Marina Takeover Weighed : Development: The county is reviewing a deal for Saudi-led investors to take control of numerous buildings and 1,000 boat slips in Marina del Rey.
Under a tentative agreement, a secretive group of Middle Eastern investors headed by a billionaire Saudi Arabian businessman will gain full control of long-term leases of public land at Marina del Rey, county officials confirmed Thursday.
The deal involves the marina’s largest developer, Abraham M. Lurie, and the investment group headed by Saudi King Fahd’s brother-in-law, Abdul Aziz Al-Ibrahim, who is seeking control of three hotels, two apartment complexes, office buildings, shops, restaurants and more than 1,000 boat slips at the marina.
Financially weakened by substantial losses at his Doubletree Hotel/Marina Beach, Lurie faces more than $45 million in overdue loans and one bank has threatened to foreclose on some of his marina holdings late this month.
Preliminary outlines of the transaction, given to Los Angeles County officials earlier this week, indicate the investment group controlled by Ibrahim will pay $15 million in cash to take over all of Lurie’s marina properties except for an undeveloped hotel site. The investors also will assume $120 million to $130 million in debts, according to a spokesman.
If approved by the Los Angeles County Board of Supervisors, Ibrahim and his associates will become the largest foreign investors in the publicly owned marina. Businesses there operate on long-term leases with the county that can be bought and sold much like conventional real estate.
Lurie and Charles Wallace, president of the Marina Group of Companies, informed several supervisors of the deal Wednesday. Neither Lurie nor Wallace could be reached for comment.
Supervisor Deane Dana, whose coastal district includes the marina, was noncommittal about whether the board will look favorably on the deal. “Obviously, we are going to have to take a good look at that, particularly selling to Saudi Arabians,” Dana said Thursday night.
“We’re going to really have to take it apart, see if it is legal, good for the county, and if we can allow it.”
Dana called the group’s proposed takeover of Lurie’s holdings “a far cry” from their initial investment in the marina last year.
A letter of intent outlining the latest transaction was delivered to county officials on Monday afternoon, said Ted Reed, director of the county Department of Beaches and Harbors.
Although county officials have yet to analyze the transaction in detail, Reed said Thursday that “on the surface the proposed agreement appears to bring financial stability to Marina del Rey leaseholds.”
“I don’t think there’s been any secret that Mr. Lurie has been in poor financial shape for a number of months, going back to 1989 when he sold that minority interest,” Reed said. “The (Doubletree/Marina) Beach hotel was draining.”
Lurie is the largest leaseholder in the marina, controlling about 17% of the area. Reed said the county wants to avoid a foreclosure. “Anytime you would have a major financial setback like that it would be a black eye on the marina’s vitality,” he said.
In August, 1989, the board approved the sale of a 49.9% interest in Lurie’s properties without dissent and without learning the identity of the investors. The supervisors relied on assurances from the investors’ Chicago attorney that Lurie’s new partners were reputable business people who valued their privacy.
This time, the county will insist on disclosure of the investors and will seek information on their business background and relationships.
“My intention is they will have to fully disclose all major investors,” Reed said. “I want to know who they are and where they are. Last time around, we did not know who they were.”
Last year’s complex $21.8-million deal was structured through a dozen corporations in California, the Caribbean and Europe in an effort to protect the identity of the investors.
“These are wealthy individuals . . . who wish to remain anonymous in order to avoid hucksters, flimflam men, gold diggers, extortionists, kidnapers, terrorists and similar criminal elements that tend to gravitate to and feed upon the prominent and well-to-do,” the attorney for the investors, Cornelius Sullivan, said in a letter to the supervisors.
After a two-month investigation, The Times last fall identified Ibrahim and his brother, Khalid, as the lead investors. At the time, the marina investment was the latest addition to their U.S. real estate portfolio, which involves properties from Florida to the Midwest to California that could exceed $1 billion in value.
A carefully worded press statement prepared by Lurie and his partners said the transaction will result in the Marina Group of Companies controlling leases on nine commercial and residential properties, including hotels, apartments, boat slips, office buildings and retail shopping centers.
Lurie will retain 50.1% control of the lease on the last undeveloped parcel of land in the marina, the site of the long-delayed Marina Plaza hotel. He and his partners are now planning to build what was described as “a luxury retirement hotel” on the property.
The statement issued by a Los Angeles public relations firm said the Marina Group, based in Century City, is the California affiliate of a Luxembourg-based fund held by various foreign investors and led by Abdul Aziz Al-Ibrahim who was described as a Saudi investor.
In an interview last fall, San Francisco attorney Khalid Al-Mansour, speaking on behalf of the Ibrahims, said they act on behalf of about 30 other Middle Eastern partners who combine their resources in what he called “The Fund.”
Mansour described investors in The Fund as “old Middle East money” from countries such as Saudi Arabia, Kuwait and Qatar.
The fund was organized in the early 1980s, investing first in the Middle East, then into Europe and Asia, Mansour said. The first U.S. investment was in Florida in 1983.
Fortune magazine and the Financial Times of London reported that the Ibrahims acted as middlemen in the summer of 1984 in a $1-billion oil-for-jetliners barter deal between Boeing Aircraft Co. and Saudia, the Saudi national airline.
The following year, according to the London Observer, the Ibrahims helped sell an initial order of British warplanes--Tornado fighter bombers and Hawk training jets--to the Saudi government in a deal U.S. authorities estimated could exceed $30 billion.
Proceeds from the deals thrust the brothers into the ranks of the world’s billionaires. The Observer reported that the Ibrahims have channeled their arms and aircraft profits into real estate investments while also generating some jealousy within the Saudi Royal Family because of their access to the King.
Published reports have said the Ibrahims manage the financial affairs of King Fahd’s youngest son, Prince Abdul Aziz Al-Fahd, but Saudi officials have categorically denied that.
Lurie’s Marina Holdings 1. Marina Plaza Hotel Site* 2. Marina International Hotel 3. Doubletree/Marina Beach Hotel 4. Marina del Rey Hotel 5. Admiralty Apartments 6. Islander Marina Apartments 7. Fisherman’s Village 8. Pier 44 9. Marina West 10. Marina Beach Shopping Center *Proposed hotel site. Of the 10 properties controlled by Abraham M. Lurie, this is the only one he will retain majority control of under a deal to be reviewed by the county.
