candidate entered into an election to conceal the candidacy of another or to divide the opposition, as thefreedictionary.com defines the term.

But how did the term get linked with auction proceedings? That connection is provided by Ken Naglewski in his 2006 article in Financier Worldwide:

“It appears that the tactical leverage…dissuades other qualified bidders who might have bid more from even entering the fray,” he said. “There have been cases where other potential bidders choose not to participate rather than spend more time and effort trying to overcome the bidding advantages offered to the stalking horse.”

Although the stalking horse bid has been an increasingly common process in bankruptcy auctions over the last few years, Naglewski says a stalking horse bid is not required. He also says it’s typical for the stalking horse bid to wind up as the winning bidder, which also backs up that “chilling effect” theory.

So now that we know the history, do you think it matters that Magna is going ahead without a stalking horse bid? Without a leading bid, is anyone at a disadvantage?

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