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French Version

Beirut's Solidere triples profits in 2004 (Daily Star)

Developer generated $180 million in property sales

Lebanon's largest corporation, Solidere, more than tripled its profits in 2004, according to financial results issued Sunday.

The publicly traded real estate giant, founded by slain former Prime Minister Rafik Hariri, announced a net profit of $54.1 million last year compared to $16.4 million in 2003. Credited with rebuilding Downtown Beirut over the last decade, Solidere said it generated $180 million in property sales, compared to a figure of $87 million for 2003.

Solidere also touted a significant boost in its share price which closed at $8 at the end of 2004, up from $4.875 at the beginning of last year. Solidere closed at $8.90 on Friday, up again from previous lows following Hariri's assassination in February, when the share price slumped by 15 percent.

Solidere largely sees the spike in last year's business to be a result of a new "sales for share program" aimed at increasing trading volumes at the Beirut Stock Exchange and improving the company's stock value.

"All these objectives were substantially achieved considering the wide acceptance of this program by investors," Solidere said in a statement, adding that land sales based on the scheme, which allows partial payment of land in existing stock, had amounted to $73 million.

But looking ahead to 2005, this year's performance will undoubtedly be affected by the current of political turmoil now sweeping the country as well as the murder of the man who embodied and facilitated Solidere's mission.

Hariri was Solidere's largest single shareholder, founding the company in the early 1990's as a multi-billion dollar project to rebuild Downtown Beirut. Despite a series of controversies, Solidere managed to expropriate much of the historic capital, which became known as Beirut Central District (BCD), transforming its ghostly war ravaged avenues into a luxury commercial center.

Critics had charged that the company unfairly compensated original land owners, but in recent years, Solidere flourished, announcing massive new projects and attracting record numbers of tourists who began frequenting Lebanon and the BCD at levels not seen since the outset of the war in the mid 1970's.

But the massive blast that ripped apart Hariri's motorcade has also dealt a solid blow to the project he was most proud of. Over the last several weeks the streets of the BCD have, to a large extent, become abandoned again with local businesses reporting a drop of up to 90 percent in sales amid spiraling consumer confidence.

In bid to lure customers back, BCD shop owners have launched a price slashing initiative to revive the lack of enthusiasm in the market which has further deteriorated following the series of bomb attacks that have been cropping up across the country over the last two weeks.

Hariri's sister, Sidon MP Bahia Hariri, has teamed up with Solidere and its tenants to produce a major entertainment and cultural program to rejuvenate the Lebanese economy and interest in the BCD. The week long event will host a series of performances, exhibitions and activities, including a marathon run to coincide with the anniversary of the civil war in mid April. National carrier Middle East Airlines will also participate by offering half priced fares to Lebanon this month.

But despite the economic downturn and political crisis some analysts, claim that investor interest in Lebanon has not fallen off dramatically. Solidere went ahead with previous plans to list its shares on the Kuwaiti Stock Exchange shortly after Hariri's death - a move that the company expects will further boost trading volumes and its share price.

"There is a determination among Arab investors to continue to investing in Lebanon," said Raja Makarem, the managing partner of Beirut-based Ramco Real Estate Advisors.

"Even after the assassination of Hariri, we heard that Solidere were negotiating some quite large contracts," he said.

Solidere could not be reached for comment, but the company has recently said construction work on its flagship project, a sprawling 100,000 square meter commercial and entertainment complex dubbed the Souks of Beirut, was scheduled to commence shortly.

"I am still seeing interest from investors as if nothing is happening," Makarem added. "And I'm surprised to see the frequency of inquiries still coming in. I feel that people are hoping the outcome of this tragic situation will be very positive for Lebanon."

Beirut 11-04-2005
Habib Battah
The Daily Star

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