Saudi Wins Court Fight Over Marina : Real estate: Billionaire gains control of nearly 20% of county-owned Marina del Rey. Ruling ends Abraham Lurie’s involvement.
A billionaire Saudi Arabian businessman with close ties to the Saudi royal family won a bitterly contested battle in federal Bankruptcy Court on Friday and took control of the largest bloc of properties in county-owned Marina del Rey.
Almost two years and millions of dollars after the fight began, Bankruptcy Judge Calvin K. Ashland confirmed a complicated reorganization plan that gives Sheik Abdul Aziz al Ibrahim control of nearly 20% of the entire marina.
Ibrahim, a brother-in-law of Saudi King Fahd, adds three hotels, two apartment complexes, offices, shopping centers and more than 1,100 boat slips in the marina to an expanding portfolio of prime properties in the United States.
The decision was warmly received in a downtown Los Angeles courtroom by Abdul Aziz Yahya, president of Newfield Enterprises International, the Century City-based firm that manages the sheik’s American real estate investments.
“We’re very pleased with the decision,” he said. “Now it’s time to roll up our sleeves and start to work.”
Referring to the neglect that the marina properties have suffered during the legal battle, Yahya said the sheik is eager “to bring the properties up to an acceptable high standard. There are a lot of things we want to do.”
The Saudi billionaire secretly acquired a major stake in the marina holdings of Los Angeles developer Abraham M. Lurie in August, 1989. The Los Angeles County Board of Supervisors gave its blessing to the deal, which involved a dozen shell companies stretching from Europe to the Caribbean to California, without learning the investor’s identity.
The entire marina is owned by the public and businesses operate there on public land through long-term leases with the county.
Almost from the start, the partnership between Lurie and Ibrahim deteriorated into an acrimonious battle for control of choice properties in the waterfront community. As Lurie’s financial and personal fortunes declined, the conflict escalated between the weakened Los Angeles developer and the deep-pocketed sheik, eventually landing in Bankruptcy Court.
For Lurie, the court’s decision marks the end of an era. The Saudi plan to reorganize more than $140 million in debts on the properties eliminates Lurie’s interest in the marina, where he has been a major force since the late 1960s.
On Friday, Lurie sat quietly, clutching his wife’s hand and choking back tears as the judge announced the Saudi’s victory.
The real estate investor, his wife and a longtime friend left hurriedly without comment after the 15-minute proceeding in the Edward R. Roybal Federal Building.
In a last-ditch attempt Thursday to head off the seemingly inevitable conclusion, Lurie’s attorney, Jeffrey H. Greenberg, pleaded with the judge not to allow the Saudi plan for reorganizing Marina International Properties Ltd. to win final approval.
Greenberg argued that the Saudi billionaire was using Bankruptcy Court to take over the properties and wipe out Lurie’s interest. “This case is not bigger than the law,” Greenberg said. “The sheik is not bigger than the law. . . . They think they have the right to completely disregard the (partnership) agreement they had with Mr. Lurie.”
Richard Peters, the attorney for Ibrahim, rejected the contention.
After sitting through numerous hearings and wading through thousands of pages of legal papers filed by more than a dozen attorneys in the case, Ashland expressed sympathy Friday for Lurie’s argument, but clearly was not willing to deny the Saudis the properties.
The judge dismissed the last objections of Lurie, his ex-wife and a committee of unsecured creditors, and confirmed the Saudi plan for the marina.
His words were welcome news for Yahya, who said the Saudi billionaire is committed to the marina for the long term. Ibrahim toured the harbor before making his initial $21.3-million investment four years ago. “When we saw these properties and developed an interest in them, it was not only for what they are today, but for what they can be,” Yahya said.
The Saudi plan calls for investing $4.7 million in upgrading the marina properties and boat slips. And Ibrahim has pledged to invest another $12 million and extensively redevelop the properties if the county agrees to extend the leases, most of which expire in 30 to 40 years.
As the bankruptcy case proceeded, county officials concluded that the Saudi plan, rather than rival proposals put forward by Lurie and the Bank of Montreal, offered the best hope for the marina.
Lurie was forced to withdraw his plan after failing to find financial backers who were willing to join in a struggle against a billionaire businessman.
The Bank of Montreal withdrew its proposal and joined late last month in supporting the Saudi bid after Ibrahim’s attorneys agreed to reduce the bank’s losses on the deal. The Canadian bank was owed more than $54 million on the high-rise Marina Beach Hotel only to see the property’s value slump to barely half that amount.
The other major creditors backed the Saudi plan, including California Federal Bank, Manufacturer’s Bank, Great Western Bank and the federal government’s Resolution Trust Corp., which took over the defunct Unity Savings of Beverly Hills.
Eric Bourdon, director of the county Department of Beaches and Harbors, which oversees the marina, also welcomed the new Saudi role in the marina. “They will upgrade the properties and manage them much more aggressively,” he said.
The nine marina properties--the Marina Beach, Marina del Rey, and Marina International hotels, Admiralty and Islander Marina apartments, Fisherman’s Village, Marina Beach Shopping Center, Marina West offices and Pier 44--provide more than $5 million a year in rent, hotel and sales tax receipts to the financially strapped county government. County officials hope that the receipts will increase as the marina holdings are upgraded.
The marina properties are part of an expanding portfolio of U.S. real estate owned by the Saudi businessman, including Ritz Carlton hotels in New York, Washington, Houston and Aspen, Colo., a major hotel and office complex near Chicago’s O’Hare International Airport and largely undeveloped land near Disney World in Florida and Colorado Springs, Colo.
Ibrahim, who has offices and homes in Saudi Arabia and Europe, also owns choice property high above Bel-Air. He has dabbled unsuccessfully in Hollywood, investing in the ill-fated movie “Brenda Starr.”
The Ibrahim Marina Holdings Billionaire Saudi Arabian businessman Abdul Aziz al Ibrahim, who secretly bought a major stake in Marina del Rey properties almost four years ago, has become the biggest developer in the county-owned marina. 1. Marina International Hotel 2. Doubletree / Marina Beach Hotel 3. Marina del Rey Hotel 4. Admiralty Apartments 5. Islander Marina Apartments 6. Fisherman’s Village 7. Pier 44 8. Marina West 9. Marina Beach Shopping Center