Sheik begins upgrading Marina del Rey properties.

New firms hired to manage his $100 million portfolio

Two months after a billionaire Saudi Arabian businessman won total ownership control of the largest portfolio of properties in Marina del Rey, small changes are already under way on those properties, with plans for much bigger changes in the works, said a spokesman for the Saudi's U.S. representative in Los Angeles.

Sheik Abdul Aziz al Ibrahim, a brother-in-law of Saudi King Fahd, won a two-year legal battle in federal Bankruptcy Court April 30, giving him total ownership control of a portfolio of properties that encompass nearly 20 percent of Marina del Rey.

The nine marina properties, valued at $100 million, include three hotels, two apartment complexes, offices, shopping centers and 1,100 boat slips. The building and other improvements are owned by the sheik, but the county retains ownership of the underlying land, which is leased to the sheik under a long-term ground lease agreement.

Outrigger Lodging Services -- an Encino-based company that manages 17 hotels, most of which are in California -- is now providing the day-to-day management of the sheik's three hotels in Marina del Rey.

PM Realty Group -- a Houston-based property management giant -- is now managing the retail, office and residential properties and boat slips.

Both property management companies were selected two years ago, but weren't able to take over until the bankruptcy proceedings were completed, said Ralph Jackson, a spokesman for Newfield Enterprises International.

Newfield is the Century City-based development and asset management company that handles the Ibrahim family's portfolio of properties in the United States. Newfield is owned by Abdulaziz Yahya, a nephew of the sheik.

Along with employing two new property management organizations, capital improvements and plans for upgrading the waterfront are taking place, said Donald J. Bredberg, Newfield's senior vice president and director of real estate.

The Ibrahim family, which has diversified real estate holdings throughout the world, has a portfolio in the United States valued at more than $1.2 billion, according to a company release. These properties include Ritz Carlton hotels in New York City, Washington, D.C., Houston and Aspen, Colo.; the Woodfield Corporate Center in Chicago; a 600-acre master planned resort community near Disney World in Orlando, Fla.; and the 23,000-acre Banning-Lewis Ranch in Colorado Springs, Colo., which was purchased three months ago for $18.5 million in cash.

The sheik's hotels in Marina del Rey contain a combined 594 rooms and 17,000 square feet of meeting space: the 300-room Marina Beach Doubletree, the 160-room Marina del Rey Hotel and the 134-room Marina International.

The other properties include the Admiralty and Marina apartment complexes, with a combined 256 rental units; the Marina Beach Shopping Center and Fisherman's Village; an office complex consisting of four one-story buildings; and a full-service marina, which includes the 1,100 boat slips.

Negotiations are currently under way with national hotel chains to franchise one of the chains' names and reservation systems for the Doubletree and the Marina International, said Bredberg.

The hotel franchises are essentially offering a "face," but Outrigger will continue managing the three hotels, he said.

Announcements on the new hotel "flags," as they are called in the hotel industry, are expected by the end of the year, he said.

The three-story Marina del Rey Hotel, located on the waterfront, will not acquire a national chain "flag" in order to retain its independent status, he said.

Since the new property management companies took charge of the marina properties in May, they have been busy interviewing all pre-existing property management employees and cleaning, said Bredberg, adding that the properties are literally being scrubbed down. He said there were no layoffs and 90 percent of the employees stayed on with the new management companies.

As agreed to in the bankruptcy plan, the sheik family is committed to spending $4.7 million to upgrade the marina properties and boat slips, said Bredberg. The planned short-term capital improvements include everything from replacing a boiler, fixing a leak in an apartment and new carpeting, he said.

As for the long-term upgrades, Bredberg said the Saudi owner wants to create a more bustling and interesting waterfront.

"We want to create a 'there' there," he said, noting that Marina del Rey has no focal point. "We would like Marina del Rey to be an exciting place for residents and a world-class resort town for tourists."

He called Fisherman's Village a "tired New England fishing theme."

Key to upgrading the marina, however, is getting county approval and having the county get state approval for zoning of its coastal properties. The state's Coastal Commission is requiring local entities to submit a local zoning plan on how they want to develop coastal properties.

Once these local plans are approved by the state, the local entities then can do the permitting for the projects.

Although Marina del Rey got its local zoning plan approved by the state two years ago, county officials are submitting amendments to the plan that would affect nine leaseholds in Marina del Rey, said James A. Fawcett, chief of planning for L.A. County's Department of Beaches and Harbors. One of those affected leaseholds is the sheik's. Fawcett said the county gave Newfield until the end of August to provide input on the proposed amendments.

"I can't say how we'd come down on their input because we haven't seen it yet," he said.

Because the sheik's Marina del Rey properties were in bankruptcy, Newfield Enterprises wasn't allowed to speak to county officials about its plans until recently, Bredberg said. He said specifics of Newfield's long-range plans will be made clearer in 90 to 120 days, after it meets with county officials.

The sheik's ground leases on the county-owned land are scheduled to expire in the next 30 to 40 years. And before any long-term financial commitments can be made, Newfield Enterprises needs to renegotiate these leases on behalf of the sheik.

Bredberg said the county has expressed an interest in extending the leases, but he doesn't know how much they want for the extension.

As observers pointed out, county officials should be quite willing to be cooperative because they are eager to increase receipts at the marina. The sheik's nine properties bring in more than $5 million a year to the county -- in the form of ground-lease payments, hotel bed taxes and sales taxes.