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French Version


Property demand boosts Solidere's net profit to $108.5 million for 2005

Real-estate brokers expect gold souk to increase value of shares

The giant real estate company Solidere reported an impressive net profit of $108.5 million at the end of 2005, almost double the figure of 2004.

Solidere, which rebuilt and developed Beirut Central District (BCD) following the end of the Civil War, also disclosed that land sales in the first quarter of 2006 had reached $1.1 billion compared to $218.6 million for the entire 2004.

"Imagine what results we could achieve if we had a real political stability. The prospects of growth in the future are even greater," Solidere chairman Nasser Chammaa said during a news conference at the company's headquarters in the BCD.

He added that the company's sales team is presently negotiating new land sales transactions amounting to $300 million with a number of investors.

Solidere, which was founded by late former Prime Minister Rafik Hariri, is the largest holding company in Lebanon and its shares have dominated trading on Beirut Stock Exchange since the bourse re-opened in 1996.

Arab gulf investors, who reaped huge benefits from the oil boom in the region, have made large property acquisitions in Solidere.

Last week, privately owned Abu Dhabi Investment House announced the launching of a $600 million project involving residential and business facilities in the BCD Beirut Central District, the biggest project of its kind in Solidere.

Chammaa admitted that the talks among leading political factions in the BCD did affect business activity in Solidere, but stressed that the market recuperated quickly.

Most shops, restaurants and offices in the BCD closed few days due to the security measures adopted during the so-called national dialogue.

The assassination of Hariri on February 14, 2005, temporarily affected the business climate in the BCD, but demand on the properties quickly gained momentum following the full withdrawal of Syrian forces who had been stationed in Lebanon for the past 30 years.

Chammaa said that once the gold souk, which covers an area of 100,000 square meters, is completed in the middle of 2007, revenues from rents will reach more than $65 million a year.

Real estate brokers believe that the gold souk will be the main showcase of Solidere and would definitely increase the value of traded shares on the bourse.

Currently, Solidere A and B shares are traded at $22.40 and $22.55 respectively.

"These results are in line with the continuous increase in income generated by land sales achieved during 2005, whereby the value of the sales agreements recognized in the financial statements of last year reached $253 million," a Solidere statement said.

It added that financial statements show a total of $450 million of cash equivalents, treasury shares and notes receivables generated by land sales transactions were concluded before and during 2005.

"As such, the company's portfolio in liquid assets only, the majority of which are expected to be collected over the nest two years, amounts to $1.55 billion, approximately corresponding to the initial capital of the company or $10 to the share," the statement said.

Solidere's rental revenues in the year 2005 reached $20.8 million, compared to $18.6 million in 2004.

"Starting in 2008, such revenues are expected to reach $65 million annually as a result of the commercial activity related to the souks of Beirut project," Chammaa said.

He added that Solidere is expected to repay all of its bank loans by the end of 2006, except for $30 million which is related to two foreign bank loans at low interest rates.

Solidere will soon be calling for a meeting of its general assembly to approve its financial statements. During the meeting, the board of directors will propose to shareholders programs for dividend distribution and share buy-back over the next few years.

Chammaa also said that Solidere plans to expand outside Lebanon, stressing that the company will use its name to manage some of commercial areas in some of the Middle East countries.

Beirut 10-04-2006
Osama Habib
The Daily Star



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