By J. PATRICK PEPPER
DEARBORN — Local real estate investor Hakim Fakhoury said Friday he is in negotiations with a large, out-of-state development firm for the sale of his entire collection of west downtown commercial property.
The news comes after Fakhoury shocked the struggling business district in early March when he said that he was putting on the market more than a dozen buildings he owns through various holding companies in a package deal.
Fakhoury said then that he had grown frustrated with frequent disagreements with city officials over a proposed large scale development project on the city-owned parking lot between Military and Howard on Garrison.
After five years of hot-and-cold negotiations, changes in development partners, project changes and dealing with a frozen credit market, Fakhoury announced that he was selling in a manner befitting the end of a long struggle.
In the windows of at least seven of his buildings posted above black and red script “Fakhoury Ventures — For Lease” signs, are new placards in the same color scheme reading “The Dream is Over — For Sale.”
The negative message on the signs made some question how seriously he was marketing the properties, but it was really more of a public announcement of the sale rather than an attempt at actually attracting buyers, Fakhoury said last week.
“You don’t market a deal like this by posting signs in windows. It’s something you do through professionals and professional organizations,” Fakhoury said. “I wouldn’t have put (the properties) for sale if I didn’t already have a buyer.”
While he declined to name the company, he said that it has sufficient capital to complete the entire deal and would also be able to move forward on a development on the parking lot.
Likely one of the most attractive aspects about the deal is controlling interest in Dearborn Village Partners (DVP), a Fakhoury-controlled entity that holds rights to roughly $40 million in redevelopment tax credits and exclusive development rights for the lot.
The credits and the development rights were initially granted in 2005 based on a proposal for upscale condos built atop a city-built parking garage, which was to be financed through tax capture revenues. But as the market dropped out on condos, several other options were explored and the city extended the development rights four times since initially granting them, including a one-year extension in December 2009.
Although DVP has stopped looking for development partners the tax credits remain earmarked for a project on the site.
Barry Murray, Dearborn director of Economic and Community Development, said the tax credits would be transferable to a new company, pending approval by the state. Had DVP moved forward with a project different than the initial proposal, it would have had to gone under state review also, he said. He added that state officials usually confer with local counterparts for input on the transfer.
As for Fakhoury, the erstwhile developer said he stands to take a “substantial” loss on the many properties that he once envisioned would serve as key pieces to a broader $170 million district rebirth.
He purchased many of the buildings during the height of the real estate bubble and, in trying to get the parking lot project off the ground, has left them vacant in hopes that he could fill them once the condos provided population density for the district.
On top of the historic devaluation that has hit every property in the country, Fakhoury said he has spent $1.6 million annually in holding costs and taxes on the buildings, something he said won’t be recovered in a sale.
“I’m taking a huge loss, absolutely,” Fakhoury said. “But my banks are telling me I have to do something so I’m between a rock and a hard place.”