Solidere reverses
losses into profits

Share price closes at above $9

Solidere achieved total audited profits of $75 million in 2016. Excluding Solidere International, profits from local operations reached $63 million.

Solidere managed to turn its losses in 2015 into profits after being able to sign 11 new sales contracts in 2016 for 73,370 square meters (m2) of built up area, at a value of $218 million, averaging $3,000 per built-up square meter. In 2015, Solidere’s losses reached $119 million.

Late payments from investors who had signed land contracts with the company in the past forced Solidere to reschedule their payments. One way this was done was by creating provisions of $27 million in case of further delays in payment.

As part of its policy, which is seen as conservative, the company set aside additional provisions of $17.4 million to cover potential taxes that might be adopted in the future. It also lowered its operating expenses such as maintenance of leased buildings, as well as number of employees. A number of development projects were also halted.

Total paid taxes reached $28 million, including income tax ($19 million), built property tax ($7.5 million), and Value Added Tax ($1 million).

Income from rent remained almost the same as in 2015, at $56 million.

Solidere still has a land bank of 1.7 million built-up m2, valued at $6 billion. Built and leased property assets are worth $1.5 billion. It also has a portfolio of bonds resulting from previous land sales ($564 million), in addition to financial liquidity of $101 million.

The book value of its investments in subsidiaries, especially Solidere International, is $240 million.

"Their actual value, however, exceed $500 million,” the company said.

Debt to banks was reduced from $683 to $606 million in 2016 after the completion of a restructure program for half of bank facilities.

Solidere’s ‘A’ shares rose four percent to close at $9.03 on Thursday. An analyst said that the rise in the share price is not related to the profit disclosure by Solidere.

The traded volume is about 28,000 shares.

The real estate developer saw its ‘A’ share plunge 11 percent to $7.4 on April 24. The sharp drop was the result of a sudden large volume sell-off by a foreign fund, according to a source familiar with the matter. The following day, on April 25, the ‘A’ shares rebounded by 10.4 percent to $8.17.

Solidere said that it will continue with its conservative policy and its projects, which include completing construction of the department store in Beirut Souks, and the infrastructure on the eastern waterfront, especially the tourist port, which, according to a company statement, “will encourage property activity and achieve future profits,” according to a company statement.