A billionaire Saudi Arabian businessman, who secretly bought a major stake in county-owned Marina del Rey almost eight years ago, has lost most of his remaining marina holdings in federal bankruptcy court.
Los Angeles County officials have been concerned that promises by the Saudi businessman to invest in upgrading and redeveloping aging marina properties have not been kept because of the bankruptcy.
Ironically, Sheik Abdul Aziz al Ibrahim, brother-in-law of Saudi King Fahd, became the largest leaseholder in the marina when he drove his U.S. business partner out of the harbor after a contentious bankruptcy case that ended in 1993.
Since then, the Saudi investor, whose U.S. real estate interests include Ritz-Carlton hotels in New York, Washington, Houston and Aspen, Colo., has apparently lost interest in Marina del Rey. A spokesman for the sheik could not be reached for comment.
County officials welcomed the court’s approval this week of an agreement to remove six properties from the protracted bankruptcy proceedings and transfer long-term leases on hundreds of boat slips, an apartment complex, shopping centers, restaurants and offices to a new owner.
“We obviously don’t like leaseholds in bankruptcy,” said Stan Wisniewski, director of the county Department of Beaches and Harbors, which oversees Marina del Rey. “We’re pleased to see this chapter come to a close.”
The entire marina is owned by the public and leased on a long-term basis to developers who operate the harbor’s hotels, apartments, boat docks, retail, restaurant and office complexes.
In a settlement agreement approved Monday in Los Angeles by U.S. Bankruptcy Court Judge Calvin Ashland, the sheik’s company, MGC Commercial, will give up its long-term leases on the six marina properties, including the tourist attraction Fisherman’s Village, the Marina Beach and Marina West shopping and office complexes, Admiralty Apartments and Pier 44 and 77. Earlier, Ibrahim lost the high-rise Marina Beach Hotel, which is now owned and operated by Marriott. He retains leases on just two properties, the Marina International and Marina del Rey hotels.
The six properties involved in the bankruptcy settlement will be foreclosed on Feb. 24 by CS First Boston Mortgage Capital Corp. The company holds approximately $26 million in loans on the properties.
David Westcott, CS First Boston’s representative, described the Marina del Rey holdings as “prime oceanfront property.” He said the properties are attractive because of the potential for redeveloping prime waterfront projects.
“There is some interest in some circles in buying [the leases on] these properties,” Westcott said. CS First Boston has had “discussions with people who are and are not leaseholders in the marina” about possibly buying the six leaseholds.
As part of the settlement agreement, CS First Boston promised to repair or replace 32 boat slips and pay the county more than $53,000 in back rent.
Altogether, the county will receive about $24 million this year in income from the marina, but nearly $21 million of that goes to repay notes issued when the county mortgaged the marina in 1993 to pay one-time operating expenses.
To boost its return on the prime waterfront property, county officials are working on an ambitious long-range strategy to encourage redevelopment of the marina.
The county’s Small Craft Harbor Commission on Wednesday approved 4-1 a plan to provide incentives for upgrading the harbor to attract more residents, business people and tourists.
“We’re excited because clearly it’s a historic document for Marina del Rey,” Wisniewski said.
The plan now goes to the Board of Supervisors for final action. It was the supervisors who voted in August 1989 to allow an unidentified foreign investor to purchase a 49.9% interest in the marina holdings of Abraham M. Lurie. At that time, Lurie held leases on about one-fifth of the entire marina.
After a two-month investigation, The Times disclosed that Ibrahim had used a major Paris bank, a Luxembourg holding company, a Cayman Islands tax shelter and a series of California corporations to buy into the marina.
Lurie and the sheik’s Marina Group of Companies filed for federal bankruptcy protection in 1991 after a bitter falling-out. The Saudi investor emerged from that case with leases on nine marina properties.
Ibrahim’s name also surfaced in connection with financing of the ill-fated movie “Brenda Starr,” featuring Brooke Shields.