Pretty profit belies struggle of property company Solidere

Last week Solidere, the property company tasked with managing the post-civil war rebuilding of the Beirut Central District (BCD), released what would appear to be its 2014 consolidated balance sheet to Beirut’s Daily Star.

I say “appear” because I have been unable to find the figures either on the company’s website or anywhere else online for that matter, although Lebanon Opportunities, the unfortunately named monthly business title, and the French also carried similar, but shorter reports. So for the purposes of this column, I will stick my neck out and assume it’s true.

According to The Daily Star, Solidere’s Lebanese operation oasted a net profit of US$96.9 million, a year-on-year increase of 144 per cent, mainly from land sales. The company confirmed that dividends would be distributed, but the roughly $30m quoted will be paltry compared to the $175.2m paid out in 2009. Still, in what is called “the difficult conditions … economic slowdown and tense political atmosphere”, Solidere Lebanon is still in business.

I used to believe in Solidere and its model of expropriating land in exchange for shares to former BCD landowners. I was convinced it was the only way to get things done in a country where it can take years to approve a national budget and where government and parliament are elastic concepts.

When the BCD properly opened for business in 1999, we all believed that the vision of Solidere’s founder, the late ex-prime minister Rafiq Hariri, of a beautifully rebuilt central Beirut as major destination for Arab tourists would work.

But in January of this year, in this paper. I put the boot in. I argued that Solidere had lost its way, alienating the Lebanese public and business community as well as foreign investors.

There were allegations of it being merciless with tenants, mainly business owners, who had seen their business decimated by the politicisation (some call it militarisation) of the area.

It was a situation not helped by a prolonged economic winter, which started in 2012 and which shows no sign of abating. Solidere had clearly forgotten its pledge to establish a “solid base for prosperity in the city centre through its value-added activities”. The area is a virtual ghost town.

Recent features in The Guardian and The Washington Post, painted an equally bleak picture, implying that what had started as an exciting cornerstone in the post-war healing process, had become a busted flush. As far as I could see, Solidere was out of step with the market.

Developers of luxury apartments in the BCD admitted that business was so slow that they were carrying out just enough construction work to meet permit schedules.

Meanwhile, the company had been peppered with allegations that it exploited its political connections to maximise its clout — bullying, not only tenants, but also landlords whose properties had fallen with the company’s purview. It had, in effect, become a law unto itself.

So in light of all this, how can the The Daily Star give Solidere such a bullish bill of health?

I have a soft spot for the newspaper; I was its feature editor when it was resurrected in the mid-90s by Jamil Mroue, the son of the founder Kamel Mroue, who also established Al Hayat, then arguably the finest pan-Arab newspaper. Back then, The Daily Star wasn’t the finished product, but compared with today, it was The Wall Street Journal. Many of my colleagues went on to have stellar careers at some of the world’s finest newspapers and wire agencies.

It’s no secret that the paper’s new owners include major Solidere shareholders, and it would be hugely naïve of me to believe that the editor shouldn’t take this into consideration whenever Solidere makes the news.

But by publishing Solidere’s results without enquiry or sufficient elaboration, The Daily Star has let its readers down.

And that’s a shame.

Michael Karam is a freelance writer who lives between Beirut and Brighton.

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