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SOLIDEREANNUALREPORT
09
SOLIDEREANNUALREPORT
09
SOLIDEREANNUALREPORT
09
TABLE OF
CONTENTS
Audi
tors
DE
LO
ITT
E &
TO
UC
HE
ARABIA HOUSE / 131 PHOENICIA STREET
PO BOX 961 / BEIRUT / LEBANON
T +961 1 364 700 / F +961 1 367 087
ER
NS
T &
YO
UN
G P
.C.C
.COMMERCE & FINANCE BLDG / KANTARI
PO BOX 11-1639 / BEIRUT 1107 2090 / LEBANON
T +961 1 360 640 / F +961 1 360 634
Cor
pora
te le
gal c
ouns
el
SA
MI
NA
HA
SATTORNEY-AT-LAW
34 CLEMENCEAU STREET / BBAC BLDG
PO BOX 11-4570 / BEIRUT / LEBANON
T +961 1 364 990 / +961 1 374 990 / F +961 1 369 663
Solid
ere
RE
GIS
TE
RE
D O
FF
ICE
SOLIDERE BLDG 149 / SAAD ZAGHLOUL STREET
PO BOX 11 9493 / BEIRUT 2012 7305 / LEBANON
T +961 1 980 650 / +961 1 980 660
F +961 1 980 661 / +961 1 980 662
SOLIDERE
ANNUAL
REPORT
2009
Intr
oduc
tion
Con
solid
ated
Fin
anci
al H
ighl
ight
sC
hair
man
’s M
essa
ge
04
BEIRUT
SOUKS
The
Con
cept
Sout
h So
uks
Bei
rut R
eal E
stat
e M
anag
emen
t and
Ser
vice
sPa
rkin
gO
ther
Fac
ilitie
s an
d Se
rvic
esN
orth
Sou
ks
60
SOLIDERE
SHARES
AND GDRS
Exch
ange
Lis
tings
and
Tic
ker
Sym
bols
Anal
ysis
of S
hare
Pri
ces
Div
iden
d D
istr
ibut
ion
Res
earc
h an
d In
vest
or R
elat
ions
114
BEIRUT
CITY
CENTER
The
Mas
ter
Plan
Solid
ere
14 REAL
ESTATE
STRATEGY
Zaitu
nay
Bay
Gra
nd T
heat
re H
otel
800
Min
a El
Hos
n17
8 Sa
ifi V
illag
eO
ffice
Bui
ldin
gM
ixed
Use
Dev
elop
men
t Se
rvic
ed A
part
men
t Bui
ldin
g Fu
ture
Pro
ject
sH
ospi
talit
y M
anag
emen
t
78
MANAGEMENT
SYSTEMS AND
STUDIES
Man
agem
ent I
nfor
mat
ion
Syst
ems
Urb
an a
nd S
trat
egic
Stu
dies
116
EXISTING
CITY
CENTER
Mas
ter
Plan
ning
Infr
astr
uctu
reD
esig
n an
d B
uild
ing
Spec
ifica
tions
Bro
adba
nd N
etw
ork
Har
dsca
ping
and
Str
eet F
urni
ture
Park
ing
Faci
litie
sO
pera
tion
and
Mai
nten
ance
Land
scap
ing
Cul
tura
l Str
ateg
yH
erita
ge T
rail
Arch
eolo
gy
20
SALE AND
RENTAL
STRATEGY
Sale
sSa
les
Res
ults
Rea
l Est
ate
Leas
ing
Sale
s Pr
oced
ure
/ Pay
men
t Sch
emes
Prop
erty
Mar
ketin
gPr
oper
ty M
anag
emen
tFu
ture
Pro
spec
ts
94
BOARD OF
DIRECTORS
GENERAL
MANAGEMENT
118
WATER
FRONT
DISTRICT
Mas
ter
Plan
ning
Bei
rut M
arin
aLa
nd R
ecla
mat
ion
and
Prep
arat
ion
Infr
astr
uctu
re a
nd P
ublic
Spa
ceLa
ndsc
apin
gD
esig
n an
d B
uild
ing
Spec
ifica
tions
Tem
pora
ry A
ctiv
ities
40
DEVELOPERS‘
PROJECTS
Foch
-Alle
nby
Nea
r B
eiru
t Sou
ksSa
ifiZo
kak
El B
latt
W
adi A
bou
Jam
ilC
ity C
ente
r So
uthe
rn G
atew
ayM
arty
rs’ S
quar
e Ax
isH
otel
Dis
tric
tW
ater
fron
t Dis
tric
tSo
lider
e M
anag
emen
t Ser
vice
s
98
SOLIDERE
ORGANIZATIONAL
CHART
120
RESTORATION
Res
tora
tion
Proc
ess
Rec
uper
ated
and
Sol
d B
uild
ings
Solid
ere
Bui
ldin
gsR
elig
ious
Bui
ldin
gs
54
CORPORATE
FUNDING
TREASURY
AND TREASURY
STOCK
Cor
pora
te F
undi
ngTr
easu
ryTr
easu
ry S
tock
112
FINANCIAL
STATEMENTS
AND AUDITORS’
REPORT
Con
solid
ated
Fin
anci
al S
tate
men
tsN
otes
to th
e C
onso
lidat
ed
Fina
ncia
l Sta
tem
ents
124
As it continues to spearhead and oversee this project, Solidere has brought life toBeirut’s central district, turning it into the finest city center in the Middle East.
The Lebanese Company for the Development and Reconstruction of the Beirut CentralDistrict s.a.l. (Solidere) is a joint-stock company established on May 5, 1994. It is basedon Law 117 of 1991, which regulates Lebanese real estate companies aiming at thereconstruction of war-damaged areas, in accordance with an officially approved masterplan. Its share capital is US$1.65 billion.
The Company issues annual reports to its shareholders. Solidere’s activities throughout2009 are summarized in its fifteenth Annual Report. This annual report includesconsolidated financial statements, which consolidate the accounts of Solidere’ssubsidiaries depending on its shareholdings. Solidere’s shareholdings in subsidiaries atend 2009 were as follows: Beirut Waterfront Development s.a.l. 50%; Beirut Real EstateManagement and Services s.a.l. (BREMS) 45%; Solidere Management Services s.a.l. fullyowned; Solidere Management Services s.a.l. (Offshore) fully owned; Beirut HospitalityCompany s.a.l. (Holding) fully owned; Solidere International Holdings s.a.l. (Holding) fullyowned; Solidere International Limited, DIFC, 1.79%.
Furthermore, Solidere International Holdings s.a.l. owns 37.19% of Solidere InternationalLimited; and Solidere International Limited in turn owns shares in companies involved inseveral prime real estate projects, notably in the Emirate of Ajman (U.A.E), in Egypt, inthe Kingdom of Saudi Arabia and in Lebanon. The consolidated financial statements areprepared and audited in accordance with international financial reporting standards.
MEDITERRANEANGATEWAY
BEIRUT CITY CENTER IS AN URBANAREA THOUSANDS OF YEARS OLD.TRADITIONALLY A FOCUS OFBUSINESS, FINANCE, GOVERNMENT,CULTURE AND LEISURE, IT HAS NOWBECOME A PREFERRED LOCATION FORCITY LIVING, WITH EXTENSIVEHOSP ITALITY FACILITIES.
BE
IRU
T M
AR
INA
A
ND
SE
A P
RO
ME
NA
DE
PH
OTO
BY
KLA
VD
IJSL
UB
AN
CONSOLIDATEDFINANCIALHIGHLIGHTS
SUMMARY OF OPERAT IONS IN US$ M ILL ION
Gross land sales 305.1 256.6Gross rental income 27.3 21.7General and administrative expenses 24.3 19.3Net income 189.2 182.7Sales backlog 428.5 605.5
STOCK DATA PER SHARE IN US$
Earnings 1.2348 1.1781Shareholders’ equity 11.91 11.99Stock price rangeA shares 27.91 - 14.51 39.80 - 16.50B shares 27.66 – 14.38 39.68 - 16.15GDRs 27.85 - 14.00 38.85 - 15.00
F INANCIAL DATA IN US$ M ILL ION
Cash and securities 177.6 297.6Accounts and notes receivable 346.5 296.4Properties held for development and sale 1,124.6 1,274.5Investment properties 311.4 216.8
Retained earnings 266.5 272.3Legal reserves 112.3 94.0Treasury stock (230.7) (168.5)Total shareholders’ equity 1,809.9 1,859.7
F INANCIAL RAT IOS IN %
Gross profit margin 73.80 71.70Return (interest income) on liquid assets 4.60 4.60Debt to equity 0.11 0.13
09 08
SA
IFI
VIL
LA
GE
PH
OTO
BY
KLA
VD
IJSL
UB
AN
SUCCESS IS DRIVEN BYFLEXIBILITY
AND ADAPTABILITY
NASSERCHAMMAA
CHAIRMAN AND GENERAL MANAGER
PH
OTO
BY
DA
VID
PAR
TN
ER
1110
income to Solidere, to supplementother property- related income,income from land sales, rentalincome and income from a variety of other sources.
Solidere draws on the bestplanning andarchitectural talents
Beirut Waterfront Development, with50% Solidere shareholding, has seengreat progress in its main building east of Beirut Marina, accommodatingfurnished and serviced apartmentstogether with a yacht club. Worksstarted on the quayside restaurants and cafés along the marina, withroofs at corniche level forming a continuation to the cornichepromenade. The project is expected to be inaugurated starting in spring2011. Construction of the under-corniche parking to serve this area is underway.
Following our strategy to strengthen our revenue-generating portfolio in real estate properties, we havereactivated a number of real estatedevelopments with the highestinternational standards: a residentialcomplex, a serviced apartment building,an office building, and a boutique hotel.Some of the projects are subject tointernational design competitions.
Several landmark buildings and otherdevelopers’ projects were completedthis year. Further reinventing the citycenter, these and ongoing projectshave been designed to form clustersaround courtyards and gardens, orpaint a modern skyline at the borderwith the Waterfront District.
Outside Beirut, Solidere has leveragedits brand name, unique expertise andtested business model by investing in, advising and managing urbanprojects in the Middle East andaround the Mediterranean Basinthrough Solidere International.
In Solidere International as in Solidere,our financial strength is reflected in a highly liquid cash position, no debt,and a lean cost structure. Thanks toSolidere’s management, the grouphas been able to weather the prevailingworld economic crisis and adapt itsflexible development strategy to thechanged market circumstances. Our strategy and business modelhave been modified in line with neweconomic realities. Our reputation is intact, and SI was profitable in itsthird year of operation.
Al Zorah was profitable in 2009 and will continue to enjoy a solid balancesheet, with enough cash to fund phaseone development, which includesinfrastructure and marine works. In line with current market andeconomic developments, the companyresolved in April 2010 to reduce itscapital by 50%, from AED4 billion toAED2 billion, through returning half ofthe land bank to the Ajman Governmentand repaying AED1 billion to cashshareholders. The scaled down projectretains two-thirds of the primeseafront and mangrove land, with the master plan revisited to reposition the project as a prime destination fortourists and tourist second homeowners, while leveraging the site’snatural attributes.
SI’s net cash outflow for Al Zorah now stands at US$123 million forholding 39% of equity, down from the initial US$512 million for 50%equity holding at inception. This hasbeen achieved as a result of sellingequity to a third party, income earnedfor services rendered to the project since its inception, and the recentcapital repatriation and reduction in project size and objectives. The above mentioned balance ofUS$123 million excludes incomeearned from professional servicesrendered to Al Zorah. Thus, SI’s total current investment in Al Zorahconstitutes 17.5% of the SI paid upcapital of US$700 million.
SI and SI Al Zorah Equity InvestmentsInc. have received AED1 billion from Al Zorah’s repatriated capital.Solidere International will receiveUS$212 million from this transaction,which will increase cash available forSI to US$422 million as of July 2010.This resulting cash balance takes intoconsideration recent deductions made
to capitalize several upcoming SIprojects: US$66 million was investedin Lebanon (Hazmieh), US$30 millionin Cairo (Westown), and US$56 millionin Saudi Arabia (US$45 million forSO-SI, and US$11 million for a newlypurchased plot in Riyadh). We intendto carefully reinvest the availablefunds in future projects that willsupport SI growth and value.
In Egypt, progress on Westown andEastown continues as infrastructuredesign efforts are underway. Two realestate projects were launched inWestown by Solidere International andSODIC, with others planned for launchin 2010, and we expect to achievegood returns in the coming year.
In Saudi Arabia, our focus is on thecore business of land developmentand value creation. SolidereInternational recently purchased asizeable plot of land in Riyadh, whichhas promising development potential.In addition, the company will belaunching a state of the art high endresidential tower on Jeddah’s seafrontlater this year. Solidere Internationalis assessing a number of otherpromising potential opportunities thatmatch the country's local needs,including the introduction of a newmiddle income product.
Solidere’s consolidated retainedprofits as at end 2009 amount toUS$266.5 million, consisting of its share of profits from affiliatedcompanies in the SI group and ofdistributable profits amounting toUS$192 million from its activities in Beirut. In this regard, our board of directors is recommending to the annual general meeting ofshareholders to distribute a dividendequivalent to US$1.15 per share.
To conclude, Solidere continues to be healthy in the middle of troubledregional and international economies,financial and real estate markets. We are confident that our soundstrategies, policies and practices will allow our Company to pursue itsstrong performance and to achieve its objectives in building Beirut citycenter and enhancing its brand name.
Nasser Chammaa Chairman and General ManagerJuly, 2010
lack of liquidity and high levels of debt at a time when markets areexperiencing a credit crunch and cash shortage. Solidere shares didinitially fall to around the US$14 level, following the trend in theLebanese stock market which sawshare values decrease by up to 50%,still much less than some companies in the region. However, the strongfundamentals of the Company and its resilience helped the share pricegradually improve to reach a level ofaround US$28.
The Company’s financial statementsillustrate its profitability and strength,represented by a solid land bank andactive sales, a high value real estateproperty portfolio, quality receivablesand efficient cash management, highliquidity and no long-term debt. Thesefactors combine to give it resilience inthe context of unfavorable political oreconomic circumstances.
During 2009, Solidere realized aconsolidated net income of US$222 million (US$189.2 millionafter income tax amounting toUS$32.8 million). Land and real estatesales amounted to US$305.1 million.Furthermore, a sales backlog ofUS$428.5 million at year end isexpected to be translated in realizedsales in the next three years.
As at end 2009, the inventory of landand projects in progress amounted to US$1,124.6 million, net investmentproperties to US$366.1 million, andinvestment in Solidere International to US$234.4 million as cashcontribution. The latter figure isUS$70 million less than the originalissue price, representing goodwill for the use of Solidere brand nameand identified projects. Solidere doesnot revalue its assets, which are still registered at their book value, in compliance with internationalaccounting standards and bestpractice. This also proved to be a verysafe and conservative policy, since the frequent revaluation of propertiescarried out by some regional realestate companies was disastrous in the crashing real estate markets.
Resulting mostly from developmentland sales, accounts and notesreceivable reached US$346.5 millionat year end. The cash position of theCompany at year end was around
US$177.7 million. Solidere has alwaysmaintained a high level of liquidity to ensure financing most of itsdevelopment projects and otheroperations.
A primary source of reliable income isrentals from the Company’s growingrevenue-generating property portfolio.Solidere earned US$27.3 million in rental revenue in 2009, a figureexpected to double at the full completionof Beirut Souks, an importantelement in our strategy to generate a sustainable income stream.
The creation and preservation ofvalue extends to maximizingCompany profits through theconception and implementation ofinnovative real estate projects, theprovision of quality development andproperty management services, theintroduction of new lines of business,all destined to ensure growingrevenue streams.
The completion and full leasing of theSouth Souks constitutes an importantturning point in the life of Solidere.Visitors now stroll along streets, some covered and some open, shop to their heart’s content, stop and rest in landscaped squares, enjoyrestaurants with special character,attend musical and other events ortake part in street activities.
Beirut Souks are to constitute theheart of economic and tourist activity,contributing to put Beirut on theworld map as a major regional centerfor shopping, work and entertainment.In addition to the financial gain theyrepresent for the Company, the Souksare changing the nature of commercialactivity in the city center and havebecome a major instigator to bring in more investors. This revival incommerce and retail activity is verypromising. And there is more tocome. In the North Souks, theentertainment center and cinemacomplex under construction and thedepartment store will further offerretail, entertainment and hospitality,restaurants or food outlets.
Solidere is initiating hospitalityprojects that will contribute to bring in more shoppers and more visitors to the Souks and to the entire citycenter. This complementary activitywill also become a new source of
Dear Shareholders,
I am happy to report that Solidere and its group are standing on solidgrounds, enjoying a position that maynot be shared by many real estatecompanies in the region. Beirut citycenter has maintained its position asan investors’ destination, despite theworld financial and economic crisiswith its serious repercussions onregional markets. The high rate ofeconomic growth in Lebanon in 2009had a favorable impact on Solidere’sbusiness. The country’s economicindicators improved, domesticconsumption resumed and tourismactivity reached record highs.Construction accelerated and anumber of completed developmentswere inaugurated during the year. Thefirst indicators of 2010 seem to pointto a continuation of these trends.
Beirut city centerhas maintained itsposition as aninvestors’destination
We are persisting in our policy topush forward for the development of Beirut city center, adding value toour land bank by targeting developerswith serious plans, not speculators,and building up a portfolio of realestate assets to enhance our incomestatement and create a sustainableincome stream in the medium andlong term. The adverse circumstancesprevailing in the world since mid-2008have not hindered us from continuingto move forward and produce goodresults, which all boils down to what we have always said: strongfundamentals for the Company.
The strategies adopted by Solidereand its group, to maintain a high levelof liquidity with a practically zero-debtsituation, have helped them withstandthe financial crisis. The group standsat an opposite end from many regional and global companies andcompetitors who are suffering from
VIE
W O
F T
HE
SE
A A
ND
MO
UN
TA
INS
FR
OM
TH
E W
AT
ER
FR
ON
T D
IST
RIC
TP
HO
TOB
YK
LAV
DIJ
SLU
BA
N
REVIVAL OF AWORLD-CLASS DESTINATION
BEIRUTCITYCENTER
The eventual easing of some issues led to a revival of Beirut city center, as Solidere successfully pursued its efforts
to make it a sought-after environmentof the highest quality
PH
OTO
BY
DA
VID
XA
VIE
R
city center, as Solidere successfullypursued its efforts to make it asought-after environment of thehighest quality.
THE MASTER PLAN
Drawing on the site’s natural assetsand rich heritage, the Master Plan isa carefully formulated, detailed,coordinated and phased action planfor the traditional city center and itsmodern extension on the waterfront.
The plan subdivides Beirut city centerinto ten sectors, each with its owncharacter. Some are previous cityneighborhoods brought back to life;others are defined by topography orby new boundaries created within theurban fabric.
site-related plan for a harmoniousurban fabric
The plan involves the recovery andextension of the public domain,constituting almost half of the landarea, with the installation of acomplete infrastructure and thecreation of some 60 parks, gardens,squares and pedestrian promenades.It also provides an urban designframework for restoration and newconstruction.
The plan reflects the site topographyand natural features, protects viewsof the sea and mountains and createspublic spaces, including gardens,squares, belvederes, promenades and trails.
Recognizing the city’s heritage, itunearths layers of its history. Itpreserves surviving buildings andtownscape features and re-establishes the urban fabric andneighborhood structures. It ensuresthe harmonious integration of old andnew, combining tradition withinnovation and control with creativityin architectural expression.
The fruit of ambitious urbanregeneration and waterfrontdevelopment, a fine city center hasemerged in Beirut, accommodating abroad, sustainable mix of facilities witha target floor space of 4.69 million sq m.
Beirut city center enjoys a primelocation in the heart of Lebanon’scapital. Sloping down towards thesea, the site commands fine views ofthe Mediterranean with a surroundinglandscape of mountains and hills. It iseasily accessible from all parts ofBeirut, including port and airport.Major roads converge on it from itseast, south and west, and line its 1.5 km seafront to the north.
Continuously inhabited for more than5,000 years, the site bears the marksof eleven civilizations, ranging fromthe Canaanite to the Ottoman.Beirut’s maritime and trading legacydates back to the Phoenicians. ItsRoman law school was the mostprominent in the Empire. Its urbancharacter and architectural style wereformed during the Ottoman periodand the French mandate, when itbecame the seat of public institutions.
Independent Lebanon grew into abooming service economy, thanks toits inherent assets, educatedpopulation and liberal political andeconomic system. Beirut was a lively,modern cosmopolitan city, its centera focus for regional trade, business,finance and tourism. Growth wasthwarted at the onset of hostilities in1975. With the return to peace andstability, Lebanon’s economyre-emerged in the 1990’s, sustainedby a national recovery anddevelopment program. Massive public investment was coupled withmacro-economic policies designed tostimulate private local and foreigninvestment. While Beirut city centerbenefited from this favorableenvironment, its entire regenerationis being achieved without recourse topublic funds. In 2005, the countrysuffered a great loss with theassassination of former primeminister Rafic Hariri, who was thegodfather of national recovery. To himwere owed the vision and inspirationfor the rebirth of Beirut. In 2006, thecountry suffered from war andinvasion, followed by internal politicalproblems. The eventual easing ofsome issues led to a revival of Beirut
With the prime objective of creating a vibrant city center, it accommodatesa broad mix of land uses, business,public, residential, hotel, leisure and cultural.
The project covers some 191 ha (472 acres) of land: 118 ha (292 acres)as the traditional city center and a73-ha (180-acre) extension reclaimedfrom the sea. Close to 98 ha (242 acres) will consist of public space,of which 59 ha (146 acres) in roads and39 ha (96 acres) in landscaped openspaces. Allocated for development are93 ha (230 acres), including 22 ha (54 acres) of retained, public orreligious property. Built-up area (BUA)guidelines are indicated on theopposite page.
PHA S E ON E 1 9 9 4 – 2 0 0 4
This phase saw the completion ofinfrastructure in the traditional citycenter and part of the treated landfill,as well as marine works, defensestructures, sea promenades andBeirut Marina, with major advances inland treatment and reclamation onthe waterfront. It also saw completionof the detailed sector planning ofexisting and new development areas;landscaping and private undergroundparking design and execution; historiccore restoration; renovation of thebanking district, Starco and Lazariyehcommercial centers; northern WadiAbou Jamil, Zokak El Blatt and Saifineighborhoods redevelopment; BeirutSouks design and undergroundconstruction.
New construction included Solidere’sUN House, Saifi Village, embassycompound and Rue de Francemultiuse complex; Bank Audi,Medgulf and Bankers’ Associationheadquarters; Monroe Hotel, Al-Bourjand Atrium office buildings; theConsulting Clinics, Block 24 and ParkView Realty residential buildings.
Still ongoing real estate projectsinvolved predominantly residentialclusters in Saifi and Wadi Abou Jamil.
RESIDENTIAL
49.8%OFFICES27.7%MIXEDUSE8.5%HOTELS6.3%GOVERNMENTCULTURAL3.8%RETAIL
3.2%RELIGIOUS
0.7%
1716
RESIDENTIAL
49.8%OFFICES27.7%MIXED-USE8.5%HOTELS6.3%GOVERNMENTCULTURAL
3.8%RETAIL
3.2%RELIGIOUS
0.7%
political problems. The eventualeasing of some issues led to a revivalof Beirut city center, as Solideresuccessfully pursued its efforts tomake it a sought-after environment of the highest quality.
THE MASTER PLAN
Drawing on the site’s natural assetsand rich heritage, the Master Plan isa carefully formulated, detailed,coordinated and phased action planfor the traditional city center and itsmodern extension on the waterfront.
The plan subdivides Beirut city centerinto ten sectors, each with its owncharacter. Some are previous cityneighborhoods brought back to life;others are defined by topography orby new boundaries created within theurban fabric.
site-related plan for a harmoniousurban fabric
The plan involves the recovery andextension of the public domain,constituting almost half of the landarea, with the installation of acomplete infrastructure and thecreation of some 60 parks, gardens,squares and pedestrian promenades.It also provides an urban designframework for restoration and newconstruction.
The plan reflects the site topographyand natural features, protects viewsof the sea and mountains and createspublic spaces, including gardens,squares, belvederes, promenades and trails.
Recognizing the city’s heritage, itunearths layers of its history. Itpreserves surviving buildings andtownscape features and re-establishes the urban fabric andneighborhood structures. It ensuresthe harmonious integration of old and
The fruit of ambitious urbanregeneration and waterfrontdevelopment, a fine city center hasemerged in Beirut, accommodating abroad, sustainable mix of facilities witha target floor space of 4.69 million sq m.
Beirut city center enjoys a primelocation in the heart of Lebanon’scapital. Sloping down towards thesea, the site commands fine views ofthe Mediterranean with a surroundinglandscape of mountains and hills. It iseasily accessible from all parts ofBeirut, including port and airport.Major roads converge on it from itseast, south and west, and line its 1.5 km seafront to the north.
Continuously inhabited for more than5,000 years, the site bears the marksof eleven civilizations, ranging fromthe Canaanite to the Ottoman.Beirut’s maritime and trading legacydates back to the Phoenicians. ItsRoman law school was the mostprominent in the Empire. Its urbancharacter and architectural style wereformed during the Ottoman periodand the French mandate, when itbecame the seat of public institutions.
Independent Lebanon grew into abooming service economy, thanks toits inherent assets, educatedpopulation and liberal political andeconomic system. Beirut was a lively,modern cosmopolitan city, its centera focus for regional trade, business,finance and tourism. Growth wasthwarted at the onset of hostilities in1975. With the return to peace andstability, Lebanon’s economy re-emerged in the 1990’s, sustained by a national recovery and developmentprogram. Massive public investmentwas coupled with macro-economicpolicies designed to stimulate privatelocal and foreign investment. WhileBeirut city center benefited from thisfavorable environment, its entireregeneration is being achievedwithout recourse to public funds. In2005, the country suffered a greatloss with the assassination of formerprime minister Rafic Hariri, who wasthe godfather of national recovery. Tohim were owed the vision andinspiration for the rebirth of Beirut. In2006, the country suffered from warand invasion, followed by internal
new, combining tradition withinnovation and control with creativityin architectural expression.
With the prime objective of creating a vibrant city center, it accommodatesa broad mix of land uses, business,public, residential, hotel, leisure and cultural.
The project covers some 191 ha (472 acres) of land: 118 ha (292 acres)as the traditional city center and a73-ha (180-acre) extension reclaimedfrom the sea. Close to 98 ha (242 acres) will consist of public space,of which 59 ha (146 acres) in roads and39 ha (96 acres) in landscaped openspaces. Allocated for development are93 ha (230 acres), including 22 ha (54 acres) of retained, public orreligious property. Built-up area (BUA)guidelines are indicated on theopposite page.
PHA S E ON E 1 9 9 4 – 2 0 0 4
This phase saw the completion ofinfrastructure in the traditional citycenter and part of the treated landfill,as well as marine works, defensestructures, sea promenades andBeirut Marina, with major advances inland treatment and reclamation onthe waterfront. It also saw completionof the detailed sector planning ofexisting and new development areas;landscaping and private undergroundparking design and execution; historiccore restoration; renovation of thebanking district, Starco and Lazariyehcommercial centers; northern WadiAbou Jamil, Zokak El Blatt and Saifineighborhoods redevelopment; BeirutSouks design and undergroundconstruction.
New construction included Solidere’sUN House, Saifi Village, embassycompound and Rue de Francemultiuse complex; Bank Audi,Medgulf and Bankers’ Associationheadquarters; Monroe Hotel, El-Bourjand Atrium office buildings; theConsulting Clinics, Block 24 and ParkView Realty residential buildings.
Still ongoing real estate projectsinvolved predominantly residentialclusters in Saifi and Wadi Abou Jamil.
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PHA S E TWO 2 0 0 5 – 2 0 3 0
This phase will consolidate the urbanfabric in the traditional city center bycompleting Beirut Souks, finalizingthe Saifi and Wadi Abou Jamil urbanvillages and establishing prime newareas in the Serail corridor, HotelDistrict, Ghalghoul sector andMartyrs’ Square Axis. Its focus onhigh-density zones will intensify thethrust towards making Beirut citycenter a favored location for regionaland global businesses, financial andother specialized services andinstitutions, as well as a primeresidential area, tourist destinationand cultural hub.
In the Waterfront District, this phasehas seen the completion of landreclamation. It also involves finalizingmaster planning; infrastructure and landscaping design andimplementation; developing theeastern marina; coordinating with thePort Authority over the developmentof the First Basin; and initiating realestate projects with a distinctarchitectural style. The WaterfrontDistrict is being launched as a modelproject of sustainable, low carbonurban development.
Completed real estate developmentincludes Solidere’s South Souks, withthe North Souks underway; MarinaTowers, Beirut Tower, Platinum Towerand others. Ongoing projects includeZaitunay Bay; The Landmark andother gateway towers on the southernedge of the city center; projects onthe Martyrs’ Square Axis; northeastgateway towers marking the pointwhere the coastal highway terminatesin the city center. Still under designare projects by Solidere for ahigh-end office building and furnishedapartments as well as other realestate and hospitality developments.
SOLIDERE
Solidere was initially capitalized atUS$1.82 billion: US$1.17 billion ascontributions in kind of property rightholders, and US$650 million as cash subscriptions following anoversubscribed initial offering. Afterthe retirement in 1997 of 17,000,129shares representing recuperatedproperties, its capital now stands atUS$1.65 billion.
Solidere’s duration was extended bydecree 13909 of 2005 from 25 to 35years, starting from May 10, 1994, the date of its registration at theCommercial Register.
The Company has established a solidbase for central Beirut prosperitythrough high value-added landdevelopment action, competitive realestate projects and propertymanagement services. Real estateprojects are implemented directly, in joint venture with partners, andthrough or in liaison with otherdevelopers. Solidere offers developersservices ranging from real estate andarchitectural concepts to completedevelopment packages.
As supervisory body and leaddeveloper, the Company controls the pace, components and quality of development. Solidere outsourcesconstruction to focus on its corecompetencies: managing real estateproject development, marketingdevelopment land, marketing andservicing rental properties. TheCompany provides management andoperation services to public utilities,infrastructure, marinas, car parksand landscaped open areas.
In 2007, after amending its bylaws,Solidere expanded the scope of itsactivities beyond Beirut city center.For that purpose, the Companyestablished Solidere InternationalLimited, which was incorporated inDIFC, Dubai. Several urban andwaterfront projects were identified in the Middle East and around theMediterranean Basin, and subsidiarycompanies were established for theirdevelopment. Services provided in2009 to Solidere International, itsprojects and subsidiaries include:master planning, urban design,infrastructure, landscaping and realestate design; project development;legal and corporate structuring;financial engineering; implementation;marketing and sales.
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In reconstructing Beirut city center,Solidere has built on the intrinsicqualities of this exceptionalgeographic and historic site andgreatly enhanced it through soundurban planning and design, newinfrastructure and fine landscapedpublic spaces.
As per its agreement with the Councilfor Development and Reconstruction(CDR), ratified in Decree 5665 of 1994,Solidere finances and executes onbehalf of the State pre-definedinfrastructure works in the traditionalcity center, as well as treatmentworks and sea defense, in return foran allocation of 29 ha of developmentland in the Waterfront District.
Solidere prepares development sitesfor investors wishing to develop realestate properties in central Beirut. Itsactivities in this respect involve townplanning, parceling and urbanmanagement, site preparation,
archeological investigation,implementation of infrastructure,landscaping, hardscaping and streetfurniture. The reconstitution of thepublic domain and the laying ofinfrastructure and utility networks,completed in the existing city center,will extend to the Waterfront District.
MASTER PLANNING
The initial Master Plan was amendedseveral times in the light of moredetailed urban studies and sectorplans. The latest Master Plan updatesregarding the existing city centerwere issued in Council of Ministers’decrees in 2006.
The Master Plan regulates andcontrols project developmentsthrough policies and generalregulations aiming at achieving themain objectives of the reconstructionand development of the city center.Several amendments to the Master
FLEXIBLEPLANNING,HUMAN SCALEDEVELOPMENT
Plan were approved in the past years,in response to more detailed urbanand traffic studies, new archeologicaldiscoveries, necessities related to thedistribution of areas between publicand private domain, and otherreasons related to specificdevelopments and to land swapsbetween the State and Solidere.
Two other amendments to the MasterPlan await Council of Ministers'approval after being approved by theMunicipal Council and the HigherCouncil for Urbanism in 2007. The firstamendment clarifies and confirms theinterpretation of several issuesmentioned in the earlier amendmentsand approved in decree 5714 of 2001,in the light of the new NationalBuilding Code of 2005, the progress ofworks and other archeological issues.The second amendment relates tosectors A and D of Beirut city center(See Waterfront District).
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Given the recent seismic activity in the world, Solidere is currentlyinvestigating even higher standards,especially for future developments on reclaimed land, whereby theCompany’s goal is to establish acriterion of 0.3 g acceleration. A teamof eminent seismic engineers hasbeen assembled to develop the newbasis for design standards, which will be communicated in all futureDevelopment Briefs.
S U S TA I NA B L EENV I RONMEN TA L S T R AT EG Y
Solidere’s present standards are inline with the concept of greentechnology, with emphasis onrecycling, environmental remediationand energy conservation.
Solidere is extending its sustainabilitystrategies to cover its real estatedevelopments by incorporatinginternationally recognized greenguidelines that have already beenrecommended and applied in crediblerating systems. The main purpose of this initiative is to enhanceenvironmental standards, reduceenergy demand, reduce operation and maintenance costs, and improvereturn on investment of all Solideredevelopments. This program will beachieved by implementing effectivestrategies to improve the projects’performance in terms of, but notlimited to, transportation aspects,vegetation schemes, rain watermanagement, water management,heating/cooling systems, energyconservation, material use anddifferent indoor environmental health and comfort aspects.
Solidere is actively working on newsustainability and energy conservationstandards. While these will continueto be treated as ‘advisory’ for alldevelopments in the existing citycenter, they will be issued as‘mandatory’ standards andregulations for all developments in the Waterfront District.
By going ‘Green’, Solidere will besupporting the basic sustainabilityconcept of meeting present needswithout compromising the ability offuture generations.
BROADBAND NETWORK
Solidere obtained in 1998 abuild-and-operate license forbroadband distribution of a convergedIP network including high speedinternet, internet protocol TV (IPTV),video on demand, video conferencing,data center facilities and virtualprivate networking (VPN) forcorporate clients. In 2006, theCompany signed an agreement withOrange, a member of the FranceTélécom group, for the building andoperation of a fully IP network, usingadvanced telecom technology basedon a fiber-optic backbone with dualconnection to each building in Beirutcity center. Solidere BroadbandNetwork deployment was completedby end March 2007, allowing theprovision of services to start inSeptember of that year.
Solidere, under its unifiedcommunication network, is able toprovide data (internet) and video (TV),operated and monitored from thenetwork operation center (NOC) thatis hosting its data center, call center(IPCC) and other equipment andservers for the different services.Beirut city center is thus beingtransformed into a 24-hour IT zonecapable of attracting multinationalcompanies and other residents whowill benefit from the provision ofmultimedia and broadbandcommunication services.
In addition to the internet and VPNservices provided at the completion of the network, Solidere BroadbandNetwork launched in March 2008 itsIPTV service for Beirut city centerresidents. This project offers greatervalue to customers by providingseamless delivery of high-qualityvideo, the most promising avenues for value-added services. Data centerdeployment was completed and thedelivery of web hosting, applicationhosting, exchange, storage andback-up services will start in the third quarter of 2010.
HARDSCAPING ANDSTREET FURNITURE
Hardscaping and street furniturewere upgraded at Solidere’s expensebeyond the agreement with the State.Street and sidewalk paving, as well asstreetlights, were designed to matchthe character of each sector.
The gradual upgrading of sidewalksfrom concrete to granite paving andcurbs will cover Mina El Hosn,Bachoura and Saifi.
Solidere undertook the integrateddesign of street furniture, signageand public area lighting, andcommissioned public art for the citycenter. Plaques with new postal codes were installed on completedbuildings. Development controls weregenerated in a public domain masterplan established with the help ofJean-Michel Wilmotte (France) andZiad Akl. Street furniture based onthe new designs includes street namesignage in stainless steel, benches,telephone booths, street kiosks, busshelters, café seating enclosures andadvertising billboards. As a pilotproject, Beyhum Street was equippedwith new benches, bollards and wastebins, with street furniture to begradually renovated everywhere elseaccording to the new designs. Thesignage manual prepared by Soliderereceived Municipality of Beirutapproval. Street name plates wereerected in the conservation area andSaifi. Pedestrian way-finding signage,65 panels in total, was installed in allareas. Advertising billboards for thepublic domain were delivered to theMunicipality, which leases them outfor operation. Solidere installed large advertising billboards on private property.
A new family of street furniture iscurrently under design by Marc Aurel(France) for the Souks district. TheWaterfront District will also have itsown unique and marine-stylevocabulary of street furniture.
INFRASTRUCTURE
Solidere completed and delivered tothe State the vast majority of works inthe existing city center includinginfrastructure and roads. TheCompany also delivered secondaryinfrastructure, public spaces andgardens in various city center areasand is pursuing studies andimplementation for other such works,along with the progress of real estatedevelopment.
Beirut city center has a 3.6-km ringroad, 8.4 km of primary roads, 16.6 kmof secondary, tertiary and pedestrianstreets. Expansions to the prewar gridaccommodate traffic and facilitate landparceling for real estate development.
Three major axes form the ring roadsystem: George Haddad Street to theeast; the widened Fakhreddine Streetto the west; General Fouad ChehabAvenue to the south, with a bridgedoubled in capacity and newinterchanges and underpassesproviding fast access to airport, port,east, west and central Beirut. TheMartyrs’ Square Axis links DamascusRoad to four major east-westboulevards: Amir Bachir-Gouraud,Weygand, Adnan El Hakim and Portstreets, the latter widened andextended towards Trieste Street.Maarad-Allenby, Foch and the newGeneral François El Hajj Street, arenorth-south axes planned to beextended to the Waterfront District.The new east-west Professor WaficSinno and Mir Majid Arslan avenuesform a grand boundary between theexisting city center and the WaterfrontDistrict. With its western segmentoperational and connecting directly to the citywide system, the city centercorniche is to skirt the District alonga broad, terraced, pedestrianesplanade. New local streets werecreated in Wadi Abou Jamil.
Bechara Al Mouhandess, created as apedestrian street east of Maarad,along restaurants and cafés that usehalf of its six-meter width for outsideseating, was extended to the AmirAssaf mosque and along St GeorgeGreek-Orthodox and St ElieGreek-Catholic cathedrals, to form apromenade overlooking HadiqatAs-Samah (Garden of Forgiveness).
Two major road modificationsproposed by Solidere have beenapproved and ratified in Decree 16163of 2005. One is the road linking thenorth of Martyrs’ Square to TriesteStreet and aiming to preserve the Tell archeology site. Michel Macary(France), in coordination with DarAl-Handasah and Solidere, completedthe concept design for the crossingfrom Byblos Street, which includesbridging part of the ancient Tell areain order to preserve archeology. Theother modification is an improvementof the George Haddad-Fouad Chehabjunction, creating grade separation at the intersection. The two projectsawait committing funds from the Stateor from Beirut Municipality.
The city center water supply networkconsists of 30 km for drinking waterand 38 km for irrigation. The waterdisposal system comprises a sewagepumping station, 28-km sewage pipingand 26-km storm water drainage.
Solidere implemented civil works,including culverts, relating to powersupply, and installed the 66 and 220 KV power cables, a 220 KV linkbetween the Beirut Pine Foreststation and the city center, and a 240 MW substation transforminghigh-tension power transmitted byElectricité du Liban (EDL) intomedium voltage; local transformersin turn convert it to low voltageelectricity for domestic use. Mostareas of the existing city center wereequipped with duct banks for low andmedium voltage cables, with worksnow proceeding in north Saifi.
Public lighting was installedthroughout, with necessary meters,low-voltage cabling, lighting fixturesand feeder pillars. Tunnels wereequipped with lighting, and providedwith stand-by generators, control and safety systems. Civil works wereimplemented for telecommunicationsnetworks, with duct banks for lowcurrent networks, cable TV andtelephone services.
DESIGN AND BUILDINGSPECIFICATIONS
Solidere’s vision of a sustainable city isbehind its continuous efforts to abide,in all the facets of its developments, bythe highest standards in design, safety,construction, urban planning,environment, etc. These standards aremandated in all Development Briefs;and in that regard, the Companyregularly restudies and updates itsstandards according to internationalbest practices.
QUAL I T Y CON T RO L
Initially managed on a project-by-project basis, quality control is nowcentralized into a Solidere divisionwith the goal to ensure that all Beirut city center developments meet, from inception to completion,the Company’s mandated qualityguidelines as well as internationalstandards for fire, safety, seismic and accessibility for the disabled.
The most important decisionsregarding the quality of a developmentare made during the design andplanning stages, when componentconfigurations, material specificationsand functional performance aredecided. Once construction is underway, quality control consists ofcarrying out inspections andcoordinating between the variousexecutors of a project to ensurecompliance to the original design,planning decisions and standards of material and workmanship.
S E I SM I C S TANDARD S
From the onset, and after carrying out extensive land surveys andearthquake vulnerabilityassessments, Solidere’s Beirut city center development guidelinesspelled out high-standard seismicsafety measures. These includedearthquake-proof foundations for all new buildings and bridges, andwhen possible in restoration activity.
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PARKING FACILITIES
Among underground public parkingfacilities provided by Solidere, theBeirut Souks car park has a capacityof around 2,500 spaces. All fourunderground levels of the south partare operational with around 2,100spaces for public use, while the northpart services companies operating inBeirut city center. An additional carpark with a capacity of around 400spaces is planned under Khan AntounBey Square in the North Souks.
Serving the Foch-Allenby area are thefour-level Weygand Street car parkproviding 108 spaces beneath a gardenand the 320-space Solidere car parkbelow Harbor Square on block 93.
Initially designed by Dar Al-Handasah(DAR) for the Council for Developmentand Reconstruction (CDR), andtendered out as BOT projects, two carparks under public property inMartyrs’ Square and near the GrandSerail have not yet been implemented.
The winning team of the Martyrs’Square Axis international urbandesign competition, integrated a newconcept for the first undergroundparking structure within thelandscape scheme for the square.Requested adjustments of DAR’sdesign to meet the Greek team’sscheme requirements includeincorporating the Petit Serail remainsand preserving them with accessfrom the parking entrance. Solideresubmitted the Greek team’s plans toCDR for re-launching the project.Beirut Municipality is reexaminingmodalities for executing the project,by funding it internally, negotiating aBOT contract with Solidere, ortendering it out on a BOT basis.
Beirut Municipality approved inprinciple The Landmark developer’sproposal to execute the car park underRiad El Solh Square on a BOT basis.
Pending completion of sufficientspace underground, several vacantlots were assigned for temporarysurface parking. They provide up to3,000 car parking spaces servicing
tenants, residents and visitors of thecity center. Surface car parks in theeastern section of the WaterfrontDistrict provide another 3,000 parkingspaces with free shuttle service to theexisting city center. Some temporarysurface parking lots have ceased orwill soon cease to exist to make roomfor development. Lot 1520 Bachouraparking near Riad El Solh Squareclosed off in April 2010 for the start ofconstruction works in The Landmarkproject. Lot 1398 Mina El Hosn washanded over to the new landowners atthe end of 2009. Lot 1523 Bachouraparking, near Lazarieh building onAmir Bachir Street, is still functioning,but the land will be handed over to thenew owners upon their request. Thesame fate awaits the lot 1502 Marfaaparking on Trieste Street.
OPERATION ANDMAINTENANCE
Solidere operates and maintains thecompleted infrastructure andreconstituted public domain untiltheir delivery to the State. Theseservices cover tunnels andunderpasses, roads and sidewalks;street furniture, traffic lights andstreet lighting; utility ducts andmanholes, sewage pumping stationand network, storm water networks;irrigation station and network, treesand landscaped open spaces.
As per Law 117 of 1991 and theagreement with the State, ratified indecree 5665 of 1994, infrastructureand the public domain are to bedelivered upon completion to CDR,representing the State. All the works have been delivered to thepublic authorities. They includeinfrastructure networks, roads,tunnels, sidewalks, street furniture,signage and lighting. Electricitynetworks were delivered everywhereexcept for north Saifi, Bachoura andTrablous Street. However, Solidereremains in charge of the irrigationnetwork, street trees and open spaces.
Solidere documents damagesoccurring in Beirut city center,including those due to car accidentsor vandalism acts. The Companysends reports to the Municipality tothat effect, with lists of needed
repairs, mentioning whether thedamages result from accidents orfrom wear and tear, and offering toexecute repairs at cost.
Since 2006, the Municipality has beensubcontracting the operation andmaintenance of handed over works,under Solidere’s supervision. Thestorm water network is maintained by the Municipality, with Solidereperforming quality control on thework done by the contractors andsubcontractors. Solidere will continueoperating the network and interveningto resolve sewage pumping stationproblems in the case of emergencies,until such time as the BeirutAdministration (Mohafazat) assignsan operation and maintenance teamof its own.
Solidere continually upgrades its sitelogistics services: cleaning, pestcontrol, safety, security and trafficmanagement.
In a city center image improvementprogram, undertaken in collaborationwith participating property ownersand users, Solidere is implementingthe following services, to supplementthose provided by the Municipality:surveillance security; door-to-doorwaste collection; street and sidewalkwashing and street furniture cleaning;pest control; maintenance of openspaces, trees and planters; and streetdecorations during holidays.
Solidere is installing a traffic controlsystem that, in addition to phasingtraffic lights, monitors driversviolating speed limits. Control panelsand cameras were installed at twointersections, with others to follow.
The Company is also installing aCCTV surveillance system to cover all sectors in the city center. The firstand second phases of the system,covering the Foch-Allenby, Saifi,Zokak El Blatt, Bachoura, Wadi AbouJamil, Beirut Souks and BeirutMarina areas, have been completed.An automatic number platerecognition system (ANPR), understudy for installation at all accesspoints in and out of Beirut city center,was put on hold pending the issuanceof new traffic laws and regulations.
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LANDSCAPING
With green public spaces andpedestrian promenades covering 39 haof land, the city center, representing10% of municipal Beirut, will containhalf of the capital’s green areas.Solidere has been vindicated in itsquest for quality and uniqueintegration of public domain designaccompanied by public art.
Fine public spaces have exerted asignificant impact on developmentland sales. Encouraged by theMediterranean climate and lifestyle,café society and social promenadingwithin public spaces have made thecity center a most active destinationfor Beirutis as well as for visitorsfrom the rest of the country, from the entire Arab region and the wider world.
The public domain is designed tocomprise around 60 parks, gardens,squares, pedestrian areas, quaysidesand seafront promenades, the mostimportant of which is the watersidecity park. Pedestrianized areas, widemedians and streets lined with trees,shrubs and seasonal plants,contribute in the creation of thedistrict’s distinctive character. Thevarious projects are in differentphases of completion.
Among completed spaces: GibranKhalil Gibran Garden facing UNHouse, featuring sculptures by SalwaRawda and a bust of Gibran by RudyRahmé, Riad El Solh Square with astatue of the first prime minister ofindependent Lebanon, Debbas Squareand Omar Daouk Square, with a bustof the statesman, all designed byMohamad Halawi; the Roman BathsGarden and public space, and thelandscaped space along the CDRstairs, both designed by InterScène(France) with Maurice Bonfils.
Also completed: Fouad ChehabGarden overlooking the city, by DidierDrummond (France); Wadi AbouJamil Garden by Thibaud Urbanismeet Paysage (TUP, France) with RafikKhoury and Partners; Saifi Squaredesigned by Ilya StevensonConsultants; a number of private-access spaces in Saifi, Zokak El Blattand Mina El Hosn; Samir KassirSquare, featuring a Louis Debré(France) sculpture, designed by
Vladimir Djurovic LandscapeArchitecture; the latter upgradedAmir Amin Square in Bachoura, withits Salwa Rawda sculptures, byadding a water feature.
Adjoining public and religiousbuildings are landscaped spaces: inand around Nejmeh Square; threegardens designed by MohamadHalawi, one between the Evangelicalchurch and National MusicConservatoire, one facing theMunicipality and one cascading underthe Grand Serail, below which, atstreet level, is Omar Onsi Garden bySemaan Kfoury with a sculpture ofthe artist by Nabil Helou; near St Eliechurch in Wadi Abou Jamil by TUPfeaturing a sculpture of PopeJean-Paul II.
The year 2009 saw the completion ofMina El Hosn Square, the culminationof a series of south-to-north openspaces forming the Hotel Districtcorridor. The square, falling betweenPlatinum and Beirut towers, wasdesigned by Vladimir DjurovicLandscape Architecture followingGustafson-Porter’s (US-UK) conceptdesign for the corridor.
Rafic Hariri Sculptural Garden, alsodesigned by Vladimir DjurovicLandscape Architecture, wascompleted by Target in December2009. The sloping garden with a waterfeature is being upgraded from itsoriginal design in basalt stone. Asculpture by Meguerditch Mazmanian(Russia) represents the late primeminister walking in the garden. Workswill begin on the Rafic Hariri MemorialPlaza along Martyrs' Square, designedby HAR Etudes (France) with OgerLiban, following building permitissuance by Beirut Municipality.
The design offered by VladimirDjurovic Landscape Architecture forthe Gebran Tuéni Memorial Garden,along Weygand Street, was revised tosafeguard future public transportalignments and provide access to LeGray Hotel. The design includes textin paving from Gebran Tuéni’s articlesand a standing monument monolith.Following CDR approval, concreteworks were completed; the projectwas delayed due to archeologicalfinds, but is scheduled for completionby end August 2010.
In Wadi Abou Jamil, block 65,adjoining Royal Hotel and Resorts, is under design by the developer andwill shortly go to tender. Block 63designed by TUP should also shortlygo to tender. Bab Idriss Square,designed by Olivier Vidal (France),space planner of Beirut Souks, is the site of the ancient arcaded streetthat led to the Roman Hippodrome. It incorporates 15 basalt stonesculptures by Xavier Corbero (Spain),evoking figures on their way to thehippodrome.
Other works in progress, whileaddressing damages suffered duringthe 2006-2007 sit-ins, also aim atimprovements. Debbas Square iscurrently being redesigned by Jean-Marc Bonfils. The new concept, whichfocuses on blending the square withits surroundings and prioritizingpedestrian passages to and from thesquare, has been completed, and thedetailed design is being developed.The square is conceived as a multi-use space to house events, withcontemporary art pieces and a waterfeature reviving and promoting thecultural heritage of the site. TheRoman Baths Garden and publicspace are being redesigned through a landscape competition, tocomplement the archeology andhistory of the site, enhance viewing of the remains and allow its use as apublic performance venue. Gillespies(UK) was the winner among fourinternational competitors, and theirtask will include a concept design forOmar Daouk Square. Gibran KhalilGibran Garden and Amir Amin Squarewill be restored and refurbishedaccording to the upgraded design.
Solidere dedicated a 2.3-ha site, onwhich it relinquished its developmentrights, to create Hadiqat As-Samah(Garden of Forgiveness). On anarcheological site overlooked byseveral places of worship, the designby Gustafson-Porter evokes Beirut'snumerous historical layers andLebanon's varied landscape. Solidere has completed all streetsand passages around the garden, between Al Amin mosque and St George Maronite cathedral,between St George Greek-Orthodoxand St Elie Greek-Catholiccathedrals, leading to Amir Assafmosque; the western terrace wall onBechara Al Mouhandess Street; and
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Serail corridor and Souks District, arethe main components of the firstphase of this project. A later phase,starting with Jean-Paul II Square, willprolong this walk into the OttomanWall Walk in the Waterfront District.
Zeitouneh Square hardscaping andcivil works are in progress. Designswere received by mid December 2009for All Saints’ Square, ShorelineGardens, the Santiyeh Promenadeand Garden. The design for theSantiyeh Garden was approved bySolidere and the concerned religiousauthority at the end of March 2010.Construction works are planned to start in August 2010 and becompleted after 18 months.
The design by Machado and SilvettiAssociates (US) of Castle Square(block 94) integrates a promontorywall at the citadel level, withpedestrian passages offering fineviews of the square and of the PortFirst Basin. Solidere completed theconsolidation and restoration of thecitadel. Tender documents were
the belvedere south of St GeorgeGreek-Orthodox cathedral.Gustafson-Porter also completed the concept design of the garden on municipal land adjoining St ElieGreek-Catholic cathedral. The projectis to be presented for Municipalityapproval before proceeding furtherwith the design.
Harbor Square, located on block 93 over part of the ancient harbor,includes part of the reconstructedharbor wall, together with waterfeatures and extensive pergolashading. The detailed design wascompleted by Gustafson-Porter. Civil works are now in progress and are to be finished by endSeptember 2010.
Gustafson-Porter also designed theOld Shoreline Walk, a sequence ofconnected spaces representing thesubmerged old shoreline. All Saints’Square, Shoreline Gardens (blocks 11and 25), Zeitouneh Square andSantiyeh Promenade and Garden,respectively in the Hotel District,
approved by the Company at the end of April 2009. Civil works weretemporarily placed on hold due to archeological finds, the mostimportant of which are beingincorporated in the design of thesquare. The design features a waterpool representing the sea, set belownew massive stonewalls symbolizingthe harbor wall and original belvedere.
The adjacent Belvedere Park (block95), which overlooks the ancient Telland includes a garden with historicremains, will allow open views to the sea. Machado & Silvetti aredeveloping the design based on theDirectorate General of Antiquities’approved concept.
The winning Greek team’spresentation for the Martyrs’ SquareAxis competition included a conceptdesign for the square’s landscaping.The design will evolve in coordinationwith Solidere and consultantsworking on the design of surroundingbuilding lots and open spaces. Thewinning team completed the
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HERITAGE TRAIL
After a long period of gestation,halted by the 2006 summer war andsubsequent events, the Heritage Trailwill finally be implemented in 2010.Along with the proposed Beirut CityHistory Museum on the Ancient Tellnorth of Martyrs’ Square, it will be acentral component in the culturalstrategy for Beirut city center.
Marked out by bronze medallionsgrouted into the sidewalk, the trailwill link archeological sites, historicpublic spaces and heritage buildingsover a 2.5 km walking circuit in thehistoric core, revealing many layers ofBeirut’s history and development.Large general or district panels andsmaller monument panels are madefrom glazed lava-stone tiles mountedon stainless steel stands. With textsprepared in three languages (Arabic,French and English) these panels areillustrated with historic maps,photographs and drawings.
The final Heritage Trail is planned tostart and finish at the City HistoryMuseum. In an initial phase, pendingcompletion of the museum, the circuitwill start at the Beirut Souks, whichretain the 2,500 year-old ancientstreet grid and Ottoman access gates,and incorporate several archeologicalremains including the Phoenico- Persian quarter, the city wall andmoat, the restored Mamluk ZawiyatIbn Iraq and Majidiya mosque. ManyByzantine period mosaics weresalvaged during archeologicalexcavations there. One has beenreconstructed and laid in the modernsouks close to its original alignmentwithin the colonnade of the Romanstreet that once led through BabIdriss, gateway to the Hippodrome in Wadi Abou Jamil.
Leaving Beirut Souks, the trail leadssouth past Amir Munzer mosque andonto the Roman Baths Garden andpublic space, through Riad El SolhSquare to the Grand Theatre and thesouthern end of the colonnadedMaarad Street. Between this streetand St George Maronite cathedral,there is an overlook to the RomanCardo Maximus. The trail then leads
to Nejmeh Square, the FrenchMandate Etoile, Parliament building as well as the St GeorgeGreek-Orthodox and St ElieGreek-Catholic adjacent cathedrals.Behind these lies the Nouriya chapelat a focal overlook to the plannedHadiqat As-Samah. The trailcontinues to the restored Al Omarimosque. It passes by the BeirutMunicipality building of 1925 and the16th century Amir Assaf mosque toMartyrs’ Square, the Canaanite Telland site of the Beirut City HistoryMuseum. By way of Castle Square,historic Foch Street and HarborSquare, site of Beirut’s ancient port,the trail traverses the Foch-AllenbyDistrict to regain Beirut Souks onTrablous Street, at the site museumof the Phoenico-Persian Quarter.
ARCHEOLOGY
Extensive archeological excavationand research of sites throughout thecity center has yielded evidence oncivilizations spanning 5,000 years.Solidere has supported the rescuingand preservation of this heritage andfinanced the teams working under thesupervision of the Directorate Generalof Antiquities (DGA).
Research proceeded in 2009 on eightarcheological sites in public spaces,development lots or built lots underrestoration. The documentation,digitizing and evaluation of the resultsprovide data for a new synthesis ofBeirut’s urban history. The latesthistorical insights are integrated inthe information panels of theHeritage Trail.
New discoveries have confirmed the location of Roman Beirut’sHippodrome, a large temple platform,a cemetery outside the city wallspanning the Omayyad to Ottomanperiod, as well as the southwesterntower of the Crusader castle.
Excavations in the Wadi Abou Jamilarea yielded vestiges of the ancientHippodrome where chariot races tookplace and large club buildings hostedthe competing team members. Thearcheologists have uncovered thestarting area of the horse-track in the
preliminary design of the square,together with the concept design ofthe underlying car park. The northernpart of the Martyrs’ Square Axis willbe developed at a following stage.
Upcoming projects include the BasselFuleihan Memorial currently in design,lighting upgrade of the Samir KassirSquare, street furniture upgrade,festive and open space lighting andpublic art strategies.
CULTURAL STRATEGY
Since the mid 1990s, Solidere hasbeen the primary instigator of therestoration of heritage buildings andthe funding of archeologicalexcavations in Beirut city center. TheCompany also initiated, more than adecade ago, the planning and conceptdevelopment for several significantcultural projects, including the BeirutCity History Museum and the HeritageTrail. In 2005, these efforts began to coalesce into a tangible CulturalStrategy, prepared with theassistance of Cultural ConsultantsGaia Heritage, and focused aroundthe Martyrs’ Square Axis from thering road gateway to the Port FirstBasin and beyond. The strategy isgradually bearing fruit, with financialsponsorship being made available tothe Ministry of Culture by Oman forthe House of Arts and Culture and byKuwait for the City History Museum.
Quartier des Arts in Saifi Village has reached critical mass and is now destined to evolve into a creativeindustries quarter. By popular demand,the Dome will be retained as alandmark cultural venue. A site hasbeen allocated on Martyrs’ Square forthe Hariri Library. The Company hasinitiated an extensive public artprogram and discussions are ongoingfor a proposed National Theater andother potential museum projects inthe city center.
In addition, the city center’sarcheological parks and many otherpublic spaces incorporatingperformance venues and public artthemes are all important componentsof the Cultural Strategy.
eastern end of Wadi Abou Jamil. Thestarting gates were built in a convexalignment ensuring equal distance forall chariots to the beginning of thespina or central barrier. Parts of thespina and bases for seating terraceson either side of the track have beenunearthed on lot 1370 Mina El Hosneast of Wadi Abou Jamil Garden. Thesite has been classified by theMinistry of Culture, and Solidere hasoffered to run an internationallandscape design competition for thishippodrome park, and to implement iton behalf of the Ministry.
In the vicinity of Riad El Solh Square,burials spanning the Omayyad toOttoman period confirm that the site,first settled in the Roman period, was
to become a cemetery after the citywall defined the open area justoutside the city gates, Bab Dirke andBab Yaqoub. Below the cemetery, thecorner of a large temple platform wasexposed. Subject to agreement withthe DGA, some of these vestiges areto be incorporated within the variousconstruction projects.
Solidere continues the integration ofarcheological sites within the cityfabric. Elements of the ancient harborwalls are to be incorporated in KhanAntoun Bey Square and in HarborSquare (block 93). The landscaping ofCastle Square (block 94) aims atintegrating the remains of a moatbetween the city wall and thefoundations of the southwestern tower
of the castle. A second phase of thisproject, Belvedere Park, is ready forexecution. The main focus remainsHadiqat As-Samah and the HeritageTrail. The City History Museum nearthe ancient Tell, to be the starting andending point of the Trail, will bring tolife Beirut’s heritage and celebratemajor finds.
Articles and lectures of thearcheologists that worked in theBeirut city center continue to bepublished in scientific journals, and anumber of young Lebanese andforeign archeologists have completedtheir dissertations attempting tosynthesize part of the city’s history.
5,000year old cityspanningeleven
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B E I R U T S O U K S S U N K E N C O U R T Y A R D O F T H E M E D I E V A L W A L L A N D M O A T
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the climax of
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WATERFRONTDISTRICT
When completed, it will contain a city waterside park, two marinas, corniche and quayside promenades, cycle and jogging trails
and 29 ha of development land
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The plan recognizes Beirut as thepremier visitor destination in theregion and aims at turning theWaterfront District into a mixedleisure, residential and commercialdistrict that is also the destinationand climax of Beirut’s citywidewaterside attraction, its cornichedrive and landscaped promenade.
Upon completion of the Beirut Marinatown quays, corniche promenade,eastern marina quayside and BeirutPort First Basin promenade, the citycenter will provide a 3.5-kmuninterrupted extension of the Beirutshoreline, more than four times thearea of seafront public spacecurrently available on the entireBeirut peninsula. The terracedcorniche promenade, over 1.3-kmlong, with a width varying between 45 and 110 m, will be a socially activepedestrian arena, with views to theMediterranean, St George’s Bay andMount Sannine beyond.
In sector A, leisure, sporting andtourist activities predominate. Decree15803 of 2005 lists an outdooramphitheater in the waterside park;infrastructure and installations forFormula One racing; buildings for theyacht club and related services,hotels, tourism, exhibition centers,sports courts, restaurants and cafés.The proposed Formula One in-citycircuit has now been abandoned,
freeing both the waterside city parkand the street network on theWaterfront District from manyonerous constraints. The yacht clubbuilding was subject to a maximumheight of 11 m above corniche level,later increased to 13 m by Council ofMinister’s decree 16546 of March 9,2006. No permanent construction isallowed on the marina quays andbreakwater, apart from infrastructureor buildings relating to portmanagement, such as customs,immigration, petrol station or carparks. Restaurants and shops built astemporary structures along the townquay are not to exceed the height ofthe corniche promenade above.
Planned as an exemplar of modernsustainable, low-energy development,sector D is a multiuse district with awide range of commercial and retailservices, offices, tourism activitiesand hotels, a convention center,exhibition and cultural facilities,together with extensive residentialdevelopment. Provisions relating todevelopment on Beirut Marina arealso applicable on the eastern marina.
Streetwall controls are applied tomain street and boulevard frontages,and mandated view corridors arecreated to preserve sea and mountainviews. Building heights and envelopecontrols ensure a careful distributionof floor space. The majority ofdevelopment is at medium density,with some 16 high-rise sites (90, 120,160 and 180 m height) planned fordistinctive locations, with landmarkbuildings framing spectacular viewsto the sea and mountains. The roadwidening and addition of new roads inthe sector plan result in larger areasdedicated to public domain. The totalbuilt-up area remains unchanged,with no increase in developmentareas allocated to Solidere.
PO S T- 2 0 0 5 U R BAN P L ANN I NG
In 2005, as the land reclamationprocess entered its final phase,substantial investment interest wasexpressed in the Waterfront District.
Solidere exercised its right to transferin excess of 100,000 sq m of BUA to the Waterfront District, tocompensate for reductions in thedensity of infill development inexisting residential areas and around
Martyrs’ Square. The Company alsodeveloped a more optimistic outlookfor the office market, with improvedopportunities to attract internationalcompanies to Beirut. Together withother changing perceptions of thecity’s regional potential, these factorsled to a proposed master planamendment for the WaterfrontDistrict involving higher density, with more and higher towers, and the creation of a special purposebusiness district. The submittedproposal, approved by the HigherCouncil of Urbanism in January 2007,has not received governmentalratification in the form of a Council of Ministers’ decree.
4times moreseafront publicspace for Beirut
A new urban design study has beenunderway in 2010, in response toincreasing investment interest in theWaterfront District. The studyessentially allows development totake place in some parts of theWaterfront District, while consideringeventual amendments in other partsof the district. Building envelopes areto provide sufficient floor space tomeet the overall BUA target for theWaterfront District, albeit with fewertowers and lower heights than in thepreviously proposed and un-ratifiedmaster plan amendment. A well-conceived phasing strategy includesdedicating a carefully planned zonefor temporary uses while allowingperimeter development to take place,exploiting sea, mountain and cityviews to best advantage.
In line with its overall land usephilosophy, Solidere aims to developon the waterfront a comprehensive,sustainable and future-orientedmixed-use district, capable of
MASTER PLANNING
The Waterfront District consists ofsectors A and D of the BCD MasterPlan. Sector A comprises thewaterside park, corniche, land, quaysand breakwater around BeirutMarina. Sector D comprises thedevelopment blocks and publicdomain extending north of the SouksDistrict, to reach the cornichepromenade; and east of the watersidepark, to reach the Beirut Port FirstBasin and the planned eastern marina.
TH E 2 0 0 5 MA S T E R P L AN
In response to investors’ earlydeclarations of interest, Solidere hasengaged since 2001 in an extensiveplanning exercise for sectors A and D,continually improving the urbanplanning of the Waterfront Districtand seeking approval from the publicauthorities for its proposals regardingthe area, together with relatedgeneral and special regulations of the BCD Master Plan.
The current Waterfront District masterplan, ratified in Council of Ministers’decree 15803 of 2005, was based on the2001 planning study by aconsortium ofUS firms: Skidmore Owings & Merrill(SOM) for urban design, Sasaki forlandscaping, and Parsons Brinckerhofffor transport planning.
The Waterfront District is takingshape as Solidere proceeds with its master planning and landdevelopment. The district has elicitedstrong investor interest, and landsales totaling to date 198,735 sq mBUA herald its real estatedevelopment planned to reach anaggregate 1.7 million sq m BUA.
Destined to be a prime, active,multiuse district with extensive greenareas and distinctive architecture, theWaterfront District commands fineviews of the sea, with hills andmountains across the bay to thenortheast.
As an urban destination, the districtcomprises the termination and climaxof Beirut’s citywide seaside drive, thecorniche. When completed, it willcontain a city waterside park, twomarinas, corniche and quaysidepromenades, cycle and jogging trailsand 29 ha of development land.
Altogether some 73 ha of reclaimedland are enclosed within a terracedsea defense system designed towithstand centennial storms. Itsunique caisson structure is limited in height to 5.5 m above sea level toprotect sea views from deep withinthe city’s historic core. The seadefenses provide harbor enclosuresfor Beirut Marina and the plannedeastern marina.
gradually accommodating risingdemand for first class office space.The Company’s declared strategy inthe Waterfront District is to marketand reposition Beirut as aninternational investor destination.Extensive green spaces, 58% of the district area, comprise theeight-hectare waterside park,corniche and quayside promenades,squares and green corridors.
The waterfront development densitiesare marginally higher than in theexisting city center. Predominatingmedium-density development on parkand sea frontages is limited to 40 mheight, with frontages on the MountSannine view corridor reaching 52 mheight. Among high-rise development,a westerly cluster of towers offeringall-round views to sea, mountain, cityand park, is focused on the Foch Streetextension and the central boulevard,with its convention center square. A second, easterly cluster of towers is centered on intersecting viewcorridors, towards Mount Sannine andfrom Martyrs’ Square to the sea. Thedesign will be carefully controlled toenhance the northerly view of theMediterranean terminating theMartyrs’ Square Axis and the easterlyview of Mount Sannine across St George Bay.
The current planning exercise willintegrate the architectural studiescarried out by Renzo Piano BuildingWorkshop, Genoa and Paris (RPBW), for the transition zone between thetraditional city center and theWaterfront District, within the existingMaster Plan. RPBW’s proposalsucceeds in establishing strongpedestrian, land use and building-scalelinks between the historic core and thewaterfront, accommodating retail,hotel, residential and cultural uses. The design focuses on two linked,slender towers rising from a podiumrooftop park.
A MODELPROJECT OF SUSTAINABLE URBAN
DEVELOPMENT
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BEIRUT MARINA
Beirut Marina provided moorings for164 boats in the last year, havingentered its eighth season in April2009. Its capacity stands at 186 boats,ranging from 5 to 65 m, with 75% ofthe mooring area accommodatingboats of more than 25 m length. Byend 2009, Solidere had signedmedium- or long-term leases (three,five or ten years) for 54 boats, andone-year leases for 110 boats.
Civil works for the marina were partof important marine works deliveredin 2002, as per the 1994 agreementwith the State, also comprising abreakwater and a two-line defensestructure protecting the marina andthe waterfront. The US$298 millionproject cost was partly financed with a 10-year US$107.3 million loanconcluded in 1996 with BNP Paribasand Banque Indo-Suez, with US$7.3 million COFACE guarantee.The loan was entirely repaid.
Beirut Marina was put at the disposalof Solidere in 2002, as per a 1997agreement with the State granting theCompany the right to operate themarina and below-corniche car parkfor a 50-year period. Solidere
undertook at its own expense, andwith the relevant public authorities’supervision, the construction ofnecessary installations andequipment, including access andcirculation roads, surface parking onthe breakwater, below-corniche carpark and on-site development:pontoons, utilities for the boats,harbormaster, customs andimmigration facilities. It also issuedmarina by-laws addressing suchmatters as general servicesadministration, operation, boat traffic, pedestrian and vehicularcirculation, environmental protectionand public safety.
Completed works include pontoons,mooring and service bollards, utilitiesand network ducting, designed byGroupe Camille Rayon (France)together with an additional quayproviding improved shelter in times of northerly winds. The marina wasconnected to EDL power andtemporary quayside offices wereprovided for harbormaster and publicauthority activities.
Solidere started in 2009 the works forthe 400-space below-corniche car park,awarded to Geneco, which is expectedto be completed by March 2011.
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options for dealing with the leftoverstockpile of plastics. Delayed by the2006 summer war added to the legalissues, all earthworks originally part of Radian’s contract (excavation,sorting, processing, backfilling) werecompleted by end 2008.
MORES (Lebanon) was assigned asenvironmental consultant forremediation and treatment, in chargeof monitoring the generation of landfillgas from 70 bore holes in the park areaand proposing remedial measures.Longitudinal venting trenches wereexecuted to help relieve gasesgenerated in backfilled materialsplaced by Radian in the park area priorto their contract’s termination.
INFRASTRUCTURE AND PUBLIC SPACE
The design of the Waterfront Districtinfrastructure, hardscaping andlandscaping, has been delayedpending the resolution of masterplanning issues. Land salesagreements already signed withdevelopers tentatively scheduleinfrastructure delivery for 2011, with a clause providing for potential delay.Accordingly, Solidere is concentratingefforts on accelerating infrastructuredesign, and has signed an agreementwith Laceco, with works expected tostart in June 2010 and be completedby October 2011. The start of executionwill allow the initial delivery of sites to concerned developers after sixmonths. Completion of infrastructureworks is expected by end 2013.
Phase one will witness infrastructurework carried out on both western andeastern sectors of the WaterfrontDistrict. In the meantime, Solidere willinstall temporary activities along acentral axis leading from Khan AntounBey and Beirut Souks to the waterfrontcorniche promenades.
LANDSCAPING
A limited international competitionengaging some of the world’s leadinglandscape architects will be launchedto design the 78,000 sq m watersidecity park and the waterfont cornichepromenades that are to constitute thecity center’s major contribution toBeirut’s public domain. While formingseparate projects, the park andcorniche are to be envisionedtogether, as will be indicated in thebriefs under preparation. Avenuelandscaping and other green areas in the Waterfront District will bedesigned by separate consultants.
DESIGN AND BUILDINGSPECIFICATIONS
S E I SM I C S TANDARD S
Solidere is working on implementing inthe Waterfront District standards thatmay exceed those mandated in thetraditional city center, specifically toaccommodate high-rise constructionon reclaimed land.
S U S TA I NA B L EENV I RONMEN TA L S T R AT EG Y
Solidere is implementing a mandatedlow-carbon strategy on theWaterfront District, which will beplanned, designed and built as amodel project of sustainable urbandevelopment. The Company is in theprocess of selecting a consultantteam to prepare sustainabilitystrategy and guidelines for the designof infrastructure and buildings. Theguidelines, which will be customizedto suit Beirut’s climate andenvironment, will be mandatory andwill include application of renewableenergy technologies, recycling of greywater and other sophisticatedenvironmental regimes. They areintended to deliver a low-carbonoutput together with substantialreductions in energy demand.
LAND RECLAMATIONAND PREPARATION
Solidere has completed the landreclamation and preparation worksfor the Waterfront District inaccordance with the tenderdocuments agreed to with CDR. The environmental works of landfilltreatment covered 18 ha of land, plus extensions below sea level.The US$56 million project, awardedto Radian International (US) in 1999, was financed by means of three bankloans: a locally syndicated loan for itslocal content; export credit financing,topped by local financing, for its UScontent in equipment, engineeringand construction services. All threeloans were fully repaid.
Solidere’s arbitration case againstRadian International and its motherCompany URS was settled by way ofan amicable settlement agreement in2008. Radian and URS paid to Soliderea cash amount in compensation of thedamages suffered by Solidere. Thisconcluded a dispute, which in 2003had gone before an internationalarbitration tribunal under the rules of the International Chamber ofCommerce. A tribunal award issued in July 2004 had required Radian toremedy the defects in the works at nocost to Solidere, cover all arbitrationlegal costs, and provide Solidere with aplan showing how Radian proposed tocontinue the works to comply with thecontract. The failure of negotiationshad been coupled at the time with the contractor suspending works in February 2005, ignoring allinstructions to return to work, andrefusing to reimburse Solidere's legalcosts. The Company had terminatedthe Radian contract in February 2006,and both Solidere and the contractorhad filed counter arbitrations againsteach other.
In the meantime, Solidere had takenmeasures on the ground to expeditecompletion of the project. A fast trackapproach was adopted, with Hornagold& Hills International (UK) asconstruction manager. The project wassplit into four operations packages, tobe executed by separate contractors.These include Société Contemporainede Développement, Assaf & Coex,Alfarah Co, and Lechbenberg(Germany), which studied the possible
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TEMPORARY ACTIVITIES
Solidere’s temporary uses strategy is amajor element within the WaterfrontDistrict development program.Structures and open spaces are beingplanned with a wide-ranging programof activities, designed to create a newdestination with cultural, recreationaland commercial attractions. This isdestined to draw people and bring life to the district, pending theimplementation of infrastructure andthe start of real estate activity. It alsoserves as a testing ground for variousland use concepts.
The strategy spatially focuses arounda rambla pedestrian spine that willlink the existing city center andSouks northwards to the terraced
waterfront corniche promenades.This spine is now open for walking,jogging and cycling leading down tothe waterfront. Other proposedtemporary activities include: anexhibition center, a multi-use centerto seat an audience of up to 6,000, anarcheology workshop, a winter skybar and a beach club alongside thefuture eastern marina.
An area in the eastern part of thedistrict had earlier been leveled,equipped with temporary roads andparking areas, and leased to BeirutInternational Exhibition and LeisureCenter (Biel) until 2013. Activitieshosted in these temporary structurescurrently include exhibition halls,conference areas, a banquet pavilionand a seaside restaurant.
PROGRAM OFACTIVITIES,DESIGNED TOCREATE A NEWDESTINATION
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RESTORATIONThe restoration of Beirut city center has confirmed the sustainability of traditional districts and
heritage buildings and their great potential for creating value, once they are adapted to the needsof contemporary life and business
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Beirut historic core has a richheritage of religious, public,institutional and commercialbuildings. Widely recognized as aconservation showpiece, this vieilleville, with its modern amenitiesbehind beautifully renovated façades,has witnessed a high demand for abroad range of office, retail, culturaland recreational uses. The peripheralneighborhoods of Saifi, Wadi AbouJamil and Zokak El Blatt, havere-emerged as urban villages.
RESTORATION PROCESS
In the Master Plan, 265 buildings and27 public or religious buildings wereretained for preservation. These werecarefully restored in accordance witha set of rules established by Solidere,in cooperation with urban planningauthorities, and involving sector plansand restoration guidelines.
Restoration briefs established for theretained buildings were based onarchitectural and photogrammetricsurveys, damage assessment andhistorical research on originaldesigns and materials. The briefsprovide guidelines for articulating thedesign and restoration strategy to beadopted in each individual case, andare stricter for those buildingsdeemed of heritage or architecturalvalue. Projects go throughpreliminary design approval,restoration permit issuance,mobilization of site works, façade and material sample approval, siteinspection and finally occupancypermit procedure. Solidere has adedicated team to monitorimplementation.
Stone repair was important in theFoch-Allenby and Nejmeh-Maaradareas, notable for its faithfulreconstitution of elaborate façadesand the high quality stone masonry.City center restoration combinesauthenticity with a progressiveoutlook. Buildings are rejuvenatedthrough the use of skylight atria, roofgardens or glazed roofs. Interiors arefitted with modern equipment forfunctionality, comfort and efficiency.
In residential neighborhoods, this isallied with sensitivity to theMediterranean typology. In officebuildings, open plan design allowsoptimal and flexible use of floor area.Restored buildings are maintained ona regular basis. To that effect, ownersprovide the Beirut Municipality with asigned commitment to undertakegeneral cleaning and façademaintenance every five years.
The final product of restoration isquality space with special character.Its success has confirmed thatheritage buildings can survive andeven create great value, provided they are adapted to the needs ofcontemporary life and business.
Solidere took the lead in the restorationprocess, undertaking showcase work inits properties and closely monitoringother parties' projects.
RECUPERATED ANDSOLD BUILDINGS
Solidere successfully completed therecuperation process, giving formerowners and tenants the opportunity to regain their rights in the buildingsretained for preservation. Besidesfulfilling the requirements that apply to all restoration projects,recuperation contracts outlined thefinancial rights and responsibilities of involved parties, be they returneeowners or tenants.
At the end of the recuperationprocess, 146 built lots had beenrecuperated. A total of 130 buildingshave been fully restored. Of the 16 remaining buildings, six are underrenovation. In Marfaa, lot 1144 is thesite of El Patio Hotel, designed by JoeChehwan with 2,958 sq m floor area;lot 243, the Municipality Annexdesigned by Nabil Azar, offers 5,478 sq m of office space; lot 1353,Islamic Wakfs building was designedby Michel Barmaki to offer 2,098 sq mof office space; lot 16, designed byPierre Neema, offers 415 sq m ofretail space in the Souks District. In Mina El Hosn, lot 771, a privateresidence designed by Pierre El Khoury
Architect, covers 2,073 sq m of floorarea. In Saifi, lot 735 was designed byFadi Najem to offer 4,630 sq m ofresidential floor space.
Two buildings are under permitting atthe Municipality of Beirut: Al Makassedbuilding on lot 448 Marfaa, offering3,682 sq m of office space, designed byWissam Jabr; Al Karmah Real Estateon lot 808 Mina El Hosn, offering 1,464 sq m of residential space, isdesigned by R & K Consultants. In theSouks District, the former L'Orient-Le Jour building on lot 12 Marfaa with4,364 sq m of retail and office space isunder design by Rogers Stirk Harbour + Partners (UK).
Restoration was halted on threebuildings due to legal issues (lot 990Mina El Hosn and lots 1220, 1354Marfaa), and one building (lot 803Mina El Hosn) was demolished.
Solidere purchased two recuperatedbuildings. A Levantine house on lot1135 Mina El Hosn, now regroupedwith lot 1133, was later sold toinvestors for new development. Thesecond building on lot 183 remainsSolidere property.
The owners of lot 111 recuperatedbuilding, Grand Hyatt Hotel,purchased an adjacent land toincrease the hotel’s total built-uparea. (See Developers' Projects)
Of the non-recuperated built lotswhose ownership had devolved toSolidere, the Company sold 'as is' 37 original lots, regrouped into 31 lots, and leased 'as is' one buildingto be restored by its user. Restorationis proceeding on the part of thebuyers/ users, with 29 built lots ready, lot 122 Zokak El Blatt underrenovation and lot 749 Saifi underpermitting at Beirut Municipality.
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SOLIDERE BUILDINGS
Of the 37 built lots retained inSolidere’s portfolio, including fiveco-owned buildings, 34 buildingswere the object of restoration by theCompany, and three were restored bythird parties, respectively co-ownersand leaseholder, with lot 164 Saificompleted, 1042 Mina El Hosn underrestoration and 996 Mina El Hosn onhold due to legal issues.
In addition, Solidere undertook therestoration of two lots on behalf of theIslamic Wakfs, with lot 141 Marfaacompleted and lot 1353 Marfaa stillunder renovation (See RecuperatedBuildings).
By year end, 27 buildings had beenrestored by Solidere: 14 residentialbuildings in Saifi, Wadi Abou Jamil andZokak El Blatt, and 12 for office use,with retail at street level in the Maaradand Foch-Allenby areas, which includesix buildings serving as Companypremises; and one office building inSaifi. As at end 2009, the Company had162 lease agreements for space in itsrestored buildings: 17 in office, 33 incommercial and 112 in residentialproperties, resulting in the occupationof around 9,154 sq m of office,
4,948 sq m of commercial and 20,540 sq m of residential space.
Restoration is proceeding in sixSolidere built lots, with two at theconstruction stage, one under studyand three on hold for legal problems.The existing structure on lot 745 MinaEl Hosn was demolished.
Lot 670 Zokak El Blatt was completed.Designed by Fouad Menem, it offers1,805 sq m of residential space overthree floors, with an area that couldbe used for hospitality activities atstreet level. Parking spaces for thebuilding residents are provided inadjacent lot 1144, a six-story infillbuilding with 128 car spaces on sixbasement levels.
At construction stage: lot 1261 MinaEl Hosn was designed by R & KConsultants to offer 1,858 sq m ofserviced apartments. Tenderdocuments are under preparation toselect the contractor and proceed forconstruction. Lot 800 Mina El Hosnwas designed by Ayman Sanioura tooffer 4,222 sq m of residential space.It comprises two old Levantinehouses with an infill building; therestored part was completed and the infill is under construction, with
completion scheduled for the firstquarter of 2011. Lot 891 Bachoura,Grand Theatre, the subject of realestate development involvingrestoration and an infill building, isunder study as a luxury boutiquehotel with around 11,800 sq m of floorspace. Following an internationaldesign competition, the project isunder design by the winner RogersStirk Harbour + Partners (UK) inpartnership with Anouska Hempel for interior design (See Real Estate Strategy).
RELIGIOUS BUILDINGS
Nineteen places of worship attest tothe spiritual value of central Beirut.Solidere has assisted in the gradualrestoration of 18 of them, with 15 nowin use and drawing increasingnumbers of people. The newMohamad Al Amin mosque took on aprofound meaning when the late PMRafic Hariri was laid to rest near it.With the assistance usually providedby Solidere for religious buildings,restoration of the Maghen Abrahamsynagogue in Wadi Abou Jamil is inprogress, under the guidance of theappointed architect Pierre Rihane andthe Lebanese Jewish community.
RICH HERITAGE,
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BEIRUT SOUKS
TRADITIONALFABRIC IN AMODERN CITY
Consecrate Beirut and its center, as a regional and global business, shopping
and leisure destination
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Beirut Souks crystallize Solidere’svision of Beirut city center as acomplete, synergetic district. Thissignature shopping, hospitality,entertainment and cultural meetingplace enhances the economic vitality and social vibrancy of thecentral district.
At the center of the center, the Soukslink the parts together, shaping anddefining the city. They are within short distance of the traditionalConservation Area, the Hotel andWaterfront districts, surrounded byup-market office, residential andhospitality venues, and enjoy easy carand pedestrian access. Beirut Souksare accessible from all regions inLebanon, with direct links to themetropolitan transportation network,port and airport.
Acclaimed as one of the mostimportant commercial centers in the region, Beirut Souks raiseexpectations and add impetus to theregeneration of the Lebanese capitaland its center, as an attractiveregional and global business,shopping and leisure destination.
The South Souks launch in the lastquarter of 2009 has seen the gradualopening of shops, along withrestaurants throughout 2010. In theNorth Souks, construction of theEntertainment Complex is proceeding,while the design of the DepartmentStore is underway.
THE CONCEPT
Designed in five separatecommissions by international andLebanese architects, Beirut Souksoffer 128,000 sq m of built-up areainterspersed with landscapedpedestrian zones. The architects’ briefwas to restructure a city precinct, notto design a shopping center. While retail would be a major component of the project, it would not be the only feature.
Beirut Souks are geographicallydivided into two main parts. The SouthSouks consist of the Souks Core andBlock M, designed by Rafael Moneo(Spain, Pritzker Prize 1996) and SamirKhairallah & Partners; the Gold Souk,designed by Kevin Dash (UK) andRafik El Khoury and Partners; and the
underlying streets and other publicspaces for which Olivier Vidal (France)is space planner and landscapearchitect. The North Souks comprisean Entertainment Complex designedby Valode et Pistre (France) andAnnabel Karim Kassar, and aDepartment Store. An undergroundcar park serves both sections, withLiban Park as managing consultanton behalf of Solidere.
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The development derives the name ofits sections as well as its identity,urban plan and materials, from thelegacy of the old Souks, drawing its inspiration from the urbanrelationships and historical layers ofthe site. Visiting the Souks today is acultural voyage in time and space, asone sees and feels the historicity ofthe place incorporated in thecontemporary design.
Internally, the South Souks, whichretain the ancient street grid, arecomposed of a series of structurescreating urban spaces in an intricatethree-dimensional network providingsurprising juxtapositions that create arich labyrinthine experience fullyintegrated with the city fabric. One can stroll along internal streets andcovered bazaars, wander alongarcheological sites, meet and lingeron the various plazas reminiscent ofLevantine heritage, and admiredramatic vistas.
SOUTH SOUKS
L O T 1 4 7 9 M A R F A A / S E C T O R E / R E T A I L / B U A 7 1 , 9 0 3 S Q M / S O U K S C O R E( T A W I L A , J A M I L , A Y Y A S , S A Y Y O U R , F A K H R Y B E Y , A R W A M , A J A M I ,P A T R I A R C H H O Y E K , B A B I D R I S S , A L F R A N J , B U S T R O S , A R W A D ) A N DB L O C K M / R A F A E L M O N E O ( S P A I N ) A N D S A M I R K H A I R A L L A H A N DP A R T N E R S / G O L D S O U K / K E V I N D A S H ( U K ) A N D R A F I K E L K H O U R Y A N D P A R T N E R S / L A N D S C A P E O L I V I E R V I D A L ( F R A N C E ) / C O M P L E T E D
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SOUK AYYAS INTABLI FOUNTAIN, AYYAS / BUSTROS SOUKS SOUK JAMIL / SAYYOUR SQUARE SAYYOUR SQUARE LEADING TO SOUK JAMIL
SAYYOUR SQUARE SOUK SAYYOUR WITH ARWAM BRIDGE SOUK JAMIL UPPER LEVEL SOUK BAB IDRISS
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UR BAN E X P E R I E NC E
The Souks open bazaar offers a highquality urban environment, as ashopping center and a people’s place,affording a number of leisure andcultural opportunities for the district’sactive population, as well as cityresidents and tourists. Being theretakes on deeper significance, as theSouks gradually become a dailyexperience.
A walk around Beirut Souks charmsthe spirit and enriches the mind. Notwo alleyways reverberate the samefeeling; each has its own appeal and attraction. This promenadearchitecturale provides discovery andsurprise that entice people to furtherexplore new ambiences and delights.
As one accesses Beirut Souks fromthe corner of Weygand and Allenbystreets, a ten-meter high arcadeannounces the Gold Souk. The fourblocks are delineated at street level by covered alleys and deep arcades,which form a natural extension toMaarad Street, thus connecting theSouks to the restored heart of the city.
The Gold Souk enclave houses two-floor pavilions linked by a network of charming passages and squares. A shaded lane with glass shopfronts,reminiscent of the old gold souk,leads from Jewelers’ Square, linedwith tightly packed boutiques, to Souk Ayyas. On the pavilions’ top level one or more restaurants willhave terraces overlooking thesurrounding souks and squares.
The integration of heritage andmodernity is evident as oneapproaches the main Beirut Souksentrance at Imam Ouzai Square. Anew prayer hall on the left, topped bya small dome, creates a virtual portalto the bazaar by mirroring the formand scale of the Mamluk Zawiyat Ibn Iraq on the right, adjacent to the Gold Souk.
Visitors can stroll from the squaretoward the Souks Core and discoverthe link to the Souks traditionalnames, following signage that alsomoves them along in a transversalway, as the main souks that runlongitudinally are intersected by anumber of secondary ones extendinghorizontally. This impressiveexperience is enhanced by several
archeological sites that are integratedinto the landscape, such as thesunken courtyard of the medieval wall and moat below Souk Jamil, the unearthed late Phoenico-Persianharbor side settlement under SoukAyyas, and the restored mosaics fromByzantine shops in Souk Al Franj.
One can also linger on the variousplazas, such as Ajami, Bab Idriss andImam Ouzai squares, or near IntabliFountain; enjoy an event or activity,maybe a concert; meet and sampleany of the concept restaurants andcafés in inviting settings; or come face to face with contemporary art. On Souk Sayyour the ‘Visitor’ is,according to the artist Arne Quinze(Belgium), an embodiment of people’spursuit for uniqueness. On Bab IdrissSquare, sculptures by Xavier Corbero(Spain) represent Roman figures onthe way to the Hippodrome.
The splendor of Beirut Souks is notdue to their great size and beautifularchitecture alone. It is a result of allthe diverse features that characterizeand effectively animate the Souks, fillthem with vibrancy and turn them intoa favorite destination for families, andpart of everyday life for many.
a promenadearchitecturale thatcharms the spiritand enriches the mind
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R E TA I L M I X S T R AT EG Y
The Souks follow the highestcontemporary standards for retailspace and leisure. As an open bazaarof the 21st century, they offer theconvenience and comfort associatedwith commercial centers within anopen air structure with shadedstreets, dotted with pleasant openurban spaces. Retail units formshopping streets that offer aconcentration of the finest local and international brands.
To ensure harmony and consistency,Solidere laid down shopfront designspecifications and guidelines for theSouks tenants to direct interiorconstruction works, and conducted
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regular site supervisory visits forquality control. Shop fitting was donein coordination with Solidere’sarchitectural consultant SamirKhairallah & Partners.
With the help of a number ofprofessionals, Solidere developed aspecific tenant-mix approach for theSouks Core, which strategically placesexclusive concept and stand-aloneboutiques and restaurants amongflagship and other traffic-generatingstores, while the Gold Souk is madeup primarily of jewerly, watches andleather goods, in addition to a majorrestaurant space with terracesoverlooking and animating the trading level.
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For food and beverage outlets,Solidere asked each tenant to offer aunique concept, with exclusivity forBeirut Souks. A short list of Lebanese,Arab and European architects wasproposed for the restaurants’ interiordesign. By June 2010, eight signaturerestaurants had opened in the Souksas well as a large food hall on theground level.
Additional signature projects arebeing developed and will further helprealize Solidere’s objective, reinforcingthe notion of service to the people,strengthening Beirut Souks’ role as a regional and global center, andmaintaining constant human trafficand activity.
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SOUTH SOUKS MASSING STUDY / THE MODEL SHOWS THESOUTH SOUKS’ GENERAL VOLUMES, AND INDICATES THEIRNAMES, LOCATIONS AND SURROUNDING STREETS.
BEIRUT REAL ESTATEMANAGEMENT ANDSERVICES
Solidere and Aswaq Managementand Services s.a.l., subsidiary ofSociété des Centres Commerciaux(France), a leader in shopping mallmanagement in Europe, establishedBeirut Real Estate Managementand Services (BREMS).
BREMS signed an assistanceagreement for Beirut Souks,whereby BREMS implements onSolidere’s behalf leasing activitiesfor the Souks. It is also in charge ofproperty and facility management,as well as rental management.
PARKING
An underground parking facilityaccommodates around 2,500 cars.Several entry and exit lanes aredistributed along Allenby Street,
Patriarch Hoyek Street, Fakhry BeyStreet and Mir Majid ArslanAvenue, and a number ofpedestrian access points to theparking from the Souks, byelevators, stairs and escalators,are well marked. Another parkingis planned under Khan Antoun BeySquare in the North Souks with acapacity for around 400 cars.
OTHER FACILITIESAND SERVICES
Souks tenants benefit fromcomplete services (water,electricity, telecom, broadband,security, etc). In addition,miscellaneous support andconvenience and informationfacilities are provided throughoutthe public areas of the Souks, suchas telephone booths, ATMmachines, information desks,information screens and publictoilets.
WAY F I ND I NG
Wayfinding is based on the SouthSouks structure, which includes eightmain sectors and five subsectors, and on the connecting walkways orsurrounding streets. Each sector has its own identity and character,reflected in the design specificationsprovided by Solidere and itsconsultants. The sectors follow thenames of the original souks and are:Fakhry Bey, Gold Souk, Tawila, Ayyas,Jamil, Patriarch Hoyek, Arwam andAjami Square; the subsectors:Sayyour, Bustros, Arwad, Al Franj and Bab Idriss.
The sector and subsector labeling helpin locating shops. The ground floorlevel covers the entire South Souks,accessible from the surroundingstreets at ground level. In the SouksCore, the upper level links SoukArwam, Souk Bab Idriss and part ofSouk Jamil with Weygand Street.
The main street entrances to BeirutSouks are from Imam Ouzai and BabIdriss squares on Weygand Street; byescalators and stairs from Fakhry BeySquare; via Ajami Square on TrablousStreet; and by stairs on PatriarchHoyek Street. Additionally, there aretwo main elevator and escalatoraccess points in the Souks to theunderground car park, located onSouk Sayyour between Arwam andJamil souks, and on Ajami Square atthe base of Souk Jamil.
2,500parking spacesavailable with several access points
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NORTHSOUKS
L O T 2 M A R F A A / S E C T O R E / E N T E R T A I N M E N T C O M P L E X / B U A 1 9 , 2 2 5 S Q M /V A L O D E E T P I S T R E ( F R A N C E ) A N D A N N A B E L K A S S A R / U N D E RC O N S T R U C T I O N / D E P A R T M E N T S T O R E / B U A 2 6 , 3 7 0 S Q M / U N D E R S T U D Y
The Entertainment Complexcomprises 14 modern cinemas aboveground with generous lounges andconcession areas, an entertainment /retail zone, restaurants, a multimediastore, a games arcade and retailextending to Khan Antoun Bey Square.A mega entertainment destination andarchitecturally avant-garde structure,the project was redesigned by thearchitects in line with up-to-datenorms and standards, featuring morecommercial space and introducing apedestrian link between Allenby andTrablous streets.
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The final design for the EntertainmentComplex was completed in December2008 and construction started inFebruary 2010, with Geneco ascontractor. Completion is expected by the end of 2011.
Interior design concept for theEntertainment Complex wascompleted under Solidere’ssupervision, in coordination between the architects and theinterior designer Nabil Dada.
The Department Store is under designand a landscaped square with afountain will face the building and the restored Majidiya mosque.
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REAL ESTATESTRATEGY
TO CREATE A VIBRANT CITYCENTER
Solidere continues to develop real estate projects within its strategy to create avibrant city center and also with the objective to secure a regular income stream
from this successful activity.
In addition to Beirut Souks, the Company is pursuing ongoing real estate projects,including Zaitunay Bay; reviving some that had been put on hold, and launching new
projects that span a variety of land uses.
Starting with its Saifi Village, Wadi Abou Jamil and Zokak El Blatt projects, Soliderecreated a booming residential activity, which now extends to residential clusters,mid and high-rise buildings in all new development sectors of the city center. TheCompany is enhancing this activity by developing more residential projects.
Having successfully put on the market institutional and business office buildings,Solidere is launching important new office developments to cater for majorinternational companies, which it considers Beirut is now able to attract.
Finally, with Beirut becoming a favorable visitor destination, Solidere is embarking ontourist and hospitality projects with special character.
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L O T S 1 4 5 5 A N D 1 4 5 6 M I N A E L H O S N / 5 0 - 5 0 J O I N T V E N T U R E B E T W E E NS O L I D E R E A N D S T O W W A T E R F R O N T D E V E L O P M E N T S . A . L . / B E I R U TW A T E R F R O N T D E V E L O P M E N T S . A . L . / S E C T O R A / F U R N I S H E D A P A R T M E N T S ,Y A C H T C L U B , R E S T A U R A N T S , O U T D O O R P U B L I C S P A C E S , S P E C I A L T YS T O R E S / S T E V E N H O L L A R C H I T E C T S ( U S ) , L . E . F T ( U S ) A N D N A B I LG H O L A M A R C H I T E C T U R E / B U A 2 0 , 0 0 0 S Q M / U N D E R C O N S T R U C T I O N
In sector A, immediately adjacent tothe Beirut Marina, Zaitunay Bay isunder construction. The development,together with the public space aroundthe marina, was designed by StevenHoll Architects (US), with L.E.FT (US)and Nabil Gholam Architecture andPlanning as associate architects.
The project is undertaken by BeirutWaterfront Development s.a.l., a50-50 joint venture between Solidereand Stow Waterfront Developments.a.l. (Stow). BWD was capitalizedwith Solidere contributing in kind20,000 sq m of BUA on 22,341 sq m of land, and Stow contributingUS$31.6 million in cash.
The facilities include Le Deckapartment building and yacht club on the east quay; and watersiderestaurants on the south quay. (A harbormaster, customs andimmigration building will beseparately erected on public domain.)The project is expected to be graduallyinaugurated starting spring 2011.
CONC E P T
Located around Beirut Marina, thesite for Zaitunay Bay extends theexisting waterfront cornichepromenades into a series of
overlapping platforms. The cornicheis inflated to create an 'urban beach',with levels subtly articulated toprovide outdoor spaces and publicareas for artwork.
The concept takes shape from strataand layers in forking vectors. Like theancient beach that was once the site,the planar lapping waves of the seainspire striated spaces in horizontallayers, as distinct from verticalobjects. The horizontal and the planarbecome a geometric force shapingthe new harbor spaces.
The form allows the separate levels todefine the organization of public andprivate domains including apartmentsand yacht club, public facilities,restaurants, and specialty stores. Thesyncopated rhythm of platforms isachieved by constructing the overallcurve of the corniche in five anglesrelating to five reflecting pools. Due to variations in height along thecorniche, the platform levels andpools vary slightly in height allowingquiet, gravity-fed fountains to connecteach pool level. In accordance withMaster Plan requirement, the BeirutMarina and its waterside restaurantswill be linked to the Hotel Districtcorridor across the corniche.
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D E S I GN
The design submitted by Steven Hollin August 2004 was graduallyamended, following comments byBeirut Waterfront Development (BWD)and Solidere.
The project is integrated into the citycenter through direct access to thecorniche promenade to the north,waterside city park to the east, and apedestrian bridge over the corniche tothe south, providing access to thetown quay restaurants and shops.Landscape designs were developed forthe entry plaza, the quayside and theextension of the corniche sidewalkabove, creating open-air terraces in the form of a ‘stone beach’ over therestaurants and shops.
L E D E C K
On the northeastern side of thedevelopment, on lot 1456, is the mainbuilding totaling 14,000 sq m of floorarea, accommodating furnished andserviced apartments over four floorsplus three basements, together with a yacht club.
The design-and-build tender forunderground structural work andconstruction of the basement floorswas won by the Hourié-Profond jointventure, based on the design endorsedby Solétanche Bachy group (France).
Profond were in charge of the shoringdiaphragm wall, piling and dewatering;Hourié of excavations and constructionof slabs and columns.
The works were completed in March2009. A fast track approach wasadopted, using up down constructionbased on a technology specific tounderground construction below sealevel, which may be applied throughoutthe Waterfront District. As per theircontract, Hourié - Profond continuedthe dewatering for the six monthsafter underground structural workcompletion and until the beginning of superstructure construction.
BWD conducted negotiations withHourié regarding upper floorconstruction. After obtaining therelevant building permits, constructionstarted in May 2009 and the softopening is expected to be completedby early 2011. Nabil Dada wasentrusted with the interior design.
In addition to the yacht club, lot 1456accommodates exclusive commercialshops at marina level, underneath 53state-of-the-art, one, two andthree-bedroom furnished andserviced apartments, of which nineapartments are to be retained andoperated by BWD with managerialsupport from a third-party operator.The other apartments will be sold.
QUAY S I D E R E S TAU RAN T S T R I P
The quayside restaurant strip on thesouthern side of the development, onlot 1455, comprises 16 restaurants and five retail outlets totalingapproximately 6,000 sq m of floor area.Stretching along Beirut Marina, fromthe site’s western limit to the mainbuilding on the east, the one-floorconstruction remains below seacorniche level, with the roofs forming a continuation of the corniche.
DMR (US), with Geopier (Turkey), wonthe tender for enabling and groundstabilization works, which werecompleted in April 2009. Constructionworks on the restaurants and retailoutlets started in October 2009 andare being executed by SociétéMouawad-Eddé.
BWD had commissioned restaurantconsultant Ulysses (France) toconduct a market study to select anoptimal type and size mix for thequayside restaurants, as well asestablish a typical rental agreement.
PHA S I NG I S S U E S
A critical issue is the completion byMarch 2011 of the underground public400-car park currently being built bySolidere below the corniche to servicethe Beirut Marina.
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Grand Theatre is a building ofhistorical significance to the city ofBeirut. Built in the 1930’s, it consistedof a hotel and apartments in additionto the theater itself. The auditoriumwas a venue for performances of allkinds. Today, after several decades ofneglect, it is proposed to revive boththe theater and the adjacent buildingin the form of a hotel and ballroom,under the direction of Solidere.
The Company has given up the idea ofrestoring Le Grand Théâtre des Milleet une Nuits into a significantmodern-day theater. This would notbe possible without the practicaldemolition of the building and itsreconstruction. Besides, siteconstraints would make it difficult toachieve a world-class performancestage. However, Solidere wasconcerned about preserving andhonoring the memory of the GrandTheatre. The main façades wererestored, with strengthening works to the footings.
The original concept design byArchitecture Studio (France), whichobtained approval from the HigherCouncil for Urbanism in April 2005,offered four floors and five basements:a boutique hotel enjoying a roofswimming pool, restaurants and barsoffering artistic performances, andshops at street level below the arcades.
In spring 2009, Solidere envisaged achange in program for the GrandTheatre. Talks with a number ofinternational boutique hotel operatorsled to the selection of Fuenso (Spain)to operate a Solidere brand luxuryboutique hotel.
A limited design competition waslaunched in two stages, in May andAugust 2009, among four internationalarchitecture firms, Rogers StirkHarbour + Partners (UK), AnouskaHempel Design (UK), Moatti et Rivière(France) and Architecture Studio(France). As per the Master Plan, amaximum BUA of 11,800 sq m wasallowed, with a maximum height of 24 m (ground with mezzanine plusfour upper floors).
L O T 8 9 1 B A C H O U R A / S E C T O R G / H O T E L / B U A 1 1 , 8 0 0 S Q M / R O G E R SS T I R K H A R B O U R + P A R T N E R S ( U K ) A N D Z I A D A K L A N D P A R T N E R S /A N O U S K A H E M P E L D E S I G N ( U K ) F O R I N T E R I O R D E S I G N / U N D E R D E S I G N
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In October 2009, the competition juryselected Rogers Stirk Harbour +Partners for architectural design, withrunner up Anouska Hempel Design tocollaborate on space planning andinterior design, under advice fromFuenso (Spain). Solidere is reviewingwith the winning firm the conceptdesign received in March 2010. Thedesign was also submitted to theDirectorate General for Urbanism(DGU) for approval. Under bestscenario conditions, the project should be delivered end 2013.
CONC E P T
The site occupies the boundarybetween Beirut historic core and the Ghalghoul sector, the location for several proposals of a morecontemporary nature. The design aims to unify these differentcharacters and scales of urban designthrough the considered use of faithfulreconstruction and the introduction of a bold modern intervention.
The ability for the centerpiece of thescheme - the original auditorium - tobe employed for public uses, whileremaining integral to the hotel
proposal, is maintained. This willensure that the cultural significanceof the building is not lost.
The new design allows the previoushotel use to colonize the whole of thesite, forming a luxury hotel in a primelocation within Beirut city center. Theproposed accommodation comprisesguestrooms and suites, a ballroom(housed within the auditorium), anintimate hammam, several restaurantsand bars, a rooftop pool, integralgardens and other amenities expectedof a luxury hotel.
The hotel proposal centers on dividingthe site between historic buildings(north and east) and contemporaryintervention (south and west). Thehotel itself is accessed via the existingGrand Thea tre entrance on thenortheast, at the corner of Amir Bachirand Syria streets. All other uses areaccessed from the southwest, via anew open space on Alexi BoutrosStreet. This reestablishes the historicpassage between the two extantbuildings and allows public access via Syria Street.
The historic arcaded street frontage is occupied by retail units, with theintention of animating and populatingthe site perimeter at its interface withthe historic core.
Several massing options wereinvestigated by the architects. Theoption of pods was selected as theone maximizing views and light to theguest rooms. Over-sailing the existingbuilding, the pods form a modularsystem accommodating suites onlower floors, restaurants and terraceson higher floors. Gaps between themserve for circulation and providepleasant views and natural light. Theoverall massing offers an interestingcontrast with the historic corestreetwall alignments, and addressesmodern neighbors in Ghalghoul.
The plan envisages a series ofbalanced cantilevered structures inconcrete, which minimize the numberof locations where they penetrate theexisting building, and ensure that theyremain clear of the auditorium andlobby interiors. This approach createsdrama in the form of largeoverhanging structures, whichprovide shading to the gardens below.
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DESIGN BY ROGERS STIRK HARBOUR + PARTNERS
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The 17-story tower will be strictly foroffice use with the possibility of acutting edge top floor restaurant.Because the site is slanted, thebuilding will have a lower ground-floor. Five underground levels willprovide ample parking spaces. Thepodium, on the other hand, willincorporate two floors of six m heighteach, and will consist of retail units,possibly hosting a progressivebusiness center, restaurants andother up-to-date amenities for theadjacent office building. The siteallows for a landscaped area aroundand between the buildings, and fordistancing the development fromsurrounding towers, ensuring aneffective integration of daylight,directed deeply and in adequatequantities into the tower.
Solidere launched on February 26,2010 the competition between fourrenowned international architects forthe design of this development. Thecontenders submitted their conceptsby end April 2010.
MIXED USEDEVELOPMENTMINA EL HOSN
L O T 1 3 3 8 M I N A E L H O S N /S E C T O R E / M I X E D U S E /B U A 1 5 , 9 8 6 S Q M / U N D E RC O M P E T I T I O N / D A V I DC H I P P E R F I E L D A R C H I T E C T S( U K ) / P E T E R M A R I N O A R C H I T E C T( U S ) / S A N A A ( J A P A N )
Solidere’s program for lot 1338 MinaEl Hosn, located on Patriarch HoyekStreet, is a mixed use combininghospitality, retail and entertainment(food and beverage), to complementthe nearby Beirut Souks.
An initial retail strategy study wasconducted by MXD Consultants(Canada) to guide configurationconcepts relating to a boutique hotel.The program was later modified andcurrently envisages 7,000 - 7,500 sq mof luxury serviced apartments with atrendy outlook (one to three bedrooms,with 100 - 300 sq m area); a 5,000 -5,500 sq m wellness, fitness and spacenter, possibly a Beirut BodynaCenter operated by Fuenso (Spain);an international specialty mix ofretail, quality restaurants and aspecial business services departmentwith private access. The main retailanchor will be an electronic, beautyor home design store.
Solidere launched the designcompetition between threeinternational architects on March 29,2010. The candidates submitted theirconcepts beginning June 2010.
SERVICED APARTMENTBUILDINGMINA EL HOSN
L O T 1 4 0 8 M I N A E L H O S N /S E C T O R B / S E R V I C E DA P A R T M E N T S / B U A 1 8 , 6 7 2 S Q M /U N D E R C O M P E T I T I O N / A X E LS C H U L T E S A R K I T E K T E N( G E R M A N Y ) / C R U Z Y O R T I Z( S P A I N ) / J O S E P L U I S M A T E O( S P A I N )
In line with its objective to upgradehospitality services in Beirut, Solidere is developing on lot 1408 adistinguished yet functional servicedapartment complex. The site is in theHotel District, close to the newlyopened Four Seasons Hotel, MarinaTowers, Park View and Avenue duParc developments.
The original market research carriedout by Jones Lang LaSalle, engagedto assess comparable projects inEurope and the region, was rejectedfor lack of profundity. Hospitality
Management, a subsidiary ofSolidere, undertook a similar studyand advanced valuable design andservicing recommendations.
The project is planned as an 11-floorblock offering around 80 apartmentsof one, two or three bedrooms, to bebuilt around a central atrium orgarden that will provide a sense ofspace and light. Three undergroundlevels will accommodate parkingspaces as well as the back-of-houseservices, janitorial, laundry and other.
Solidere launched the designcompetition between the threeinternational architects on March 26,2010. The candidates submitted theirconcepts beginning of June 2010.
800 MINA EL HOSNWADI ABOU JAMIL
L O T 8 0 0 M I N A E L H O S N / S E C T O RF / R E S I D E N T I A L / B U A 4 , 2 2 2 S Q M /A Y M A N S A N I O U R A / U N D E RC O N S T R U C T I O N
In Wadi Abou Jamil, Solidere initiatedthe design and implementation ofpredominantly residential clusters of various sizes, involving restorationand infill construction. The use of this typology on the city scale, incombination with detailed andindividual residential buildings, ismeant to reinforce urban integration.International and Lebanesearchitects, with experience inMediterranean and Middle Easterncountries, contributed designconcepts reflecting responsiveness to local context, culture and climate,and the market interest led to thesale of practically all the propertieswith cluster concepts.
Owned by Solidere, lot 800 Mina ElHosn is a triplet designed by AymanSanioura, combining restoration andnew construction. The 4,234 sq mfloor area comprises two twinrestored Levantine houses plus aninfill building, with four floors each,located between two streets, Rue deFrance and a lower entrance street .The infill building, designed in asimilar style, has two basement floors linking the three buildings and providing parking space to serve the entire triplet. It has obtained a building permit, with earthworkscompleted in 2008. Civil works startedin April 2009 and completion isscheduled for the first quarter of 2011.
178 SAIFI VILLAGESAIFI
L O T 1 7 8 S A I F I / S E C T O R I / O F F I C ER E S I D E N T I A L A N D R E T A I L / B U A 1 0 , 7 4 7 S Q M / N A B I L G H O L A MA R C H I T E C T S / A W A I T I N G P E R M I T
The success of Saifi Village ledSolidere to initiate concepts for itsextension. 178 Saifi Village is aresidential cluster designed by NabilGholam on 2,937 sq m of land to offer8,003 sq m for residential, 1,850 sq mfor offices, 179 sq m for retail, 176 sq m for a restaurant and 530 sq mfor a cultural space.
The cluster is formed by five elegantbuildings with clean modern façadesalong surrounding streets, set arounda landscaped courtyard. The designoffers a range of spacious apartmentsto include lofts with 5.75 m highceilings, mini lofts with work/livespace, ground floor maisonetteswith private gardens, central hallapartments and a variety ofpenthouses with generous terraces.
The building opening on the ring roadoffers serviced office and exhibition orgallery space, designed for end usersin the creative industries sector. Onthe ground level a ‘link-gallery’ (in thearchitect’s words) connects the officebuilding to an upper level culturalspace above a streetfront café,opening onto Charles Debbas Street.
The scheme is geared to acontemporary lifestyle, bringing a blend of services and conveying adiscreet sense of luxury. Space, light,calm and comfort characterize thetownhouse-like residential units,combining the advantage of a greaturban location with the pleasure of aquiet green haven in the heart ofBeirut. At the same time the creativeindustries building and gallery willmake the project an importantinnovative addition to the SaifiQuartier des Arts.
Excavation and piling works havestarted, with the superstructureawaiting building permit issuance by the Municipality.
OFFICE BUILDINGMINA EL HOSN
L O T 1 4 9 3 M I N A E L H O S N /S E C T O R B / O F F I C E /B U A 2 4 , 0 0 0 S Q M / U N D E RC O M P E T I T I O N / 3 X N ( D E N M A R K ) /F U M I H I K O M A K I ( J A P A N ) / R O G E R SS T I R K H A R B O U R + P A R T N E R S( U K ) / W I L K I N S O N E Y R E ( U K )
To promote Beirut city center as amajor business hub, Solidere isdeveloping a grade A building alonghigh international standards, with theaim to produce a landmark, ‘the bestoffice development in the MiddleEast’. Located on Omar Daouk Streetalong the George Chehadeh Streetaxis, the project has a built-up area of 24,000 sq m that will hold a podiumand an office tower with a maximumheight of 90 meters.
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FUTURE PROJECTS
CONC E P T S B Y R EN ZO P I ANOB U I L D I NG WORK SHOP
As part of its objective to appointinternationally renowned architectsfor the development of Beirut citycenter, Solidere approached RenzoPiano Building Workshop, Genoa and Paris (RPBW) to study two major sites.
The first site, part of sector D in theWaterfront District is strategicallylocated close to the Port First Basin,north of the historic Foch-Allenbyarea and its modern extension. Thesite is defined by four main arteriesforming a pinwheel: east and west,Foch and Allenby streets that stretchfrom the traditional city centerthrough the district; south, PortStreet; and parallel to it, Amir MajidArslan, the main east-west axispassing through the project. The
project is intended by Solidere as alandmark, in direct visual relationwith the sea, a link between the NorthSouks west and the Port First Basineast, forming altogether a gateway to the Waterfront District.
To RPBW, a main consideration is the site being a milestone in thecompletion of the Conservation Areaas well as Beirut Souks, and openingup to the Waterfront District. In thearchitect’s vision, the old and newworlds come together in thispinwheel, trapezoidal-shaped site.The gateway image guides theconcept and gives the project itslandmark identity, with an exclusiveprogram that includes a hotel,serviced apartments, sky villas, retail with possibly a departmentstore, and public landscaped gardens.
Since the surrounding roads are maintraffic axes, the architect proposes todesign and transform the adjacent
Port Street into a pedestrian road thatwill tighten the connection betweenthe site and the Conservation Area,and open up (as per the Master Planrecommendations) to the WaterfrontDistrict. Other ideas proposed byPiano are to introduce water featuresaround the project site and along theOttoman Wall Walk, to evoke thememory of the old Beirut seashoreline and stress the historicalimportance of the location.
The architect has a number ofconcept ideas. One of them is theSuspended Gardens of Babylon,which to him reflect theMediterranean spirit, creating abeautiful park at high level. Othercharacteristics of Piano’s work areaerial passerelles to create linkageand fluidity in motion; and belvedereswith 360 degree views atop tallslender buildings that are split intoseparate structures to provide asense of lightness and transparency.
B E I R U T C I T Y H I S TO RY MU S EUM
Solidere has proposed theconstruction of a Beirut City History museum on a significantarcheological site north of Martyrs’Square, where excavations in themid-1990s unearthed such majorfinds as the Phoenician Tell, BronzeAge city gate and features fromPersian, Hellenistic, Byzantine,Medieval and Ottoman periods.
In 1997, Solidere commissionedMichel Macary (France) to undertakea site planning study of the Tell and to explore the concept of a SiteMuseum. Macary was chosen for hisexpertise in cultural projects, inparticular his design work for theLouvre extension with the creationunderground galleries incorporatingexcavated elements of historicstructures. In conjunction withSolidere, Macary completed theconcept design of a 9,300 sq mmuseum due to incorporate the site’sarcheological findings and envisioned,with Directorate General ofAntiquities (DGA) approval, as anoutreach of the National Museum.
With a view to protect and safeguardthe site while providing the necessaryvehicle and pedestrian access in whatis a heavy use environment, Soliderecommissioned Dar Al-Handasah to
study three route options, incoordination with the DGA, and tocarry out the detailed design of themost appropriate option. The chosenone incorporates a two-way road andbridge structure on the east side ofthe Tell, with additional underpassesto be dug beneath the road to ensurepedestrian connections to themuseum. It will be a complexunderground structure, with its roofterrace serving as a viewing platformat the level of Martyrs’ Square,overlooking the ancient Tell. Themuseum is closely integrated with thedesign of the Martyrs’ Square parkingstructure, the Petit Serail remains,and the landscaping of Martyrs’Square and the Tell site.
The City History Museum, for whichfinancial sponsorship has beenoffered by the Kuwaiti government,will be the point of origin of theHeritage Trail, a circuit connecting all main archaeological sites andheritage buildings and extending themuseum out into the city itself. Thefull extent of Beirut’s urbanized area,from its Bronze Age origins to the1830’s, lies within the boundary of thepresent-day city center. Evidence ofpast urban layers is there for all tosee. It is the ideal place to tell thestory of the history, growth anddevelopment of Beirut from ancienttimes to the recent past. The firstphase of the Heritage Trail is beingimplemented by Solidere incoordination with DGA.
Two other site museums are locatedin the city center, both on NejmehSquare. The recently restored CryptoPortico museum, beneath theDeputies’ Office Building, featurespart of the site of the Roman Forum,at the original level of the ancient city.In this section of the principal street,an omphalos (round granite blockrepresenting the navel or exact centerof the city from which all distanceswere measured) sits against abackdrop of a series of blind archesthat once lined the street, completewith its original checkered black andwhite tiling pattern. The museum isnot opened to the public. TheByzantine church site museum, in the crypt beneath St GeorgeGreek-Orthodox cathedral, is underrestoration and should be opened tothe public upon completion.
HOSPITALITYMANAGEMENT
Solidere aims at enhancing vibrancyin the city center. Now that Beirut hasbecome once again an attractivedestination for local, Arab and foreignvisitors, the Company intends tocreate a sustainable level of activitiesand to upgrade hospitality facilitiesand services, by encouraging theestablishment of unique conceptshigh-end restaurants, cafés, servicedapartments and boutique hotels withretail outlets.
Looking at this matter in all itsaspects, Solidere has also decided toengage in Hospitality Management asa revenue-generating activity and ison course to incorporating a holdingcompany with the object to develophospitality projects, sometimes inpartnership with third parties.Solidere intends to set a benchmarkin hospitality services by drawing onthe expertise of world renownedarchitects and interior decorators, and reaching agreements with leadinghotel operators and starred chefs.
NEW REAL ESTATE CONCEPTS
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SALE ANDRENTALSTRATEGY
The strategy is to stimulate real estate development and
city center occupation
HIGH QUALITY PROJECTS AND
SPACE
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Thanks to the reconstruction effort,much change has taken place in thepast few years. A steady stream ofnew owners and tenants has movedinto the city center. Hundreds ofestablishments have already settled there.
Solidere's strategy is to stimulate highquality real estate development in thecity center. Its support to investors hasexpanded in the last years to coverproject design and development. Inaddition to providing developmentbriefs based on sector plans andadapted to project sites, the Companycommissioned Lebanese andinternational architects to prepareconcept designs for a number of lots,with obvious benefits for prospectivebuyers, to whom Solidere sometimessells land with a real estate program,architectural design and even adevelopment package.
Sales revenues rose, sustained by asubstantial sales backlog. Manyprojects, some of importantproportions, were pursued, regionalinvestors continuing to give strongindications of interest in Beirut citycenter. This was evidenced by astrong pick-up of negotiating activityat the end of the year. Rental activitymaintained its healthy pace due tocontinuing demand for quality spaceand services.
As land bank with a considerableproperty portfolio, Solidere markets awide range of land and built space forresidential, office, hotel, retail andother specialized uses. In the earlyyears, sales mainly involved un-builtlots and existing buildings sold 'as is'for renovation or development. Thedelivery of Solidere real estateprojects led to a growing volume ofsale and leasing operations involvingfinished products, new or preservedbuildings or parts thereof.
Since 2005, the Company has beenholding on to its portfolio of finishedproducts, leasing space in it togenerate income flows, and willcontinue to do so in the foreseeablefuture as part of its revenuediversification strategy. Solidereactively supports developers andmonitors the demand and supply ofreal estate in the city center, to thebenefit of all.
SALES
In any given year, the salesrecognized in the income statementconsist of closed deals negotiated inthat year and in preceding ones. Onthe other hand, the deals negotiatedup to that year and not closed duringthe year make up the sales backlog at year end. Aggregate sales ofUS$2.24 billion, were recognized frominception to end 2009 (1,735,847 sq mof floor space) of which US$305 million(158,391 sq m) in 2009.
SALES RESULTS
Gross land and real sales of US$305 million were recognizedduring the year 2009 (US$256.6 millionin 2008). Solidere has stopped sellingfinished products in order to build aportfolio of income-generatingproperties. Deals closed in previousyears and recognized in 2009 amountto US$967,320, representing 546 sq m of floor area.
At end 2009, the backlog of sales notrecognized during the year amounted toUS$428.5 million (163,000 sq m BUA).
Down payments received on signeddeals as at end 2009 amounted toUS$129.2 million on sales, andUS$21.1 million on leases andrentals. Down payments are treated as deferred revenues, to berecognized as part of revenues onlyupon sales and rentals realization.
REAL ESTATE LEASING
Solidere’s portfolio of income-generating properties includes UNHouse and lot 1 Zokak El Blatt, eachleased to a single institutional tenant,and a compound dedicated for embassyuse. The Company also leases space inits buildings, in car parks and mooringspaces in Beirut Marina. At end 2009,the value of leased properties wasUS$393.8 million (US$366.1 millionafter depreciation: US$24.1 million inbuildings and US$3.6 million in other assets).
Gross rental income from leased space,including parking spaces and marinaberths, was US$27.3 million, againstUS$7.5 million, US$10.2 million,US$14.1 million and US$15.4 million
in 2000 to 2003; US$18.6 million,US$20.8 million and US$20.7 million in 2004 to 2006; US$20.8 million in 2007,and US$21.7 million in 2008.
Residential leases relate to new andrestored flats in Saifi, Zokak El Blattand Wadi Abou Jamil. Leased officespace relates to UN House, lot 1Zokak El Blatt and the embassycompound. Other commercial space relates to offices and shops inrestored buildings, as well as shopsin Saifi Village.
SALES PROCEDURE /PAYMENT SCHEMES
A sale agreement, which includespre-development and constructionstandards and timetables, as well aspayment conditions, is signed upfront.Sales are expressed in terms of floor orbuilt-up area (net development rights).
Solidere pursued in 2009 its policy of offering buyers the possibility toeither pay cash or defer part of thesale price payment. Financing up to 75% of the land sales value bySolidere from its own equitycontinued, following the standardformula on the basis of four equalmaturities carrying interest at LIBORplus a margin of 2.5% with a floor.
Property transfer is registered beforethe Real Estate Registrar uponsigning the final sale deed, followingfulfillment of technical and legalconditions, together with themortgage contract in case of finance.Concomitant with the propertytransfer registration, the buyer/developer provides Solidere with afirst-degree mortgage on the soldproperty as guarantee against anyoutstanding payments. A bankguarantee also provides security forproper and timely execution of allconstruction works.
PROPERTY MARKETING
The Company has been successful inmarketing its residential, commercialand institutional space, new andrestored. As alternatives to a simplelease, schemes such as lease withoption to buy or outright sale wereoffered for residential space until2002 and 2004 respectively. Buyerscould also benefit from paymentfacilities. From 2005, property salesor options to buy were discontinued,with no outstanding options to buysince end 2007, and only leasescontinuing to generate income flows.
All the 136 Saifi Village apartments,totaling 30,326 sq m of floor area, had been marketed by end 2009, ofwhich 40 (7,768 sq m) were leasedand 96 (22,558 sq m) were sold, 61(13,279 sq m) after exercising optionsto buy. Concurrently, agreementshave been signed at year end for all40 restored houses or flats in Saifi,totaling 9,145 sq m in floor space.They represent 4,461 sq m of leasesand 4,684 sq m of sales, of which4,024 sq m as a result of exercisingoptions to buy. Lease agreements had also been signed for a nursery (240 sq m) and for 39 shops (3,952 sq m), as part of Quartier des Arts.
In Zokak El Blatt, 89 apartments with21,649 sq m of floor space had beenthe subject of agreements at year end.
They represent 18,795 sq m of leasesand 2,854 sq m of sales, of which 979 sq m as a result ofexercising options to buy, with one apartment available for rent (222 sq m). In Mina El Hosn, 20agreements for 6,608 sq m ofresidential floor space had beensigned including 3,638 sq m as leasesand 3,698 sq m as sales, of which1,971 sq m as a result of exercisingoptions to buy.
Also at year end, the Company had five lease agreements totaling35,078 sq m of floor space in newoffice buildings: UN House, lot 1Zokak El Blatt and the embassycompound. In the Maarad andFoch-Allenby restored officebuildings, 17 lease agreements for9,154 sq m, as well as 18 leaseagreements relating to 3,615 sq m of retail space, had been signed.
PROPERTYMANAGEMENT
Solidere provides complete full-timeproperty management, operation and maintenance services for all itsproperties. These include the newand restored buildings, the BeirutSouks, Weygand Street and block 93 car parks.
In UN House, electro-mechanical andcivil works are provided as per anoperation agreement with ESCWA.
Extending its services to otherproperty owners, Solidere signedagreements for the marketing ofseveral third-party properties, prior to undertaking their managementand maintenance.
The Company is currently offeringsuch buildings the following services:technical maintenance, cleaning,safety, security and the maintenanceof landscaped areas; marketing, leasemanagement, including drawing upbudgets, arranging insurance,collecting rents, preparing assetsinventories, subscribing to utilities,tackling co-ownership issues andpaying real estate and municipal taxes.Solidere expects to derive increasingrevenues from property managementservices in the coming years.
FUTURE PROSPECTS
Solidere is firmly relying on growth in its rental income as it steps up the delivery of new and restoredbuildings. Rental revenues will bestrongly boosted by the delivery of Beirut Souks, by far the mostimportant Solidere real estate project and its flagship commercialdevelopment.
successfullymarketingresidential,
commercial andinstitutional space
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DEVELOPERS’PROJECTS
DIVERSITY IN ARCHITECTURAL
CONCEPTS, PROGRAMS AND LAND USE
A floor area of 2.50 million sq m has been so far the subject ofdevelopment by third-party developers, in new construction and
restoration. Of these developers' projects, 1,023,778 sq m were completed, 137,857 sq m are under finishing,182,749 sq m are under construction or restoration, and the balance
is in various stages of development
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FOCH-ALLENBY
In Marfaa cadastral zone, tworesidential developments have beencompleted: Foch 94, designed byVincent Van Duysen (Belgium) andNabil Gholam on lot 1498, offering7,320 sq m over nine floors, 29 flats;and Starway furnished apartmentsbuilding, designed by Nachaat Owaidaon lot 1440, offering 3,000 sq m oversix floors, 26 flats.
Lot 108, developed by Banque duCrédit Libanais and designed by ErgaGroup, and offering 3,149 sq m overfive floors, five flats, was completed.
Two restored buildings are underfinishing: the Municipality Annex onlot 243, as per Nabil Azar design, with5,478 sq m distributed over threefloors; and Groupe du Moyen OrientHotel on lot 1144, as per JoeChehwan design, with 2,815 sq mdistributed over five floors.
Two office buildings are underfinishing. Bank of Kuwait and theArab World, designed by Abdel WahedAl Wakeel (Egypt-UK) and Arc Groupon lot 1470, offers 8,300 sq m overeight floors. Radium office building,designed by R & K Consultants on lot114, offers 2,600 sq m over five floors.
Beryt Lebanon residential building isunder redesign by Nabil Gholam onlot 1468 to offer 7,384 sq m.
NEAR BEIRUT SOUKS
The Medawar-Merheb-Moughabghabbuilding on lot 16 Marfaa, underrestoration as per Pierre Neemadesign, has 415 sq m of retail spacedistributed over two floors. TheMakassed Association building on lot 448 Marfaa, to be restored as per Wissam Jabr design, will offer3,682 sq m of office space distributedover seven floors. The project isawaiting building permit from Beirut Municipality.
In Mina El Hosn cadastral zone, threeresidential buildings are underfinishing. The Palladium mixed-usebuilding, designed by Kevin Dash andR & K Consultant on lot 2, offers14,000 sq m distributed over sevenfloors, 15 flats. 45 Park Avenue,designed by Laceco on lot 1337, offers7,150 sq m distributed over 12 floors,
12 flats. Luna One, designed by Diyar Consultants on lot 1331, has2,723 sq m distributed over sevenfloors, 10 flats.
Under construction is Park Palaceresidential building, designed byFouad Meneem on lot 1339, with12,790 sq m distributed over 10 floors,24 flats.
2.5million sq msubject to thirdparty development
to date
Three residential developments are under study. Media Fan, designed by Joe Geitani on lot 1347, with 6,351 sq m; Avenue Venture, designedby LAB Architecture and Associates(Australia) and Elie-Pierre Sabbaghon lot 1450, with 7,300 sq m; andBlock 42 development, designed byVictor Legorreta (Mexico) andFadlallah Dagher on lot 1495 Marfaa,with 13,493 sq m.
SAIFI
Two residential developments werecompleted. Saifi Village Two, designedby Nabil Gholam on lot 146, offers22,350 sq m distributed over fourbuildings of 11 floors each, 74 flats. A part of Saifi Khan residential projecton lot 752 restored as per Elias Issa's design, was completed to offer 3,467 sq m of floor areadistributed three floors with retail on ground floors.
Lakis-Majesty residential building isbeing restored as per Fadi Najemdesign on lot 735 to offer 4,630 sq mdistributed over six floors, 11 flats.
1079 Real Estate, designed by YoussefHaidar on lot 1079, is underconstruction to offer 3,358 sq mdistributed over six floors, 10 flats.
Under permitting at Beirut Municipalityare four residential developments andone office building. The Selwanbuilding, designed by Nabil Azar on lot1056, offers 2,350 sq m distributedover five floors, 14 flats. Saifi Squareand Al Mada, designed by NabilGholam on lots 1059 and 1068, offer5,115 sq m and 6,350 sq m distributedover seven floors, 16 flats and 17 flatsrespectively. The lot 749 part of SaifiKhan, designed by Elias Issa, has 783 sq m over three floors with retail on ground floor. Al MashrekInsurance Company buildingdesigned by Nabil Azar on lot 1080,offers 2,300 sq m distributed overseven floors.
ZOKAK EL BLATT
The Pavilions residential complex,designed by R & K Consultants on lot1128, offering 10,312 sq m of floorspace, is completed. It combines athree-floor private villa on Rue deFrance with a nine-floor modern infillon Rue de l’Armée, 16 apartments, fiveduplexes and two triplexes.
Under finishing are two restoredbuildings. The Doghmosh privateresidence, designed by Zahi Cardahi onlot 122, with 1,336 sq m of floor space;and Diwan Al Mouhasabat officebuilding, designed by Fares Hajj on lot 647, with 6,921 sq m of floor space.
Still under restoration, Les Gradinsprivate residence, designed by Ziad Aklon lot 73, has 734 sq m of floor space.
City Hill residential project, designedby Youssef Haidar on lot 1137, with3,090 sq m of floor space, is underpermitting at Beirut Municipality.
Awaiting architect assignment is thePérimètre Rue de France residentialdevelopment, on lot 59, planned tooffer 4,200 sq m of floor space.
G E N E R A L F R A N Ç O I S E L H A J J S T R E E TPHOTO BY FOUAD EL KHOURY
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of six floors each, 68 flats. Stow Wadi,designed by Porphyrios Associatesand Nabih Sinno on lot 1407, offersseven apartments and two duplexestotaling 3,750 sq m over seven floors.Mira Immobilière, designed by ErgaGroup on lot 1478, offers 3,624 sq mdistributed over six floors, threeapartments and one duplex. Designed by Abdel Wahed Al Wakeel(UK-Egypt) and ARC Group, theprivate residence on lot 911, offers1,595 sq m of floor space. GreenlineReal Estate, Designed by BatimatArchitects on lot 1393, offers 2,750 sq m distributed over sevenfloors: two for retail, three for officesand a duplex on the top two floors.
The Khaireddine private residence on lot 771, designed and restored by Pierre El Khoury Architect, has2,073 sq m of floor space.
Under permitting at BeirutMunicipality are a residentialdevelopment, a private residence anda hotel. Al Karmah Real Estate on lot808, designed by R & K Consultantsoffers 1,464 sq m distributed over fivefloors, seven flats. The privateresidence on lot 1375, designed byCharles Hadifé, offers 1,660 sq m offloor space. Designed by Ziad Akl incollaboration with Philippe Starck(France) on lots 834 and 1410, theRoyal Hotel and Resorts boutiquehotel with 77 rooms and 50 suitesoffers a floor space of 16,805 sq m,distributed over 12 buildings of two,three or four floors.
Still under study are a bankheadquarters, an office building and aresidential building. Al Mawared Bankheadquarters is designed by ZahaHadid (UK-Iraq) and Raed Abillamaon lot 1383, to offer 8,080 sq m offloor space. Luna Company on lot1394 is designed by A Practice to offer 4,084 sq m of floor space. WadiMansions, on lot 1442, designed byPorphyrios Associates and NabihSinno, offer 4,200 sq m of floor space.
CITY CENTERSOUTHERN GATEWAY
In Bachoura cadastral zome, TheLandmark multiuse development,designed by Jean Nouvel (France) onlot 1520, is awaiting issuance of thebuilding permit by the Muncipality. The project offers 74,412 sq m of floorspace. A 42-floor tower comprises 27 floors for a five-star hotel, with 240 rooms and 48 suites, and 15 floorsfor residential apartments overlookingRiad El Solh Square. Two ten andtwelve-floor buildings accommodateapartments, offices, retail outlets anda cinema entertainment complex atbasement levels. Piling and excavationworks started in March 2010.
The House of Arts and Culture (DarBeirut) is being developed by theMinistry of Culture on lot 739 to offer8,000 sq m of floor area devoted toeducation, culture, interactive andmultidisciplinary exchange. Followingan international design competition, it is under design by Alberto Catalano(Italy). The winner project wasselected in March 2009 for its"modestly urban and human scale,invested with a modern functionalityappropriate to Beirut's emerging new identity."
Funded by a US$20 million grant fromthe Sultanate of Oman, the project isunder study to include a cinema,exhibition spaces, a large auditorium,a small performance hall, rehearsaland production studios, a multimedialibrary and office space, withcompletion scheduled for 2013.
WADI ABOU JAMIL
In Wadi Abou Jamil, cadastral zoneMina El Hosn, one residentialdevelopment, one private residenceand one office complex arecompleted: Mina El Hosn 1466residential development, designed by Fouad Meneem on lot 1466, with1,788 sq m distributed over five floors,two duplexes and a penthouse; VillaWadi private residence on lot 855,designed by Nabil Gholam with 1,250 sq m of floor space; CedarHouse and Pine House on lot 1133,redesigned by Youssef Haidar to offer 2,000 sq m distributed overthree floors.
Three residential buildings are underfinishing. Phoenix Development,designed by Porphyrios Associates(UK-Greece) and Samir Khairallah &Partners on lot 1440, offers 4,117 sq mdistributed over seven floors, sixapartments and one duplex. WadiGardens, designed by Dar al Omran(Jordan) and Hani Murad on lot 1392,has 25,769 sq m distributed aroundan internal garden over six buildingsof eight floors each, 68 flats. Designedby Maha Nasrallah on lot 1371, TheCourtyard offers 5,280 sq m distributedaround an internal courtyard over threebuildings of seven floors each, 19 flats.
innovativeconcepts byinternational and Lebanese architects
Three residential developments, oneprivate residence and one officebuilding are under construction. WadiHills on lot 1388, designed by Agenced’Architecture Antoine Bechu(France) and Nabih Sinno, offers22,000 sq m distributed around aninternal garden over seven buildings
MARTYRS’ SQUARE AXIS
NOR TH EA S T S E C T I ON
In Marfaa cadastral zone, MeritCorporation headquarters building,designed by Nabil Gholam, is underfinishing on lot 1536, with 6,034 sq mof floor space over six floors.
Phoenician Village is a high-density,mixed-use landmark project underdevelopment. Spread over lots 1501and 1502, it will offer 205,735 sq m offloor area, thus constituting the citycenter’s largest real estatedevelopment to date. The urbandesign for the site is based on theKoetter Kim (US) planning study,updated according to the newenvelope controls incorporated in theMaster Plan amendment for sector H.The development contains fourtowers, stepping in height to a 160 mmaximum, and comprises visitorattractions and cultural facilities,upscale residential, hotel and majorcorporate office opportunities arounda central active plaza, with retail onground level. A pedestrian bridgeacross Trieste Street will connect thetowers to the waterfront componentof the project on the Beirut Port FirstBasin quayside. The development is planned to create an important visitor destination.
Beirut Harbor, designed by FouadMenem on lot 1504, will offer an office building covering 5,186 sq m of floor space.
NOR THWE S T S E C T I ON
In Marfaa cadastral zone, tworesidential developments overlookingthe Tell archeological site are understudy at Beirut Municipality. Marfaa94, designed by Machado and SilvettiAssociates (US) and Charles Hadiféon lot 1538, covers 12,700 sq mdistributed over 10 floors, 22 flats.Marfaa 1474, designed by AxelSchultes (Germany) and KamalHomsi Architects on lot 1474, offers8,270 sq m of floor space distributedover nine floors, 28 flats. The saleagreement of Park Side mixed-usedevelopment on lot 1475 wascancelled and the site is once againavailable for sale.
M ID S E C T I ON
Le Gray Hotel was completed andopened to the public in October 2009.Designed by Kevin Dash (UK) andHani Murad on lot 1489, with interiordesign by Fox Linton Associates Ltd(UK), the hotel offers 17,635 sq mover eight floors, 87 rooms and suiteswith areas ranging from 40 to 220 sq m;the building includes a commercialcenter of 5,400 sq m distributed overthree floors.
teaming up with owners and developers
Beirut Gardens residentialdevelopment, designed by ArataIsozaki (Japan) and Erga Group on lot1524, is under permitting at BeirutMunicipality. It offers 18,325 sq mover 12 floors, 59 flats and sixduplexes. The façades overlooking theGarden of Forgiveness and Martyrs’Square are covered by a white marbleskin treated as a screen with acomputer-generated geometricpattern, giving a three-dimensionalimpression.
In Saifi cadastral zone, twodevelopments are under study: theMinistry of Foreign Affairs on lot 1076,designed by Abdel Wahed Al Wakeeland ARC Group to offer 12,980 sq m ofoffice space; and Saifi Moderndevelopment on lot 1075, designed byAllies & Morrison Architects (UK) withR & K Consultants to offer 42,000 sq mof residential space.
SOU TH S E C T I ON
In Bachoura cadastral zone, fourresidential developments and a bankheadquarters are under permitting atBeirut Municipality. Tower Plus Oneand Tower Plus Two, designed byArchitectonica (US) and Erga Group onlots 1525 and 1542, offer 13,600 sq mand 14,200 sq m distributedrespectively over 13 floors, 44 flats;and 14 floors, 49 flats with retail onstreet level. 1544 Bachoura Companybuilding on lot 1544, designed by thesame architects, offers 15,000 sq mdistributed over 13 floors, 49 flats.1523 Bachoura Company building,designed by Nabil Gholam on lot 1523,offers 37,000 sq m over 13 floors, 166 flats. Immediately to its north, theCanadian Bank headquarters building,designed by Axel Schultes (Germany)and Batimat Architects on lot 1524Bachoura, offers 7,800 sq m of floorspace over eight floors, with retail onthe ground floor.
Lot 901 Saifi, designed by Erga Group,is under study to offer 11,200 sq mover 13 floors.
Architects are to be assigned forthree residential developments: 987 Bachoura Company building,former Dome City Center site, with 39,000 sq m, planned to incorporate acontemporary cultural use within thepreserved Dome; 1526 BachouraCompany building with 26,000 sq m;and 1477 Bachoura Company buildingwith 22,400 sq m.
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HOTEL DISTRICT
At the city center northwest gateway,Mina El Hosn cadastral zone, oneinternational hotel and three towersoverlooking Beirut Marina are nowoccupied. Opened in January 2010,the Four Seasons Hotel on lot 1418was designed by Dar Al-Handasah,with Pierre-Yves Rochon (France) forinterior design. It has 27,761 sq mdistributed over 25 floors, 234 roomsand suites with areas ranging from 85 to 250 sq m. The Marina Towercomplex, designed by Kohn PedersenFox Associates (US) and DarAl-Handasah on lot 1354, includesMarina Tower, with 27,343 sq m over26 floors; Marina Gardens, with 8,427 sq m over 10 floors; and MarinaCourts, with 9,079 sq m over tenfloors. Beirut Tower, designed byWimberley Allison Tong & Goo (US)and Samir Khairallah & Partners onlot 1401, has 42,458 sq m over 27floors, 63 apartments, four duplexesand two penthouses. Platinum Tower,designed by Ricardo Bofill (Spain) andNabil Gholam on lot 1421, offers53,887 sq m distributed over 34 floors,70 flats.
Two high-rise residentialdevelopments are under finishing.The Dana of CCC, designed by KevinDash (UK) and Al Salam Architects onlot 1353, offers 13,856 sq m
distributed over 10 floors, 15 flats.Capital Plaza residential building onlot 1464, designed by Machado &Silvetti Associates (US) and NabilAzar, offers 14,102 sq m distributedover 12 floors, 36 flats.
A high-rise luxury residentialdevelopment, an international hoteland an office building are underconstruction. Bay Tower on lot 1422,designed by Wimberley Allison Tong & Goo (US) and Samir Khairallah &Partners, offers 34,760 sq mdistributed over 30 floors, 92 flats. TheGrand Hyatt Hotel on lot 111, designedby Michael Graves (US) and DarAl-Handasah, has 32,122 sq mdistributed over 17 floors, 443 roomsand suites in total with retail onground floor. Stratum office building,designed by R & K Consultants on lot1364, offers 11,200 sq m over 10 floors.
Two office buildings and oneresidential development are underpermitting at Beirut Municipality.Mika Real Estate office buildings,designed by Joe Geitani on lots 1363 and 1487, respectively offer10,831 sq m and 8,866 sq m of floorspace distributed over 10 floors.Cibico residential building, designedby Joe Geitani on lot 1488, offers4,333 sq m distributed over 11 floors,14 flats.
H O T E L D I S T R I C TPHOTO BY FOUAD EL KHOURY
a broad scope of developmentrelated services
Under study are three residentialhigh-rise developments, tworesidential buildings and a hotel.Venus Real Estate on lot 1398,designed by Rafael Moneo (Spain) andSamir Khairallah and Partners, offers53,000 sq m. Beirut Terraces, twotowers on lots 1399 and 1494,designed by Herzog & de Meuron(Switzerland) and Khatib & Alami,respectively offer 26,700 sq m and26,500 sq m. Trust Construction on lot1296, designed by Bolles and WilsonFreie Architekten (Germany) and Arc Group, offers 17,800 sq m. LesRésidences on lot 1396, designed byValode et Pistre Architectes (France)and Erga Group, with Versace (Italy)for interior design, offers 26,000 sq m.Designed by Foster + Partners (UK)on lot 1397, 3 Beirut will offer 56,000 sq m. Rotana Hotel on lot1369, designed by Architecture Studio (France) and Erga Group,offers 21,155 sq m and will include150 rooms and suites with 50 furnished apartments.
WATERFRONT DISTRICT
The Mika Land residentialdevelopment is the first project to bedeveloped in the Waterfront District.The project, on lot 1493 Marfaa, isunder design by Foster + Partners(UK) and R & K Consultants, and willoffer 32,000 sq m of residential space.
V E N U S R E A L E S T A T E DESIGN BY RAFAEL MONEO / SAMIR KHAIRALLAH AND PARTNERS
B E I R U T T E R R A C E S DESIGN BY HERZOG & DE MEURON ARCHITECTS / KHATIB & ALAMI
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H O U S E O F A R T S & C U L T U R E ( D A R B E I R U T ) W I N N I N G D E S I G N
DESIGN BY ALBERTO CATALANO
S A I F I M O D E R NDESIGN BY ALLIES AND MORRISON / R & K CONSULTANTS
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SOLIDEREMANAGEMENTSERVICES
Solidere provides developmentmanagement services to somedevelopers’ projects.
Solidere initiated the design andimplementation of predominantlyresidential clusters in Wadi Abou Jamiland in some neighboring areas of MinaEl Hosn. International and Lebanesearchitects contributed design conceptsreflecting responsiveness to localcontext, culture and climate, and themarket interest led to the sale ofpractically all the properties withcluster concepts.
Apart from the usual interactivity with owners-developers, Solidere hasclosely pursued the development ofsome of those projects, which arecurrently managed by ManagementServices (SMS), a subsidiary ofSolidere. In addition to constructionmanagement, SMS provides a broadscope of services associated with realestate development: programdefinition, marketing, design control,client representation, financialmanagement, sales and post-construction operation andmaintenance.
Among projects managed by SMS,two residential developments areunder finishing. Garden View on lot1368, designed by Nabil Gholam,offers 13,778 sq m distributed over 11 floors, 34 flats, with deliveryscheduled for mid 2010. Lot 1380,designed by Charles Hadifé andTripod Architecture, offers four flatson five floors and commercial spaceon street level, totaling 2,300 sq m.The structure was completed inOctober 2009, with delivery scheduledfor end 2010.
Three residential developments areunder construction. Noor Gardens, aluxurious complex on lots 1365, 1395and 1439, is expected to be completedat the beginning of 2011. It comprisesthree clusters designed by PorphyriosAssociates (UK) and Malek
Mahmassani Architectural Practice.Respective floor areas of 4,420 sq m,3,601 sq m and 4,520 sq m aredistributed over seven floors. Upperlevels offering 22 flats and threepenthouses, with street and first floor levels dedicated to retail orcommercial use. Eden Gardens,designed by LAB Architecture andAssociates (Australia) and BatimatArchitects on lot 1333, offers 6,164 sq m of floor space distributedover six floors, 13 flats, with retail on street level. After excavations,construction works started in April2010 and the project is scheduled forcompletion at the beginning of 2012.New Zone Real Estate, designed byTripod Architecture and Nabih Sinnoon lot 1477, offers 3,626 sq mdistributed over seven floors, 12 flatsand one penthouse, with retail onstreet level; works are expected to becompleted by end 2010.
Shoring and excavation works startedon two projects, both designed byGiancarlo De Carlo and Associates(Italy) and Rafic El Khoury. BeirutSquare, on lot 1379, offers 15,260 sq mdistributed over four buildings of sixfloors, 44 flats and five penthouses.The buildings are arranged alongexternal streets, around an interiorspace divided into one common andseveral private gardens. As per theMinistry of Culture decision, the mostvaluable of the archaeological findsunearthed in the site during theexcavations will be integrated withinthe development landscaping. BeirutVillage, on lot 1370, was delayed andlater cancelled as excavationsunearthed the remnants of theRoman Hippodrome. The Ministry ofCulture has placed the site on the listof archeological sites of Lebanon, and the Directorate General ofAntiquities has expressed its interestto collaborate with Solidere onclearing and landscaping the site.
Property 709 Mina, designed byAntoine Skaf on lot 709, offers 2,263 sq m distributed over sevenfloors, seven apartments and oneduplex. The project is under study atBeirut Municipality, with constructionto start upon building permit issuance.
G R A N D H Y A T T H O T E L C O N S T R U C T I O N S I T EV I E W T O W A R D S T H E H O T E L D I S T R I C T
PHOTOS BY FOUAD EL KHOURY
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CORPORATEFUNDINGTREASURY
AND TREASURY STOCK
CORPORATE FUNDING
The strategy to reduce borrowing levelswas again pursued in 2009, utilizinggrowing levels of liquidity generatedfrom land sales. Consequently, thebank debt level was substantiallyreduced, from US$2.3 million in 2008,representing 0.13% in debt to equityratio, to zero in 2009 excludingjoint-venture activities.
In 2009, the Company pursued thepractice of resorting to flexibleshort-term credit arrangements,mainly temporary overdrafts atcompetitive interest rates.
One new short-term bank facility wassigned during 2009. Another similarfacility, signed with the same bank in 2008, was renewed in 2009, inaddition to two others signed withlocal banks in 2007 and renewed in2008 and 2009.
In 2009, the Company repaid in fullthe three loans used to finance landreclamation works: the US$22 millionlocally syndicated loan and the twoparallel facilities from Citibank
N.A. totaling US$24.7 million(US$14.7 million in export creditfinancing with guarantee from the USExport-Import Bank, and US$10 millionas local facility from Citibank Beirut).
TREASURY
The consolidated balance sheet atyear end shows positions of US$177.6 million for cash and cashbalances; US$253.7 million for bankoverdrafts and short-term facilities.
The Company maintained its policy of investing its liquid funds in assetspresenting minimum risk, and withtop-ranking banking and financialinstitutions in the domestic andinternational markets, includingsome structured products that carryhigh returns with guaranteed capital.For efficient cash management,Solidere also arranged with localbanks certain revolving currentoverdraft facilities, utilized andrefunded according to cash needs and availability.
During 2009, Solidere made 522 cashplacements totaling US$2,000 million.These figures include placementsmade in 2009, which matured in thesame year or will mature in thefollowing year.
The Company pursued again this yeara strategy of short-term cashplacements, with a weighted averageholding period of about 40.71 days.Around 371 basis points were securedon average over the median 2009three-month LIBOR rate. Interestincome earned during the year on theaggregate cash placements wasequivalent to an annualized interestrate of about 4.4%.
TREASURY STOCK
The share buyback program launchedearly in 2008, targeting to acquire Aand B shares equivalent to up to 10%of the issued capital, with a view toretire these shares and reduce capitalaccordingly, was pursued in 2009.
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SOLIDERESHARESAND GDRS
EXCHANGE LISTINGSAND TICKER SYMBOLS
Beirut Stock ExchangeSolidere A shares: SOLA.BYSolidere B shares: SOLB.BYLondon Stock ExchangeGDRs: SOLAq.L
ANALYSIS OF SHAREPRICES
Throughout the first half of the year,sequels of the world financial crisiskept Solidere share prices hoveringaround their two-year low of US$15.By the beginning of June, news ofstrong upward reversals in worldmarkets, started in March, upliftedthe local mood with prices of bothclasses of shares jumping up on highvolume. This occurred at the time ofpublication of Solidere’s 2008 year-end financials, which showed robustresults, as the Lebanese economydemonstrated strong resilience facingthe world financial crisis. During theremainder of the year, both classes ofshares fluctuated within a tight bandaround US$25, closing the year on anupbeat note.
Share A closed the year at US$23.98,representing a 45% year-on-yearincrease. Share B closed at US$23.78,a 42.39% year-on-year increase. TheGDRs, which are traded on theLondon Stock Exchange, closed theyear down at US$24.5, a 57% increasecompared to the previous year.
Both classes of shares fluctuatedduring the year between a high ofUS$27.91 and a low of US$14.38.
Trading was active, with a total ofaround 32.5 million shares changinghands, for a cumulative value of aboutUS$726 million. This representsaround 19.67% of the Companycapital changing hands. The averagedaily volume was about 133,608shares worth around US$3 million.The average price for the yearconsequently was about US$22.38, a22% decrease compared to theprevious year.
DIVIDENDDISTRIBUTION
The annual general shareholdersmeeting held on July 13, 2009,confirmed the Board of Directors’recommendation to distributedividends of US$1.15 (US$1.09 afterdeducting the compulsory 5% tax onprofit distributions) per share held, asper the shareholders’ register at thegeneral meeting date. The distributiontook effect starting September 28,2009. Of the dividends payable, in theamount of US$176.5 million, net ofdistribution tax in the amount ofUS$8.8 million, approximatelyUS$153.6 million had been settled by December 31, 2009.
RESEARCH ANDINVESTOR RELATIONS
The Company pursued its investorrelations efforts in 2009, participatingin several financial, investment,business and real estate conferences.
Solidere was invited to a series ofinternational investor conferences.Presentations were made to a large
number of international investors andinvestment funds, many of which arealready Solidere shareholders.
Solidere attended the Lebanon CapitalMarket Day in New York on March 2,2009, organized by Bank of New YorkMellon and Auerbach Grayson,accompanied by the American-Lebanese Chamber of Commerce; theEFG Hermes and Auerbach GraysonManhattan MENA conference, NewYork, October 19-20, 2009; and theBank of America Merrill Lynch MENAand Frontiers conference, Dubai,November 9-11, 2009.
Presentations on Solidere’sfundamentals and strategies that ledto the success of Beirut city center,were made at the Arab BusinessForum held in Beirut February 4-5,2009 under the theme ‘Innovativeinstitutions and their capacities toweather the current crisis’; and theEFG Hermes 7th Annual One-on-OneConference held in Sharm El Sheikh,Egypt, March 8-12.
Financial research in 2009 wasinitiated by Citibank and FFA PrivateBank at the beginning of 2009, and byEFG Hermes and Audi Bank at midyear. The Company continued toreceive at its premises numerousvisitors with diverse profiles.
A S HA R E S - DA I LY T R AD E S
B S HA R E S - DA I LY T R AD E S
30
25
20
15
10
480,000
360,000
240,000
120,000
001 Jan 09 03 Apr 09 03 Jul 09 02 Oct 09 31 Dec 09
30
25
20
15
10
480,000
360,000
240,000
120,000
001 Jan 09 03 Apr 09 03 Jul 09 02 Oct 09 31 Dec 09
2,245,428
1,207,458
S H A R E P R I C E U S $ V O L U M E
S H A R E P R I C E U S $ V O L U M E
SHARE PRICE - IN US$
VOLUME OF SHARES TRADED
SHARE PRICE - IN US$
VOLUME OF SHARES TRADED
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MANAGEMENTSYSTEMS ANDSTUDIES
MANAGEMENTINFORMATION SYSTEMS
In 2009, the Solidere IT departmentfinished upgrading its data center to meet the latest internationalspecifications for server rooms. Workis progressing on the unified databasedestined to support the Company’sbusiness intelligence applications,which will function on top of the newintegrated system. In application of the plan to gradually automate theworkflow and document controlfunctions within Solidere, theDocument Management Systemcontinues to add new departments anddivisions to the scope of its services.
A special software for Digital AssetManagement is being introduced totrack, archive and control the use ofgraphic documents and photographswithin the concerned divisions.
GIS, Geographic Information Systemapplications, have been developed toserve the needs of the newly openedBeirut Souks, in terms of intelligentmaps and users experienceapplications to be installed ininformation kiosks.
The physical network of Solidere iscontinuously undertaking upgradesand updates in terms of newconnectivity to new buildings as wellas installing the latest switches toupgrade its core network functions.
URBAN AND STRATEGICSTUDIES
UR BAN D E S I GN S T UD I E S
With rising investment interest in thereclaimed area, and the contract forinfrastructure design having beensigned with Laceco, in-house urbandesign studies are in progress onbuilding massing, land use, phasingand land sales strategies for theWaterfront District. These include atemporary use strategy through theearly phases of development, creatinga new waterside destination of retail,cultural, recreational and nightlifeactivity, as well as the origin of futurepermanent city center bicycle trails.The strategy focuses along anorth-south axis or ramblapedestrian spine that will lead from Beirut Souks to the terracedesplanades of the waterfront.
Permanent development is planned to start around the periphery of the
street grid along the Ottoman WallWalk to the planned East Marina, with mountain and marina views to the east, city views to the south,waterside city park and Beirut Marinaviews to the west, and Mediterraneanviews to the north. The central blockswill then be developed, graduallyreplacing temporary uses, to housethe Convention Center, offices, hotels,serviced apartments and mixed-usesupport facilities of the specialbusiness district. The total BUA for the Waterfront District will be 1,725,000 sq m, including 105,000 sq m transferred from thetraditional BCD, with maximum BUA allocated for each parcel.
Of strategic importance to thecompletion of the traditional BCD,Italy’s leading architectural firm,Renzo Piano Building Workshop, hasbeen commissioned to undertake anurban design study of the Martyrs’Square axis, producing detailedguidelines for building massing and land use. A more human-scalevision is emerging that will soften itsmemorial and ceremonial character,encouraging Martyrs’ Square, with itsnew green corridor open to the sea, to recover its role as Beirut’s premierpublic space and center of the city life.
L AND U S E S T R AT EG Y
The Company has carried out marketstudies and concept designs for someeight new projects in the residential,serviced apartment, hotel and officesectors. Limited design competitionshave been launched for four keyprojects in the sectors chosen forSolidere development. A high qualityof international participation wasachieved in these competitions.
Solidere’s objective is to create themarket and control the supply andquality of new development in specifickey market sectors, including office,conference and exhibition, hotel,serviced apartments and certaincategories of residential space. A newland use strategy is being put in placefor that purpose. It will includedetailed planning and a more directcontrol of temporary uses, likely to bethe main activity in the WaterfrontDistrict for the next five to ten years,and serving as testing grounds andincubators for new uses that mayemerge in time as permanentfeatures of the city center.
T R AN S POR TAT I ON S T R AT EG Y
The detailed design of the Martyrs’Square corridor highlighted the needfor parking, public transportstrategies, detailed traffic modelingand traffic management. The winningscheme design of the Greekconsultant team features a dedicatedpublic transport right-of-way on thewest side of Martyrs’ Square,continuing southwards through theBeirut Gate development. Impendinggrowth in development density andemployment uses in the WaterfrontDistrict confirm the necessity for busrapid transit in the future.
A strategic transport planning projectis under way with UK consultantsArup. A large-scale traffic model hasbeen constructed for the city center,based on citywide data provided fromexisting Beirut traffic models checkedagainst traffic counts taken on thecity center periphery. The modelillustrates peak hour traffic flow,traffic build-up and vehicle turningmovements at all junctions in thenetwork. Based on new land usesprojections for sectors A and D, thetraffic model has been extended tocover the Waterfront District and theoutput will enable Solidere to provide
detailed briefing guidelines to theinfrastructure consultants for thestreet network design.
A parking strategy for the city center,also to be developed by Arup, willinclude a more detailed application inthe Waterfront District. Significantparking capacity, proposed beneaththe corniche roads and the watersidecity park, is likely to reduce parkingrequirement standards for individualblock developments. The consultantwill also propose pilot projects forconsideration by Solidere, toencourage the gradual introduction of city-wide public transport. Thestrategy will further includepedestrianization measures and theimplementation of bicycle lanesthroughout the city center.
L I GH T I NG MA S T E R P L AN -P U B L I C A R E A L I GH T I NGS T R AT EG Y
Beirut city center enjoys a high qualityand active use of its public spaces,which will comprise on completionsome 60 parks, gardens, squares andpromenade areas. Solidere intends tomaximize the value of this asset byimplementing a new public arealighting strategy, further enhancingthe city center as the capital’s mainvisitor attraction and meeting point.
Consultants are being shortlisted anda scope of work defined for a lightingmaster plan that will guide the overallstrategy. There will be three maincomponents: a festive lightingprogram for major calendar events,possibly including an annual Festivalof Light; heritage lighting; and façadelighting guidelines for private owners.
A heritage building lighting project isalready under way, with projectionlighting of many façades in thehistoric core along the route andaround important squares on theHeritage Trail. The program will begradually expanded in future years tobecome one of the key attractions ofthe city center.
S U S TA I NA B L EENV I RONMEN TA L S T R AT EG Y
The voluntary application ofsustainability measures has beenencouraged throughout Beirut citycenter for the past 10 years andseveral projects are now comingforward to the Leadership in Energyand Environmental Design (LEED)Gold Standard. While this trendcontinues to be encouraged, Soliderehas specifically resolved to develop theWaterfront District as a model projectof sustainable urban development,applying mandatory energyconservation standards and otherwide-ranging sustainability guidelines.
Consultants are to be appointedshortly, following scoping workshopsand tender procedures. Aspects of theproject will incorporate infrastructureand transportation guidelines as wellas building design guidelines, whichinclude issues related to buildingorientation, insulation values, buildingskin, building services, buildingmanagement systems and the use ofrenewable resources. Some form ofscoring system, such as LEED, BREEnvironmental Assessment Method(BREEAM) or Estidama is likely to beapplied. Training programs will follow,to enable Solidere staff to audit,approve and monitor the performanceof development projects.
L AND D E V E LO PMEN TS T R AT EG Y
A phasing strategy is being developedfor the Waterfront District, includinginfrastructure construction,temporary uses and phased sequenceof land uses, sales and real estatedevelopment.
The consultancy agreement has beenfinalized and signed with Laceco toundertake the design of moderninfrastructure networks for theWaterfront District, with workcommencing in the early summer.The project includes the design ofparking structures beneath thewaterside corniche road andwaterside city park. Infrastructuredesign will be coordinated with thetransport planning consultant, ARUP,in relation to street networkgeometry, and with the sustainabilityconsultant in relation to specificaspects of the design, ofinfrastructure systems and networks.
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BOARD OFDIRECTORSGENERAL
MANAGEMENT
CHAIR
MAN A
ND
GENERAL M
ANAGER
NASSERCHAMMAA
VIC
E C
HAIR
MAN
FADIBOUSTANY
VIC
E C
HAIR
MAN
MAHERBEYDOUN
GENERAL M
ANAGER
MOUNIR
DOUAIDY
MEMBER O
F THE B
OARD
ABDULH
AFIZMANSO
UR
MEMBER O
F THE B
OARD
RAPHAELSA
BBAGHA
MEMBER O
F THE B
OARD
FOUADELKHAZEN
MEMBER O
F THE B
OARD
SAMINAHAS
MEMBER O
F THE B
OARD
SARKISDEMERJIAN
MEMBER O
F THE B
OARD
BASILE
YARED
MEMBER O
F THE B
OARD
JOSEPHASSEILY
MEMBER O
F THE B
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MAHERDAOUK
MEMBER O
F THE B
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MOSBAHKANAFANI
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SOLIDEREORGANIZATIONAL
CHART
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TENDERING, CONTRACTING, PROCUREMENT, AND SPECIAL CORPORATE ASSIGNMENTS
BUSINESS OPERATIONS AND RELATIONS WITH PUBLIC AUTHORITIES
OPERATIONS
ASSISTANT GENERAL MANAGERS
CHIEF FINANCIALOFFICER
SHAREHOLDERS
BOARD OF DIRECTORS
STRATEGY AND PLANNING
GENERAL MANAGEMENT
C H A I R M A N A N D G E N E R A L M A N A G E R
G E N E R A L M A N A G E R CORPORATE SYSTEMS AND INVESTOR RELATIONS
QUALITY CONTROL
CORPORATE MANAGEMENTACTIVITIES
Risk Management
Business Development
WaterfrontDistrict Development
International ProjectsSupport
Network Administration
Enterprise Resource Planning
Corporate Application Development
Enterprise Project Management
Corporate Document Management
INFORMATIONTECHNOLOGY
FINANCIAL ACCOUNTING
General Accounting
Taxation
Financial Statements
Audit Relations
TREASURY AND FINANCIAL CONTROL
Treasury and Cash Management
Stock Management
Budget Control
Financial Reporting
CORPORATE FINANCE
Financial Analysis and Modeling
Business Planning
Corporate Funding
Financial Markets
LEGAL
Legal Counsel
Contract Structuring and Management
International Projects Support
ADMINISTRATION
Human Resources
General Services
COMMERCIAL SALES, LEASING AND RETAIL MANAGEMENT
Land Sales
Real Estate Leasing
Beirut Souks
Retail Management
URBAN MANAGEMENT
Urban Design
Town Planning
Development Control
Property Control
Landscaping and Public Space Design
International Projects Support
Design Control
Execution Control
Technical Control Third-Party
BROADBAND NETWORK SYSTEMS
CORPORATE REPORTING AND PUBLICATIONS
Research Reporting and Editorial
Creative Artwork and Production
Website Development
International Projects Reporting and Publications
PUBLICRELATIONS AND COMMUNICATION
Promotion and Advertising
Media Relations
Events and Activities
International Projects Communication
INFRASTRUCTURE AND SITE LOGISTICS
Infrastructure Execution and Maintenance
Landscape Execution and Maintenance
Car Parking Facilities
Site Logistics Support
OPERATIONS MAINTENANCE AND TECHNICAL SERVICES
Real Estate Operations and Maintenance
CCTV Surveillance Network
Beirut Marina
Technical Support Services
REAL ESTATE DEVELOPMENT
Restoration
New Developments
Third-Party Developments
PROPERTY ADMINISTRATION
Contract Administration
Recuperation
PublicServices
Property Management Services
Relations with Public Authorities
Property Fiscal Management
TENDERING CONTRACTING AND PROCUREMENT
Tendering for Infrastructure Activities
Tendering for Construction Projects
Procurement of Services and Supplies
Special Corporate Assignments
2009
SOLIDEREORGANIZATIONALCHART
122
2009
SOLIDEREORGANIZATIONALCHART
123
124
INDEPENDENTAUDITORS' REPORTTo the shareholdersThe Lebanese Company for the Developmentand Reconstruction of Beirut Central District s.a.l.Beirut - Lebanon
We have audited the accompanying consolidated financial statements of The Lebanese Company for theDevelopment and Reconstruction of Beirut Central District s.a.l. and its Subsidiaries (the Group), which comprisethe consolidated statement of financial position as at December 31, 2009, and the consolidated statement ofincome, statement of comprehensive income, statement of changes in equity and statement of cash flows forthe year then ended, and a summary of significant accounting policies and other explanatory notes.
M A N A G E M E N T A N D D I R E C T O R S ’ R E S P O N S I B I L I T Y F O R T H E F I N A N C I A L S T A T E M E N T S
Management and Directors are responsible for the preparation and fair presentation of these financialstatements in accordance with International Financial Reporting Standards. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud or error; selecting andapplying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.
A U D I T O R ’ S R E S P O N S I B I L I T Y
Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance whether the financialstatements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.
O P I N I O N
In our opinion, the consolidated financial statements present fairly, in all material respects, the financialposition of The Lebanese Company for the Development and Reconstruction of Beirut Central District s.a.l.and its Subsidiaries (the Group) as of December 31, 2009, and of its consolidated financial performance andits cash flows for the year then ended in accordance with International Financial Reporting Standards.
Beirut, Lebanon, April 9, 2010 Deloitte & Touche Ernst & Young
FINANCIAL STATEMENTS
AND AUDITORS’REPORT
125
127
CONSOLIDATED STATEMENT OF INCOMEThe accompanying notes form an integral part of these financial statements
December 31, 2009 2008Notes US$ US$
Revenues from land sales 305,081,555 256,635,633Revenues from rented properties 27,254,090 21,670,899Revenues from rendered services 23 3,975,801 7,426,645Provision for previously recognized sales 16 (e) (7,007,910) -Cost of land sales (80,646,511) (62,422,633)Charges on rented properties 24 (9,522,142) (8,345,604)Cost of rendered services 25 (4,670,872) (6,712,741)Loss on sale of investment properties (376,453) (2,108,123)Net revenues from operations 234,087,558 206,144,076Share result from an associate 7,861,360 (1,798,576)General and administrative expenses 26 (24,338,674) (19,351,682)Depreciation of fixed assets 14 (5,057,481) (4,512,679)(Provision)/write-back of provision againstland and real estate development cost 11 (2,562,760) 9,604,171Write-off of land and real estate development cost 11 - (8,036,672)Provision for impairment on collectivelyassessed accounts receivable 9 (9,000,000) -Other expenses 30 (4,737,547) (570)Other income 27 352,120 832,602Other taxes 16 (300,000) (3,739,823)Interest income 28 37,044,009 55,496,110 Interest expense 29 (11,382,997) (20,309,559)Profit before tax 221,965,588 214,327,398Income tax expense 16 (32,754,575) (31,608,453)
Profit for the year 189,211,013 182,718,945
Basic/diluted earnings per share 31 1.2348 1.1781
The accompanying notes form an integral part of these financial statements
126
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONThe accompanying notes form an integral part of these financial statements
December 31, 2009 2008Notes US$ US$
A S S E T S
Cash and banks balances 7 177,622,687 291,703,019Prepayments and other debit balances 8 36,585,843 34,803,021Accounts and notes receivables, net 9 346,474,210 296,401,913Investment securities 10 - 5,901,300Inventory of land and projects in progress 11 1,124,616,666 1,274,486,606Investment properties, net 12 366,099,244 216,787,077Investment in an associate 13 311,384,302 296,444,933Fixed assets, net 14 36,200,879 37,304,608
Total Assets 2,398,983,831 2,453,832,477
L I A B I L I T I E S
Bank overdrafts and short term facilities 15 253,659,010 176,996,835Accounts payable and other liabilities 16 112,554,605 95,310,680Dividends payable 17 70,541,046 62,989,562Deferred revenue and other credit balances 18 150,280,315 256,523,727Loans from banks and financial institutions 19 1,987,023 2,347,054Total Liabilities 589,021,999 594,167,858
S H A R E H O L D E R S ' E Q U I T Y
Issued capital at par value US$10 per share: 20100,000,000 class (A) shares 1,000,000,000 1,000,000,00065,000,000 class (B) shares 650,000,000 650,000,000
1,650,000,000 1,650,000,000Legal reserve 21 112,304,146 94,067,105Retained earnings 266,525,826 272,280,032Foreign currency translation reserve 81,009 -Cumulative changes in fair value of available for sale securities 10 - 185,130Surplus on sales of treasury shares 11,723,032 11,653,751Less: Treasury shares 22 (230,672,181) (168,521,399)Total Equity 1,809,961,832 1,859,664,619
Total Liabilities and Shareholders' Equity 2,398,983,831 2,453,832,477
The accompanying notes form an integral part of these financial statements
129128
CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOMEThe accompanying notes form an integral part of these financial statements
December 31, 2009 2008US$ US$
Profit for the year 189,211,013 182,718,945Other comprehensive income:Foreign currency translation reserve 81,009 -Net gain on value of available-for-sale securities - 37,638Redemption of available-for-sale securities (185,130) -Other comprehensive (loss) income for the year (104,121) 37,638Total comprehensive income 189,106,892 182,756,583
CONSOLIDATED STATEMENT OF
CH
AN
GES
IN
EQ
UIT
YThe accompanying notes form an integral part of these financial statements
Cum
ulat
ive
Cha
nges
in
Fore
ign
Fair
Val
ue o
fSu
rplu
s C
urre
ncy
Avai
labl
e-on
Sal
e of
Shar
eLe
gal
Ret
aine
dTr
ansl
atio
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r-sa
leTr
easu
ryTr
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ryC
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lR
eser
veEa
rnin
gsR
eser
veSe
curi
ties
Shar
esSh
ares
Tota
lU
S$U
S$U
S$U
S$U
S$U
S$U
S$U
S$
Bal
ance
at D
ecem
ber
31, 2
007
1,65
0,00
0,00
075
,543
,036
263,
175,
988
-14
7,49
211
,653
,751
(168
,491
,485
)1,
832,
028,
782
Allo
catio
n to
lega
l res
erve
from
200
8 pr
ofit
-18
,524
,069
(18,
524,
069)
--
--
-To
tal c
ompr
ehen
sive
inco
me
--
182,
718,
945
-37
,638
--
182,
756,
583
Trea
sury
sha
res
trad
e-
--
--
-(2
9,91
4)(2
9,91
4)D
ivid
ends
- N
ote
17-
-(1
55,0
90,8
32)
--
--
(155
,090
,832
)B
alan
ce a
t Dec
embe
r 31
, 200
81,
650,
000,
000
94,0
67,1
0527
2,28
0,03
2-
185,
130
11,6
53,7
51(1
68,5
21,3
99)
1,85
9,66
4,61
9
Allo
catio
n to
lega
l res
erve
from
200
9 pr
ofit
-18
,237
,041
(18,
237,
041)
--
--
-To
tal c
ompr
ehen
sive
inco
me
--
189,
211,
013
81,0
09(1
85,1
30)
--
189,
106,
892
Surp
lus
on s
ale
of tr
easu
ry s
hare
s-
--
--
69,2
81-
69,2
81Tr
easu
ry s
hare
s tr
ade
--
--
--
(62,
355,
782)
(62,
355,
782)
Oth
er-
-(2
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--
-20
5,00
0(4
3,22
1)D
ivid
ends
- N
ote
17-
-(1
76,4
79,9
57)
--
--
(176
,479
,957
)
Balance at D
ecem
ber 31, 2009
1,650,000,000
112,304,146
266,525,826
81,009
-11,723,032
(230,672,181)
1,809,961,832
The accompanying notes form an integral part of these financial statements The accompanying notes form an integral part of these financial statements
131
NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSYear ended December 31, 2009
1FORMATION ANDOBJECTIVE OF THECOMPANY
The Lebanese Company for theDevelopment and Reconstruction ofBeirut Central District s.a.l. (Solidere)(the Company) was established as aLebanese joint stock company on May5, 1994 based on Law No. 117/91, andwas registered on May 10, 1994 underCommercial Registration No. 67000.The articles of incorporation of theCompany were approved by DecreeNo. 2537 dated July 22, 1992.
The objective of the Company, is toacquire real estate properties, tofinance and ensure the execution ofall infrastructure works in the BeirutCentral District (BCD) area, toprepare and reconstruct the BCDarea, to reconstruct or restore theexisting buildings, to erect buildingsand sell, lease or exploit suchbuildings and lots and to develop thelandfill on the seaside.
The duration of the Company is 25years, beginning from the date ofestablishment. An extraordinarygeneral assembly dated June 29, 1998resolved to amend the duration of theCompany to be 75 years beginningfrom the date of establishment. During 2005, the Council of Ministersapproved the extension of the durationof the Company for 10 years.
The Company, based on lawNo.117/91 mentioned above, wasexempt from income tax for a periodof ten years beginning on the date offormation. As such beginning May 10,2004, the Company became subject toincome tax.
An extraordinary general assemblydated November 13, 2006 resolved toamend the objective of the Companyto include providing services andconsultancy in real estatedevelopment for projects outside theBCD area and all over the world.
During 2007, the Company grantedSolidere International Limited (anassociate) the right to use the“Solidere” brand in the execution ofreal estate projects outside the BeirutCentral District area of Lebanon.
The Company’s shares are listed onthe Beirut stock exchange and GlobalDepository Receipts (GDR) are listedon the London stock exchange(International Trading List).
2ADOPTION OF NEWAND REVISEDINTERNATIONALFINANCIALREPORTINGSTANDARDS (IFRSS)
2 . 1 S TANDARD S A F F E C T I NGP R E S EN TAT I ON ANDD I S C LO SU R E
The following new and revisedStandards have been adopted in thecurrent period in these financialstatements. Details of other Standardsand Interpretations adopted but thathave had no effect on the financialstatements are set out in section 2.2:
IAS 1 (as revised in 2007) Presentationof Financial Statements IAS 1 (2007) has introducedterminology changes (includingrevised titles for the financialstatements) and changes in theformat and content of the financialstatements.
Improving disclosures about FinancialInstruments (Amendments to IFRS 7Financial Instruments: Disclosures)The amendments to IFRS 7 expandthe disclosures required in respect offair value measurements and liquidityrisk. The Company has elected not toprovide comparative information forthese expanded disclosures in thecurrent year in accordance with thetransitional reliefs offered in theseamendments.
2 . 2 S TANDARD S ANDI N T E R P R E TAT I ON SADOP T ED W I T H NO E F F E C TON T H E F I NANC I A LS TAT EM EN T S
The following new and revisedStandards and Interpretations havealso been adopted in these financialstatements. Their adoption has nothad any significant impact on theamounts reported in these financialstatements but may affect theaccounting for future transactions or arrangements.
Amendments to IFRS 2 Share-basedPayment - Vesting Conditions andCancellations The amendments clarify the definitionof vesting conditions for the purposesof IFRS 2, introduce the concept of‘non-vesting’ conditions, and clarifythe accounting treatment forcancellations.
Amendments to IAS 32 FinancialInstruments: Presentation and IAS 1Presentation of Financial Statements –Puttable Financial Instruments andObligations Arising on LiquidationThe revisions to IAS 32 amend thecriteria for debt/equity classificationby permitting certain puttablefinancial instruments and instruments(or components of instruments) thatimpose on an entity an obligation todeliver to another party a pro-ratashare of the net assets of the entityonly on liquidation, to be classified asequity, subject to specified criteriabeing met.
130
CONSOLIDATED STATEMENT OFCASH FLOWSDecember 31, 2009 2008
Notes US$ US$
CA SH F LOWS F ROM O P E R AT I NG AC T I V I T I E S
Profit for the year before income tax 221,965,588 214,327,398Adjustments to reconcile income to net cash provided by operating activities:Depreciation 32 9,537,724 7,788,218Loss on sale of investment properties 12 445,728 2,108,123Gain on sale of securities (316,500) (645,911)(Gain)/loss on sale of fixed assets 324,169 (14,651)Provision for impairment on collectively assessed accounts receivable 9 9,000,000 -Provision for previously recognized sales 16(e) 7,007,910 -Provision for contingencies and other charges 16(d) 861,008 1,499,712Share result from an associate 13 (7,861,360) 1,798,576Interest income 28 (36,801,927) (54,522,764)Interest expense 32 11,382,602 20,506,797Changes in working capital:Prepayments and other debit balances 8(b) 5,833,972 14,820,105Accounts and notes receivable 32 (59,628,768) 21,292,223Inventory of land and projects in progress 32 142,392 46,691,451Accounts payable and other liabilities 32 20,730,270 (17,921,830)Deferred revenues and other credit balances 8(b) (106,243,412) 23,376,275Interest received 29,178,257 45,018,642Income tax paid (46,496,652) (33,403,422)Net cash provided by operating activities 59,061,001 292,718,942
CA SH F LOWS F ROM I N V E S T I NG AC T I V I T I E S
Short term deposit (42,648,774) -Pledged term deposits with banks 5,022,870 2,105,602Receivable from recuperated properties 32 556,469 1,068,588Acquisition of fixed assets 14&32 (4,378,967) (2,617,276)Acquisition of investment properties 12 (4,388,522) (340,604)Proceeds from sale of fixed assets 11,658 53,100Proceeds from sale of investment properties 12 967,320 8,454,923Proceeds from sale of securities 6,000,000 4,851,911Investment in an associate 13 (6,997,000) (10,784,850)Net cash (used in)/provided by investing activities (45,854,946) 2,791,394
CA SH F LOWS F ROM F I NANC I NG AC T I V I T I E S
Bank loans (settlement) (2,347,054) (4,694,109)Bank loans (additions) 1,987,023 -Dividends paid 17 (168,971,694) (130,559,521)Deferred credits under structured contracts - (170,280,000)Treasury shares (62,286,501) (57,914)Interest paid (9,956,237) (19,768,148)Net cash used in financing activities (241,574,463) (325,359,692)
Net change in cash and cash equivalents (228,368,408) (29,849,356)Cash and cash equivalents -- Beginning of the year 109,626,314 139,475,670
Cash and cash equivalents -- End of the year 32 (118,742,097) 109,626,314
The accompanying notes form an integral part of these financial statements
133132
IFRIC 13 Customer LoyaltyProgrammesThe Interpretation provides guidanceon how entities should account forcustomer loyalty programmes byallocating revenue on sale to possiblefuture award attached to the sale.
IFRIC 15 Agreements for theConstruction of Real Estate The Interpretation addresses howentities should determine whether anagreement for the construction of
real estate is within the scope of IAS11 Construction Contracts or IAS 18Revenue and when revenue from theconstruction of real estate should berecognized.
IFRIC 16 Hedges of a Net Investmentin a Foreign Operation The Interpretation provides guidanceon the detailed requirements for netinvestment hedging for certain hedgeaccounting designations.
Improvements to IFRSs (2008)Amendments to IFRS 5, IAS 1, IAS 16,IAS 19, IAS 20, IAS 23, IAS 27, IAS 28,IAS 29, IAS 31, IAS 36, IAS 38, IAS 39,IAS 40 and IAS 41 resulting from theMay and October 2008 AnnualImprovements to IFRSs majority ofwhich are effective for annual periodsbeginning on or after January 1, 2009.
3SUMMARY OFSIGNIFICANTACCOUNTINGPOLICIES
The consolidated financial statementshave been prepared in accordancewith International Financial ReportingStandards.
The consolidated financial statementsare presented in U.S. Dollars.
The consolidated financial statementsare prepared under the historical cost
convention as modified for themeasurement at fair value ofavailable-for-sale financial assetsand derivatives, as applicable.
The consolidated financialstatements incorporate the financialstatements of The LebaneseCompany for the Development andReconstruction of Beirut CentralDistrict s.a.l. and its controlledsubsidiaries drawn up to December31 of each year. Control is achievedwhere the Group has the power togovern the financial and operating
2 . 3 S TANDARD S AND I N T E R P R E TAT I ON S I S S U ED B U T NO T Y E T E F F E C T I V E
New Standards and amendments to Standards:Effective for annual periods
beginning on or after
IFRS 1 (revised) First time Adoption of IFRS and IAS 27 (revised) Consolidated and Separate Financial Statements – Amendment relating to Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate July 1, 2009
IFRS 3 (revised) Business Combinations – Comprehensive revision on applying the acquisition method and consequential amendments to IAS 27 (revised) Consolidated and Separate Financial Statements, IAS 28 (revised) Investments in Associates and IAS 31 (revised) interests in Joint Ventures July 1, 2009
IAS 39 (revised) Financial Instruments: Recognition and Measurement – Amendments relating to eligible hedged Items (such as hedging inflation risk and hedging with options) July 1, 2009
IFRS 2 (revised) Share-based payment – Amendment relating to Bank cash-settled Share-based payments January 1, 2010
IAS 32 (revised) Financial Instruments: Presentation – Amendments relating to classification of rights Issue February 1, 2010
IAS 24 Related Party Disclosures – Amendment on disclosure requirements for entities that are controlled, jointly controlled or significantly influenced by a government January 1, 2011
IFRS 9 Financial Instruments: Classification and Measurement (intended as complete replacement for IAS 39 and IFRS 7) January 1, 2013
Amendments to IFRS 2, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38 and IAS 39 resulting from April 2009 Annual Improvements to IFRSs. Majority effective for
annual periods beginning onor after January 1, 2010
The directors anticipate that the adoption of all of the above Standards and Interpretations will have no material impact onthe financial statements of the Group in the period of initial application.
policies of an entity so as to obtainbenefits from its activities.
Where necessary, adjustments aremade to the financial statements ofsubsidiaries to bring their accountingpolicies in line with those used byother members of the Group.
All intra-Group balances, transactions,income and expenses and profits andlosses resulting from intra-Grouptransactions are eliminated in full.
Group entities comprise the following:
Ownership Date ofCompany Share Establishment
Beirut Water Front Development s.a.l. (Joint Venture)(Proportionate consolidation) 50 April 2004
Beirut Real Estate Management and Services s.a.l.(Joint Venture), (Proportionate consolidation) 45 September 2005
Solidere Management Services s.a.l. 100 June 2006
Solidere Management Services (Offshore) s.a.l. 100 March 2007
Solidere International Holding s.a.l. 100 May 2007
The significant accounting policies adopted are set here below:
A . B A S I S O F P R E S EN TAT I ON
In view of the long term nature andparticulars of the Group's operations,the consolidated financial statementsare presented on the basis that theoperations have realization andliquidation periods spread over theduration of the Group and which aresubject to market conditions andother factors commonly associatedwith development projects; as such,assets and liabilities are reflected inthe statement of financial positionwithout distinction between currentand long-term classifications.
B . F O R E I GN C U R R ENC I E S
The functional and presentationcurrency is the U.S. Dollars, inaccordance with the applicable law,which reflects the economicsubstance of the underlying eventsand circumstances of the Group.Transactions denominated in other
currencies are translated into U.S.Dollars at the exchange ratesprevailing at the dates of thetransactions. Monetary assets andliabilities stated in currencies otherthan the U.S. Dollar are translated atthe rates of exchange prevailing at theend of the year. The resultingexchange gain or loss which is notmaterial is reflected in theconsolidated statement of income.
C . I M PA I RM EN T ANDUNCOL L E C T I B I L I T Y O F F I NANC I A L A S S E T S
An assessment is made at eachconsolidated statement of financialposition date to determine whetherthere is objective evidence that afinancial asset or group of financialassets may be impaired. If suchevidence exists, the estimatedrecoverable amount of that asset andany impairment loss are determinedbased on the present value ofexpected future cash flows.
Impairment losses are recognized inthe consolidated statement of income.
D . AC COUN T S AND NO T E SR E C E I VA B L E
Accounts and notes receivable whichare originated by the Group are statedat amortized cost less any amountwritten off and provisions forimpairment. An assessment is madeat each consolidated statement offinancial position date to determinewhether there is objective evidencethat accounts or notes receivable maybe impaired. If such evidence exists,the estimated recoverable amount ofthat asset is determined and anyimpairment loss, based on the netpresent value of future anticipatedcash flows discounted at originaleffective interest rates, is included inthe consolidated statement of income.
The carrying amount of the asset isadjusted through the use of anallowance account.
135134
E . F I NANC I A L I N S T RUMEN T S
Financial assets and financialliabilities are recognized in theGroup’s consolidated statement offinancial position when the Groupbecomes a party to the contractualprovisions of the instrument.
When a financial instrument gives riseto a contractual obligation on the partof the Group to deliver cash oranother financial asset or to exchangeanother financial instrument underconditions that are potentiallyunfavorable, it is classified as afinancial liability. The instrument is anequity instrument if, and only if, bothconditions (a) and (b) below are met:
(a) The instrument includes nocontractual obligation to deliver cashor another financial asset to anotherentity; or to exchange financial assetsor financial liabilities with anotherentity under conditions that arepotentially unfavorable to the issuer.
(b) If the instrument will or may besettled from the Group’s own equityinstruments; it is a non-derivativethat includes no contractualobligation for the Group to deliver avariable number of its own equityinstruments; or a derivative that will be settled only by the Groupexchanging a fixed amount of cash or another financial asset for a fixednumber of its own equity instruments.
Financial assets within the scope ofIAS 39 are classified as financialassets at fair value through profit orloss, loans and receivables,held-to-maturity investments oravailable-for-sale financial assets, asappropriate. When financial assetsare recognized initially, they aremeasured at fair value, plus, in thecase of investments not at fair valuethrough profit or loss, directlyattributable transaction costs.
The Group determines theclassification of its financial assets oninitial recognition and, where allowedand appropriate, re-evaluates thisdesignation at each financial year end.
All regular way purchases and salesof financial assets are recognised onthe trade date, which is the date thatthe Group commits to purchase theasset. Regular way purchases or
sales are purchases or sales offinancial assets that require deliveryof assets within the period generallyestablished by regulation orconvention in the marketplace.
Held-to-Maturity SecuritiesHeld-to-maturity securities, whichhave fixed or determinable paymentsand which are intended to be held tomaturity, are subsequently measuredat amortized cost, less provision forimpairment in value. This cost iscomputed as the amount initiallyrecognized minus principalrepayments, plus or minus thecumulative amortization using theeffective interest method of anydifference between the initiallyrecognized amount and the maturityamount. Amortized cost is calculatedby taking into account any discount orpremium on acquisition.
Impairment loss on such investmentsis recognized in the consolidatedstatement of income.
Loans and ReceivablesLoans and receivables are non-derivative financial assets with fixedor determinable payments that arenot quoted in an active market. Afterinitial measurement, loans andreceivables are carried at amortizedcost using the effective interestmethod less any allowance forimpairment. Gains and losses arerecognized in profit and or loss whenthe loans and receivables arederecognized or impaired as well asthrough the amortization process.
Available-for-Sale SecuritiesAvailable-for-sale securities arethose non-derivative financial assetsthat are designated as available-for-sale or are not classified in anyother category. After initialrecognition available-for-salefinancial assets are measured at fairvalue with gains or losses beingrecognized net of deferred tax inother comprehensive income (“OCI”)and accumulated as a separatecomponent under equity until theinvestment is derecognized or untilthe investment is determined to be impaired at which time thecumulative gain or loss previouslyaccumulated in equity is included inthe consolidated statement of income.
Fair ValueThe fair value of investments that areactively traded in organized financialmarkets is determined by referenceto quoted market bid prices at theclose of business on the consolidatedstatement of financial position date.For investments where there is noactive market, fair value isdetermined using valuationtechniques. Such techniques includeusing recent arm’s length markettransactions, reference to the currentmarket value of another instrument,which is substantially the same,discounted cash flow analysis andother pricing models.
DerecognitionFinancial assetsA financial asset (or where applicable,a part of a financial asset or part of agroup of similar financial assets) isderecognized where:
> The rights to receive cash flowsfrom the asset have expired, or
> The Group has transferred its rightsto receive cash flows from the asset,or has assumed an obligation to paythe received cash flow in full withoutmaterial delay to a third party under a‘pass through’ arrangement, and
> Either (a) the Group has transferredsubstantially all the risks and rewardsof the asset, or (b) the Group hasneither transferred nor retainedsubstantially all the risks and rewardsof the asset, but has transferredcontrol of the asset.
When the Group has transferred itsrights to receive cash flows from anasset and has neither transferred norretained substantially all the risks andrewards of the asset nor transferredcontrol of the asset, the asset isderecognized to the extent of theGroup’s continuing involvement in theasset. Continuing involvement thattakes the form of a guarantee over thetransferred asset is measured at thelower of the original carrying amountof the asset and the maximumamount of consideration that theGroup could be required to repay.
When continuing involvement takesthe form of a written and/orpurchased option (including a cashsettled option or similar provision) on
the transferred asset, the extent ofthe Group's continuing involvement isthe amount of the transferred assetthat the Group may repurchase,except that in the case of a writtenput option (including a cash settledoption or similar provision) on anasset measured at fair value, theextent of the Group's continuinginvolvement is limited to the lower ofthe fair value of the transferred assetand the option exercise price.
Financial liabilitiesA financial liability is derecognizedwhen the obligation under the liabilityis discharged or cancelled or expires.Where an existing financial liability isreplaced by another from the samelender on substantially differentterms, or the terms of an existingliability are substantially modified,such an exchange or modification istreated as a derecognition of theoriginal liability and the recognition ofa new liability and the difference inthe respective carrying amount isrecognized in statement of income.
OffsettingFinancial assets and financialliabilities are only offset and the netamount is reported in theconsolidated statement of financialposition when there is a legallyenforceable right to set-off therecognized amounts and the Groupintends to either settle on a net basis,or to realize the asset and the liabilitysimultaneously.
F . I N V EN TORY O F L AND ANDP RO J E C T S I N P ROGR E S S
Inventory of land and projects inprogress are stated at the lower ofcost and estimated net realizablevalue. Costs include appraisal valuesof real estate plots constituting thecontributions in kind to capital (Ashares), in addition to capitalizedcosts. Capitalized costs comprise thefollowing:
> Project direct costs and overheadsrelated to the properties development,construction and project managementas a whole, as well as acquisition,zoning, and eviction costs.
> Indirect costs, such as overheads,which were partially allocated toinventory of land and projects inprogress.
G . I N V E S TM EN T P RO P E R T I E S
Investment properties which representproperties held to earn rent and/or forcapital appreciation are measuredinitially at cost and subsequent toinitial recognition are stated at theircost less accumulated depreciationand any impairment in value.
Depreciation is computed using thestraight-line method over theestimated useful lives of theproperties, excluding the cost of land,based on the following annual rates:
Buildings 2%
Furniture, fixtures, equipment
and other assets 4%-15%
The carrying amount includes thecost of replacing part of an existinginvestment property at the time thatcost is incurred if the recognitioncriteria are met. Other subsequentexpenditure is capitalized only when itincreases future economic benefits ofthe related item of investmentproperties. All other expenditure isrecognized in the consolidatedstatement of income as the expenseis incurred.
Transfers are made to investmentproperties when, and only when,there is a change in use, evidenced bythe end of owner occupation,commencement of an operating leaseto another party or completion ofconstruction or development.
Transfers are made from investmentproperties when, and only when,there is a change in use, evidenced bycommencement of owner occupationor commencement of developmentwith a view to sell.
H . IN TEREST IN JO INT V ENTURES
The Group has interests in jointventures. A joint venture is acontractual arrangement wherebytwo or more parties undertake aneconomic activity that is subject tojoint control. The Group recognizes itsshare in joint ventures by using theproportionate consolidation method.Investments in joint ventures areaccounted for in the standalonefinancial statements using historicalcost net of any impairment loss.Impairment loss is recognized in thestatement of income.
The Group consolidates its share inassets, liabilities, revenues andexpenses with related captions in theconsolidated financial statements.
Financial statements of joint venturesare prepared for the same fiscal year,using the same accounting policies.
When the Group contributes or sellsassets to the joint venture, anyportion of gain or loss from thetransaction is recognized based onthe substance of the transaction.When the Group sells assets to thejoint venture, the Group does notrecognize its share of the profits fromthe transaction until the joint ventureresells the assets to an independentparty.
The joint venture is proportionatelyconsolidated until the date on whichthe Group ceases to have joint controlover the joint venture.
I . I N V E S TM EN T S I NA S SOC I AT E S
The Group’s investments inassociates are accounted for underthe equity method of accounting.These are entities over which theGroup exercises significant influenceand which are neither subsidiariesnor joint ventures.
Under the equity method ofaccounting, the interest in theassociate is carried in theconsolidated statement of financialposition at cost as adjusted for postacquisition changes in the Group’sshare of the net assets of theassociate, less any impairment in thevalue of the individual investment.
J . F I X E D A S S E T S
Fixed assets are stated at cost net ofaccumulated depreciation and anyimpairment in value. Depreciation iscomputed using the straight-linemethod over the estimated usefullives of the assets based on thefollowing annual rates:
Buildings 2%
Marina 2%
Furniture and fixtures 9%
Freehold improvements 9%
Plant 10%
Machines and equipment 15%-20%
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Expenditure incurred to replace acomponent of an item of fixed assetsthat is accounted for separately iscapitalized and the carrying amountof the component that is replaced iswritten off. Other subsequentexpenditure is capitalized only when itincreases future economic benefits ofthe related item of fixed assets. Allother expenditure is recognized in theconsolidated statement of income asthe expense is incurred.
K . I M PA I RM EN T O F TANG I B L EA S S E T S
At each consolidated statement offinancial position date, the carryingamounts of tangible assets(investment properties and fixedassets) are reviewed to determinewhether there is any indication thatthese assets have suffered animpairment loss. If any suchindication exists, the recoverableamount of the asset is estimated inorder to determine the extent of theimpairment loss, if any.
Recoverable amount is defined as thehigher of:
> Fair value that reflects marketconditions at the balance sheet dateless cost to sell, if any.
> Value in use assessed as thepresent value of estimated futurecash flows expected to arise from thecontinuing use of the asset and fromits disposal at the end of its usefullife, only for applicable assets withcash generation units, as applicable.
Where an impairment losssubsequently reverses, the carryingamount of the asset is increased tothe revised estimate of its recoverableamount, but so that the increasedcarrying amount does not exceed thecarrying amount that would havebeen determined had no impairmentloss been recognized for the asset inprior years. A reversal of animpairment loss is recognizedimmediately in statement of income,unless the relevant asset is carried ata revalued amount, in which case thereversal of the impairment loss istreated as a revaluation increase.
The impairment loss is recognized inthe consolidated statement of income.
L . T R E A SU RY S HA R E S
Own equity instruments which arereacquired (treasury shares) arededucted from equity. No gain or lossis recognized in profit or loss on thepurchase, sale, issue or cancellationof the Group's own equityinstruments.
Gains on sale of treasury shares arerecorded under a reserve account inequity. Losses in excess of previouslyrecognized gains are charged toretained earnings.
M . R E V ENU E R E COGN I T I ON
Revenue on land and real estate salestransactions is recognized on thebasis of the full accrual method asand when the following conditions aremet:
> A sale is consummated andcontracts are signed.
> The buyer’s initial (in principle over25% of sales price) and continuinginvestments are adequate todemonstrate a commitment to pay forthe property.
> The Group’s receivable is notsubject to future subordination.
> The Group has transferred to thebuyer the usual risks and rewards ofownership in a transaction that is insubstance a sale and the Group doesnot have a substantial continuinginvolvement with the property.
If any of the above conditions is notmet, the initial payments receivedfrom buyers are recorded underdeferred revenues and other creditbalances. Amounts are released torevenue as and when the aboveconditions are fulfilled.
Financial assets (including treasuryshares) received in return for the saleof land and real estate are valued atfair market value.
Rental income from operating leasesis recognized on a straight-line basisover the term of the relevant lease.
Interest income is recognized asinterest accrues using the effectiveinterest method, by reference to theprincipal outstanding and theapplicable interest rate.
Revenue from rendering of services isrecognized when the outcome of thetransaction can be estimated reliably,by reference to the stage ofcompletion of the transaction at theconsolidated statement of financialposition date.
N . CO S T O F S A L E S
Cost of properties sold is determinedon the basis of the built up area (BUA)- permitted right to build in squaremeters - on the sold plots based onthe terms of the sales agreements.The cost of one square meter of BUAis arrived at by dividing, totalestimated cost of the landdevelopment project over totalavailable BUA after deduction of theBUA relating to recuperatedproperties and those relating to thereligious and public administrations.
O. CA SH AND CA SHEQU I VA L EN T S
For the purpose of the statement ofcash flows, cash and cash equivalentsconsists of cash in hand, bankbalances, and short-term depositswith an original maturity of threemonths or less, net of outstandingbank overdrafts and short-termfacilities with an original maturity ofthree months or less.
P. B O R ROW ING CO S T S
Borrowing costs directly attributableto the acquisition, construction orproduction of qualifying assets, whichare assets that necessarily take asubstantial period of time to be readyfor their intended use, are added tothe cost of those assets, until suchtime that the assets are substantiallyready for their intended use.
All other borrowing costs arereflected in the consolidatedstatement of income in the period inwhich they are incurred.
Q . BANK BO R ROW ING S
Interest-bearing bank loans andoverdrafts are initially measured atthe fair value of the considerationreceived, less directly attributablecosts and are subsequently measuredat amortized cost, using the effectiveinterest rate method. Any differencebetween the proceeds (net oftransaction costs) and the settlement
or redemption of borrowings isrecognized in profit or loss over theterm of the borrowings through theamortization process, using theeffective interest rate method.
R . T R AD E AND O TH E RPAYA B L E S
Trade and other payables are initiallymeasured at fair value. Due to theirshort-term nature, the carrying amountof trade and other payablesapproximates their fair values as of thedate of the statement of financialposition. Average maturity dates oftrade payables range between 30-90days. Short duration payables with nostated interest rate are measured atoriginal invoice amount unless theeffect of imputing interest is significant.
S . TA X AT I ON
Current TaxIncome tax is determined andprovided for in accordance with theLebanese tax laws. Income taxexpense is calculated based on thetaxable profit for the year. Taxableprofit differs from net profit asreported in the consolidatedstatement of income because itexcludes items of income or expensethat are taxable or deductible infuture years and it further excludesitems that are never taxable ordeductible. The Group’s liability forcurrent tax is calculated using taxrates enacted at the consolidatedstatement of financial position date.Provision for income tax is reflectedin the consolidated statement offinancial position net of taxespreviously settled in the form ofwithholding tax.
Tax on the holding subsidiary isprovided for in accordance withArticle 6 of Legislative Decreenumber 45 dated June 24, 1983 (asadjusted in decree number 89 datedSeptember 7, 1991). The tax is cappedat USD3,317 (LBP5million).
Tax on the offshore subsidiary isprovided for in accordance byLegislative Decree number 46 datedJune 24, 1983 amended by Decreenumber 85 dated September 7, 1991.The tax is set at a flat rate of USD663(LBP1million).
Rental income is subject to the builtproperty tax in accordance with theLebanese tax law.
Deferred taxDeferred income tax is provided,using the liability method, on alltemporary differences at theconsolidated statement of financialposition date between the tax basesof assets and liabilities and theircarrying amounts.
Deferred income tax assets andliabilities are measured at the taxrates that are expected to apply to theperiod when the asset is realized orthe liability is settled, based on lawsthat have been enacted at theconsolidated statement of financialposition date.
Deferred income tax assets arerecognized for all deductibletemporary differences and carry-forward of unused tax assetsand unused tax losses to the extentthat it is probable that taxable profitwill be available against which thedeductible temporary differences andthe carry-forward of unused tax assetsand unused tax losses can be utilized.
The carrying amount of deferredincome tax assets is reviewed at eachconsolidated statement of financialposition date and reduced to theextent that it is no longer probablethat sufficient taxable profit will beavailable to allow all or part of thedeferred income tax asset to beutilized.
Taxes payable on unrealized revenuesare deferred until the revenue isrealized.
Current tax and deferred tax relatingto items that are credited or chargeddirectly to other comprehensiveincome are recognized directly inother comprehensive income.
Value added tax (VAT)Revenues, expenses and assets arerecognized net of the amount of VATexcept:
> Where the VAT incurred on apurchase of assets or services is notrecoverable from the taxationauthority, in which case the VAT is
recognized as part of the cost ofacquisition of the asset or as part ofthe expense item as applicable; and
> Receivables and payables that arestated with the amount of VATincluded.
The net amount of VAT recoverablefrom, or payable to, the taxationauthority is included as part ofreceivables or payables in theconsolidated statement of financialposition.
U . P ROV I S I ON S
Provisions are recognized when theGroup has a present obligation (legalor constructive) as a result of a pastevent, it is probable that an outflow ofresources embodying economicbenefits will be required to settle theobligation and a reliable estimate canbe made of the amount of theobligation.
The amount recognized as a provisionis the best estimate of theconsideration required to settle thepresent obligation at the consolidatedstatement of financial position date,taking into account the risks anduncertainties surrounding theobligation. Where a provision ismeasured using the cash flowsestimated to settle the presentobligation, its carrying amount is thepresent value of these cash flows.
V. EM P LOY E E S 'E ND -O F - S E RV I C E B E N E F I T S
The Group provides end-of-servicebenefits to its employees. Theentitlement to these benefits is basedupon the employees' final salary andlength of service, subject to thecompletion of a minimum serviceperiod. The expected costs of thesebenefits are accrued over the periodof employment.
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4CRITICALACCOUNTINGJUDGMENTS ANDUSE OF ESTIMATES
In the application of the accountingpolicies described in Note 3 above,management is required to makejudgments, estimates and assumptionsabout the carrying amounts of assetsand liabilities that are not readilyapparent from other sources. Theestimates and associated assumptionsare based on historical experience andother factors that are considered to berelevant. Actual results may differ fromthese estimates.
The estimates and underlyingassumptions are reviewed on anongoing basis. Revisions to accountingestimates are recognized in the periodin which the estimate is revised if therevision affects only that period, or inthe period of the revision and futureperiods if the revision affects bothcurrent and future periods.
The most significant estimate madeby the Group is the determination ofthe aggregate cost of the BeirutCentral District Project.
I M PA I RM EN T O F AC COUN T SAND NO T E S R E C E I VA B L E
An estimate of the collectible amountof accounts and notes receivable ismade when collection of the fullamount is no longer probable. Forindividually significant amounts, thisestimation is performed on anindividual basis. Amounts which arenot individually significant, but whichare past due, are assessed collectivelyand a provision is set up according tothe length of time past due, based onhistorical recovery rates.
At the statement of financial positiondate, accounts and notes receivableamounted to US$3,210,555 andUS$356,525,877 respectively, and theprovision for doubtful debts amountedto US$451,320 and provision forimpairment on collectively assessedaccounts receivable amounted toUS$9,000,000 as of the date of thestatement of financial position. Anydifference between the amountsactually collected in future periodsand the amounts expected will berecognized in the consolidatedstatement of income.
US E FU L L I V E S O F F I X E D A S S E T SAND I N V E S TMEN T P RO P E R T I E S
The Group’s management determinesthe estimated useful lives of its fixedassets for calculating depreciation.The estimate is determined afterconsidering the expected usage of theassets or physical wear and tear.Management reviews the residualvalue and useful lives annually andfuture depreciation charge would beadjusted where the managementbelieves the useful lives differ fromprevious estimates.
I M PA I RM EN T O F AVA I L A B L EFO R - S A L E E QU I T YI N V E S TM EN T S
The Group determines thatavailable-for-sale equity investmentsare impaired when there has been asignificant or prolonged decline in the fair value below its cost. Thisdetermination requires judgment. Inmaking this judgment the Groupevaluates among other factors, thenormal volatility in share price. Inaddition, the Group considersimpairment to be appropriate whenthere is evidence of deterioration inthe financial health of the investee,industry and sector performance,changes in technology, andoperational and financing cash flows.
5INTEREST IN JOINT VENTURES
The Group has interest in jointventures as follows:
(a) The Group entered into a jointventure agreement on February 11,2004, with Stow Waterfront s.a.l.(Holding) to establish BeirutWaterfront Development s.a.l. with a50% stake in the joint venture’s totalcapital amounting to US$19,900.During the year 2006, the capital ofthe joint venture was increased toUS$12,819,900 without changing theGroup’s share. The main activity ofthe joint venture is to develop,operate, manage, exploit and sell realestate properties in the Marina areain Beirut Central District.
As per the terms of the agreement,on December 31, 2005, the Group soldproperties with an aggregate cost ofUS$10,100,000 from properties held
for development and sale, to the jointventure for a total consideration ofUS$31,600,000. The other venturercontributed in cash an amount ofUS$31,600,000 to the joint venture.
(b) The Group entered into a jointventure agreement on December 23,2005, with Aswaq Management andServices L.L.C. to establish BeirutReal Estate Management andServices s.a.l., with a 45% stake in thejoint venture’s capital amounting toUS$19,900. The main activity of thejoint venture is to manage and marketAswaq Beirut Project which is ownedby the Lebanese Company for theDevelopment and Reconstruction ofBeirut Central District s.a.l.
The Group’s share of the assets,liabilities, income and expenses of thejointly controlled entities at December31, 2009 and 2008, included in theconsolidated financial statements,are as follows:
December 31, 2009 2008US$ US$
A S S E T S
Cash and bank balances 4,734,357 8,682,897Prepayments and other debit balances 1,761,462 66,098Inventory of land and projects in progress 18,893,699 14,046,207Fixed assets, net 107,569 129,140
25,497,087 22,924,342
L I A B I L I T I E S
Accounts payable and other liabilities 9,413,277 6,541,3289,413,277 6,541,328
I N COME AND E X P EN S E S 2009 2008US$ US$
Revenues from consulting services 537,302 231,260General and administrative expenses (531,334) (383,867)Depreciation (26,423) (16,399)Other income 3,100 -Interest income 196,525 279,209Interest expense (16,510) (19,875)Profit for the year before income tax 162,660 90,328
Income tax (47,099) (35,737)Profit for the year 115,561 54,591
6OPERATINGSEGMENT
The business segments’ reporting isdetermined as the Group’s risk andrates of return are affectedpredominantly by differences in the products and services. Thegeographical operating segment
offers products and services througha specific economic environment andis subject to risks and returns thatdiffer from other economicenvironments and is considered theprimary segment. The Group has nosecondary segment.
The Group operates in twogeographic markets, the Lebanese
market and the Middle East marketconsisting primarily of the UnitedArab Emirates (UAE), Egypt and theKingdom of Saudi Arabia (KSA). Thefollowing table shows the distributionof the Group’s revenues, profit for theyear, total assets and total liabilitiesby geographical segment.
Lebanon Middle East TotalUS$ US$ US$
2009Revenues 336,311,446 - 336,311,446Profit for the year 181,349,653 7,861,360 189,211,013Total assets 2,087,599,529 311,384,302 2,398,983,831Total liabilities 589,021,999 - 589,021,999
2008Revenues 285,733,177 - 285,733,177Profit for the year 184,517,521 (1,798,576) 182,718,945Total assets 2,157,387,544 296,444,933 2,453,832,477Total liabilities 594,167,858 - 594,167,858
141140
7CASH AND BANK BALANCES
December 31, 2009 2008US$ US$
Cash on hand 119,731 88,252Current accounts 11,978,956 7,921,544Short term deposits 165,467,000 278,613,353
177,565,687 286,623,149Pledged term deposits 57,000 5,079,870
177,622,687 291,703,019
Short term deposits mature betweenJanuary and March 2010 (December31, 2008: Short term deposits maturein January and April 2009). Theaverage yield on the term deposits as of December 31, 2009 was
approximately 4.59% (4.6% for theyear ended December 31, 2008).
Pledged term deposits as ofDecember 31, 2008 include depositsof US$5million pledged against a
stand-by letter of credit to the extentof about US$3.35million and against a local bank’s loan to the extent ofUS$3million as explained under Note19 and Note 34(h).
8PREPAYMENTS AND OTHER DEBIT BALANCES
December 31, 2009 2008US$ US$
Advance payments to contractors 12,921,003 5,113,251Advances to employees 2,826,155 2,485,084Accrued interest income (a) 7,646,393 9,504,122Prepaid expenses 2,609,408 2,365,089Deferred tax assets (b) 2,712,165 2,455,798Due from related parties (c) 1,710,214 5,864,520Other debit balances 6,160,505 7,015,157
36,585,843 34,803,021
(a) Accrued interest income consists of the following:
December 31, 2009 2008US$ US$
Interest on bank deposits 1,054,049 1,502,022Interest on notes and accounts receivables 6,592,344 8,002,100
7,646,393 9,504,122
(b) Deferred tax assets caption consists of the following:
December 31, 2009 2008US$ US$
Deferred tax assets on unrealized profits fromsales to a joint venture – Note 5 (a) 1,612,500 1,612,500Deferred tax assets on cost of land sold – Note 16 (c) 1,099,665 843,298
2,712,165 2,455,798
(c) Due from related parties caption consists of the following:
December 31, 2009 2008US$ US$
Solidere International Limited 1,703,464 5,857,770Brems International s.a.l. (Offshore) 6,750 6,750
1,710,214 5,864,520
The above balances are interest free.
9ACCOUNTS AND NOTES RECEIVABLE, NET
December 31, 2009 2008US$ US$
Notes receivable 356,525,877 292,850,322Accounts receivable 3,210,555 29,581,896Receivables from tenants 15,108,508 6,919,018Less: Unearned interest (18,919,410) (32,498,003)Less: Provision for problematic receivables (451,320) (451,320)Less: Provision for impairment on collectively assessedaccounts receivable (9,000,000) -
346,474,210 296,401,913
The Group’s credit risk exposure isspread mainly over 56 counter-parties;6 customers constitute 80% of thetotal exposure and 50 customersconstitute the remaining 20% as of
December 31, 2009 (as of December31, 2008, 93 counter-parties; 6customers constitute 70% of the totalexposure and 87 customers constitutethe remaining 30%).
Notes receivable, which resultedmainly from sales carry the followingmaturities:
December 31, 2009 2008US$ US$
Doubtful balances 470,605 470,605Overdue 21,095,564 5,155,2552009 - 121,950,5342010 117,983,925 65,793,7952011 66,342,915 48,386,4732012 53,128,953 28,392,4992013 45,961,936 1,621,2582014 and above 51,541,979 21,079,903
356,525,877 292,850,322
As at December 31, the aging analysis of notes receivable is as follows:
December 31, 2009 2008US$ US$
Doubtful balances 470,605 470,605Past due but not impaired:>120 days 21,095,564 5,155,255
21,095,564 5,155,255
Neither past due nor impaired 334,959,708 287,224,462356,525,877 292,850,322
The average yield on accounts andnotes receivable is mainly dependanton the Libor rate but subject to a floor
which was 7% as of December 31,2009 (7% as of December 31, 2008).
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11INVENTORY OF LAND AND PROJECTS IN PROGRESS
December 31, 2009 2008US$ US$
Land and land development works, net (a) 1,007,443,319 1,101,672,564Real estate development projects, net (b) 117,173,347 172,814,042
1,124,616,666 1,274,486,606
(a) Land and land development works include the following cost items:
December 31, 2009 2008US$ US$
Acquired properties (a.1) 966,114,168 959,044,344Pre-acquisition costs (a.2) 9,412,802 9,412,802Infrastructure costs (a.3) 680,263,874 662,520,215Eviction costs (a.4) 259,842,988 259,749,466Capitalized costs (a.5) 60,439,543 63,276,868Cumulative costs 1,976,073,375 1,954,003,695Less: Cost of land sold, net (830,063,056) (750,075,601)Less: Cost of land transferred to real estate development projects (132,213,879) (95,902,409)Less: Cost of infrastructure transferred toreal estate development projects (6,353,121) (6,353,121)
1,007,443,319 1,101,672,564
a.1 Acquired properties consistmainly of the aggregate initialappraised value attributed to the plotsincluded in the BCD area ofUS$1,170,001,290 net of therecuperated properties. Theaggregate appraised value isdetermined in accordance withDecree No. 2236 (dated February 19,1992 based on the decision of theHigher Appraisal Committee, which
was established in accordance withLaw No. 117/91). Acquired propertiesinclude the value of purchased andexchanged properties as well.
Law No. 117/91 stated therequirements for propertyrecuperation and exemption. In thisrespect properties appraised atUS$255million were recuperated byoriginal owners and properties
appraised at US$133million were notclaimed for recuperation.
a.2 Pre-acquisition costs includetechnical and master plan studiesincurred during the set up period ofthe Group.
a.3 Infrastructure costs consists ofthe following:
December 31, 2009 2008US$ US$
Sea front defense 276,083,472 280,595,361Work executed in the traditional BCD area 149,856,118 147,315,715Land reclamation and treatment 83,525,629 83,039,919Electricity power station 41,874,265 41,832,902Borrowing costs 41,087,847 41,067,251Other costs 87,836,543 68,669,067
680,263,874 662,520,215
During May 2008, the Group signed anagreement with a contractor wherebyboth parties agreed to cancel all thearbitrations raised against each other.In addition, the agreement stated that
the Group receive an amount ofUS$43,094,872 of which US$8,494,875was previously settled. As a result,provisions in the amount ofUS$12,604,171 were written back and
recorded under “(Provision)/write-backof provision against land and realestate development cost” in theconsolidated statement of income andthe balance was offset against cost of
December 31, 2008Maturity Conditional Book Net Fair
Date Coupon Rate Value Value Value
% US$ US$ US$
H E L D - T O - M A T U R I T Y
10-year USD “Momentum” CallableRange Accrual Note 16/03/2015 6.50 2,995,500 2,995,500 2,928,000
2,995,500 2,995,500 2,928,000
A VA I L A B L E - F O R - S A L E
7-year Non-Call 3 monthsKnock-out Callable Range Note (1) 29/03/2012 5.60 - - -
7-year USD Callable Range Accrual Puttable Note 1 25/04/2016 6.20 2,688,000 2,688,000 2,905,000
2,688,000 2,688,000 2,905,000Total investments in securitiesat net book value 5,683,500 5,683,500 5,833,000
Add: Change in fair value of available-for-sale securities 217,800
Investment securities 5,901,300
(1) The Group had a put option to sell back the notes to the issuer at 100% provided certain conditions are met.
10INVESTMENT SECURITIES
During prior years, the Grouppurchased several investments incapital guaranteed structuredproducts, issued by foreignfinancial institutions, whereby aconsiderable part of the pricewas financed by a loan from theissuing foreign bank. Couponrates depend on certainconditions being satisfied which
vary depending on theinstrument, but mainly arerelated to the Libor rate. Theaverage yield on theseinvestment securities amountedto 7.71% in 2008.
The details of the aboveinvestments are as follows:
The change in fair market value ofthe available-for-sale securities isrecorded under “Cumulative changesin fair value of available-for-sale
securities” in equity net of deferredtax liability in the amount ofUS$32,670 as of December 31, 2008.
The above investments wereredeemed during the year endedDecember 31, 2009.
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145144
inventory of land and projects inprogress in the consolidated statementof financial position as at December 31,2008. The deposit payable andretention payable in the amount ofUS$8,494,875 and US$2,831,625,respectively, previously recognizedwere offset against cost of inventory ofland and projects in progress in theconsolidated statement of financialposition as at December 31, 2008.
a.4 Eviction costs represent the costsof relocating previous settlers out ofthe BCD area which were mainly paidthrough the Central Fund for theDisplaced (a public authority). This caption is stated net ofUS$22.2million as of December 31,2009 (US$22.2million as of December31, 2008) representing a 10% chargeon recuperated properties appraisedvalues collected from original owners
other than religious andgovernmental recuperated properties.
a.5 Capitalized costs representallocation of direct overheads. Costscapitalized during the year endedDecember 31, 2009 amounted toUS$5.5million (US$2.9million for theyear ended December 31, 2008).
(b) Real estate development projects include the following:
December 31, 2009 2008US$ US$
Construction and rehabilitation of buildings 488,722,722 430,857,950Cost of land 132,602,160 96,290,690Cumulative costs 621,324,882 527,148,640Less: Cost transferred to investment properties, net (432,616,848) (282,799,911)Cost transferred to fixed assets (27,370,432) (27,370,432)Cost of real estate sold (44,164,255) (44,164,255)
117,173,347 172,814,042
During 2009, the Group transferred anamount of US$149,816,937 toinvestment properties representingthe cost of land, building and otherassets of the “Beirut Souks” project.
During 2009, a provision forimpairment in the amount ofUS$2,562,760 (US$3,000,000 duringyear 2008) was setup against dormantreal estate development projects. Theabove provision was recorded under“(Provision)/write-back of provision
against land and real estatedevelopment cost” in the consolidatedstatement of income.
During 2008, the Group wrote-offcosts in the aggregate amount ofUS$5,535,809 related to old realestate development projects, andrecorded under “write-off of land andreal estate development cost” in theconsolidated statement of income.During 2008, the Group wrote-offcosts in the aggregate amount of
US$2,500,863 related to projects that were sold in previous years andrecorded under “Write-off of land andreal estate development cost” in theconsolidated statement of income.
Based on all of the above, (Provision)/write-back of provision against landand real estate development cost inthe consolidated statement of incomeconsists of the following:
December 31, 2009 2008US$ US$
Write back of provision (a.3) - 12,604,171Provision for impairment (b) (2,562,760) (3,000,000)
(2,562,760) 9,604,171
Write-off of land and real estate development cost in the statement of income consist of the following:
December 31, 2009 2008US$ US$
Provision for impairment (b) - 5,535,809Write-off of costs incurred (b) - 2,500,863
- 8,036,672
12INVESTMENT PROPERTIES, NET
DisposalsBalance as at December 31, 2008 Additions Transfers and Sales 2009
US$ US$ US$ US$ US$
CO S T
Land 56,414,271 - 36,311,470 (275,730) 92,450,011Buildings 179,657,312 5,092,790 85,740,467 (1,137,318) 269,353,253Other assets 3,968,949 226,454 27,765,000 - 31,960,404
240,040,532 5,319,244 149,816,937 (1,413,048) 393,763,668
ACCUMULAT ED D E P R E C I AT I ON
Buildings 20,323,257 3,832,590 - (69,275) 24,086,572Other assets 2,930,198 647,654 - - 3,577,852
23,253,455 4,480,244 - (69,275) 27,664,424Net Book Value 216,787,077 366,099,244
DisposalsBalance as at December 31, 2007 Additions Transfers and Sales 2008
US$ US$ US$ US$ US$
CO S T
Land 42,090,628 - 16,759,535 (2,435,892) 56,414,271Buildings 124,281,478 301,246 63,638,342 (8,563,754) 179,657,312Other assets 4,585,459 39,358 (655,868) - 3,968,949
170,957,565 340,604 79,742,009 (10,999,646) 240,040,532
ACCUMULAT ED D E P R E C I AT I ON
Buildings 17,644,192 3,110,665 5,000 (436,600) 20,323,257Other assets 2,964,333 164,874 (199,009) - 2,930,198
20,608,525 3,275,539 (194,009) (436,600) 23,253,455Net Book Value 150,349,040 216,787,077
Investment properties include rentedand available for rent properties.These represent mainly a propertyleased out to the Ministry of ForeignAffairs and Emigrants, for use by aninternational agency. It also includesresidential complexes, an embassycomplex, and other restored buildings.
During the year ended December 31,2009, the Group sold property havingan aggregate net book value ofUS$1,343,733 (US$9,262,563 during2008) for total proceeds of US$967,320(US$8,454,923 during 2008) whichresulted in a loss of US$376,453(US$807,640 during 2008) recordedunder “Loss on sale of investmentproperties” in the statement of income.Also during 2008, the Group booked animpairment loss on investment
properties due to additional costsincurred that will not be recovered infuture periods amounting toUS$1,300,483 recorded under “Loss onsale of investment properties”.
During the year ended December 31,2009, the Group transferredUS$149,816,937 from real estatedevelopment projects to investmentproperties (US$80,754,285 for theyear ended December 31, 2008)representing the cost allocated to the“Beirut Souks” project.
During the year ended December 31,2008, the Group transferredUS$527,335 from fixed assets toinvestment properties.During the year ended December 31,2008, the Group transferred cost in
the amount of US$1,529,611 andrelated depreciation in the amount ofUS$194,009 from investmentproperties to fixed assets.
The fair value of the investmentproperties is estimated bymanagement at approximatelyUS$ 1,270,030,000 based on currentmarket prices (US$605million as ofDecember 31, 2008). There has beenno valuation of these properties by anindependent valuer.
Depreciation for investment propertiesin the amount of US$4,480,244 for theyear 2009 (US$3,275,539 for the year2008) is recorded under “Charges onrented properties” caption in theconsolidated statement of income(Note 24).
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13INVESTMENT IN AN ASSOCIATE
Details of the Group’s associate are as follows:
2009 2008Country of Ownership Group’s Share Group’s Share
Incorporation Interest Cost of Equity Cost of Equity% US$ US$ US$ US$
Solidere InternationalLimited UAE 38.98 303,441,933 311,384,302 298,243,509 296,444,933
Summarized financial information in respect of the Group’s associate is set out below:
December 31, 2009 2008US$ US$
Total assets 940,720,809 923,820,740Total liabilities (30,538,215) (38,548,196)Minority interest (111,296,688) (108,914,805)Net assets 798,885,906 776,357,739Group’s share of net assets 311,384,302 296,444,933Initial price of investment 303,441,933 298,243,509Group’s share of results 7,861,360 (1,798,576)Group’s share of comprehensive income 81,009 -Carrying amount of the investment 311,384,302 296,444,933
During the first half of the year 2007,Solidere established SolidereInternational Holdings s.a.l. (SIH)which in turn established SolidereInternational Limited (SI) in the DubaiInternational Financial Center (DIFC)with an initial capital of US$50,000.The main activity of SI is to promote,invest in, develop, market andmanage, as well as provide consultingservices with respect to real estateprojects outside the Beirut CentralDistrict area of Lebanon.
During the same year, SIH raisedadditional funds for SI through aprivate placement.
As a result of the private placementSI’s share capital and share premiumamounted to US$700,050,000 out ofwhich SIH settled US$216millionagainst an ownership percentage of37.19%.
The private placement memorandumand other signed agreements betweenSolidere and SI stipulate that Solidereand Solidere Management Servicess.a.l. will transfer to SI all the projectsthat they had outside the Lebaneseterritories. In addition, Solidere willgrant SI the right to use the Soliderebrand name through a licenseagreement and a none compete right.
On June 7, 2007, the Group furthersubscribed into the capital of SolidereInternational Limited for an amountof US$3,000,060 representing a0.4286% equity stake.
During 2008, the Group increased its direct ownership in SolidereInternational Limited to 38.18% byacquiring 66,849 shares for anamount of US$10,784,850.
During 2009, the Group increased its direct ownership in SolidereInternational Limited to 38.98% byacquiring 86,900 shares for anamount of US$6,997,000.
14FIXED ASSETS, NET
Fixed assets are composed of the following:
DisposalsBalance as at December 31, 2008 Additions Transfers and Sales 2009
US$ US$ US$ US$ US$
CO S T
Land 5,080,192 - - - 5,080,192Buildings 12,477,419 1,021,144 - (318,302) 13,180,261Marina 7,866,724 - - - 7,866,724Furniture and fixtures 2,686,073 744,639 - - 3,430,712Freehold improvements 3,923,972 612,847 - - 4,536,819Machines and equipment 29,415,543 2,004,338 593,175 (17,525) 31,995,531Prefabricated office 40,425 - - - 40,425
61,490,348 4,382,968 593,175 (335,827) 66,130,664
ACCUMULAT ED D E P R E C I AT I ON
Buildings 2,219,346 371,096 - - 2,590,442Marina 665,123 39,333 - - 704,456Furniture and fixtures 2,389,096 245,911 - - 2,635,007Freehold improvements 2,770,591 380,030 - - 3,150,621Machines and equipment 16,138,214 4,699,590 - - 20,837,804Prefabricated office 3,370 8,085 - - 11,455
24,185,740 5,744,045 - - 29,929,785Net Book Value 37,304,608 36,200,879
DisposalsBalance as at December 31, 2007 Additions Transfers and Sales 2008
US$ US$ US$ US$ US$
CO S T
Land 5,080,192 - - - 5,080,192Buildings 11,725,529 113,358 638,532 - 12,477,419Marina 6,934,100 - 932,624 - 7,866,724Furniture and fixtures 2,547,704 134,689 3,680 - 2,686,073Freehold improvements 3,614,458 183,578 125,936 - 3,923,972Machines and equipment 24,530,020 2,153,473 2,926,295 (194,245) 29,415,543Prefabricated office - 40,425 - - 40,425
54,432,003 2,625,523 4,627,067 (194,245) 61,490,348
ACCUMULAT ED D E P R E C I AT I ON
Buildings 1,994,043 225,303 - - 2,219,346Marina 512,792 157,331 (5,000) - 665,123Furniture and fixtures 2,154,268 234,414 414 - 2,389,096Freehold improvements 2,403,462 341,627 25,502 - 2,770,591Machines and equipment 11,725,561 4,387,322 173,093 (147,762) 16,138,214Prefabricated office - 3,370 - - 3,370
18,790,126 5,349,367 194,009 (147,762) 24,185,740Net Book Value 35,641,877 37,304,608
149148
During the year ended December 31,2009, the Group transferred computerequipment and installations (BroadBand Network) amounting toUS$597,175 from real estatedevelopment projects to fixed assets(US$2,400,043 during the year endedDecember 31, 2008).
During the year ended December 31,2008, the Group transferredUS$1,224,748 from real estatedevelopment projects to fixed assets.
During the year ended December 31,2008, the Group transferredUS$1,529,611 and its relateddepreciation in the amount ofUS$194,009 from investmentproperties to fixed assets.
During the year ended December 31,2008, the Group transferredUS$527,335 from fixed assets toinvestment properties.
The depreciation for the year endedDecember 31, 2009 was split betweenan allocation to inventory of land andprojects in progress, prepayment andother debit balances and a charge tothe consolidated statement of incomeof US$376,553, US$310,012 andUS$5,057,481 respectively(US$573,750, US$262,938 andUS$4,512,679 respectively for the yearended December 31, 2008).
15BANK OVERDRAFTS AND SHORT TERM FACILITIES
Bank overdrafts and short term facilities consist of the following:
December 31, 2009 2008US$ US$
Bank overdrafts 10,330,996 4,523,728Short term facilities 243,328,014 172,473,107
253,659,010 176,996,835
On August 5, 2009, the Grouprenewed two credit facilityagreements, amounting US$75millionand US$35million respectively, signedin 2007 with a local bank. Thesefacilities are subject to a fixed interestrate of 5% per annum (2008:one yearLibor plus 1.7% and one year Liborplus 1.5% respectively). Thecovenants of the agreementsstipulated that the Group maintains amaximum debt to equity ratio of 1:4and a minimum equity balance ofUS$1billion (2008: a maximum debtto equity ratio of 1:4 and a minimumequity balance of US$1billion). Thematurity of these loans was extendedto February 3, 2010.
On December 7, 2009, the Grouprenewed its US$40million credit
facility with a local bank (2008:US$40million). The facility is subjectto an interest rate of three-monthLibor plus 1.5% but not less than4.125% ( 2008: three-month Liborplus 1.5% but not less than 4.5%). The covenants of the agreementsstipulate that the Group maintain amaximum debt to equity ratio andbanks’ loans, overdraft, and facilitiesto equity ratio of 2:1 and 4:1respectively (2008:The same). During2009, the Group signed, with samebank, a US$60million one year creditfacility. The facility is subject to aninterest rate of three-month Liborplus 1.5% but not less than 4.5% per annum.
The covenants of the agreementsstipulate that the Group maintain a
maximum debt to equity ratio andbanks’ loans, overdraft, and facilitiesto equity ratio of 2:1 and 4:1respectively. In both facilities, theGroup should maintain a minimum ofUS$75million in notes and accountsreceivables, maintain a minimum of750,000 squared meters of builtproperties and US$1billion in nettangible assets from liens free fromany liens.
On July 31, 2009, the Group signed aUS$50million credit facility with a localbank. As of 31 December 2009, theGroup utilized US$ 19.9million of thisfacility, and is subject to an interestrate of three-month Libor plus 1.75%with a minimum of 5% per annum.This facility matures on July 31, 2010.
16ACCOUNTS PAYABLE AND OTHER LIABILITIES
Accounts payable and other liabilities consist of the following:
December 31, 2009 2008US$ US$
Accounts payable (a) 42,745,701 37,708,322Accrued charges and other credit balances (b) 14,894,177 10,452,447Taxes payable (c) 37,587,883 38,309,279Provision for end-of-service indemnity and other charges (d) 8,752,141 8,039,259Provision for previously recognized sales (e) 7,007,910 -Due to related parties (f) 140,428 30,054Deferred tax liability – Note 10 - 32,670Accrued interest payable 1,426,365 738,649
112,554,605 95,310,680
(a) Accounts payable as of December31, 2009 and 2008 include balances inthe aggregate amount of
US$13.8million due to the LebaneseGovernment in consideration of the
exchange of assets agreementexplained in Note 34(f).
(b) Accrued charges and other credit balances consists of the following:
December 31, 2009 2008US$ US$
Deposits from tenants 3,249,032 2,810,666Accrued municipality expenses 3,326,425 2,326,425Other 8,318,720 5,315,356
14,894,177 10,452,447
(c) Taxes payable consist of the following:
December 31, 2009 2008US$ US$
Accrued income tax 32,514,984 30,997,135Other accrued taxes 3,887 3,887VAT payable 27,816 21,369Taxes withheld 1,798,770 752,984Property tax payable 3,242,426 2,112,855VAT additional tax assessment - 670,059Tax review assessment - 3,750,990
37,587,883 38,309,279
151150
I N COME TA X
The applicable tax rate in Lebanon is 15% according to the Lebanese tax laws.
The accrued income tax for the years 2009 and 2008 was estimated as follows:2009 2008US$ US$
Profit before tax 221,965,588 214,327,398Less: Income/(losses) of subsidiaries (7,048,843) 796,923Add: Non deductible provisions and charges 22,168,563 9,228,266Less: Non taxable revenues (17,469,828) (13,193,954)Taxable income 219,615,480 211,158,633Applicable tax rate 15% 15%Accrued income tax 32,942,322 31,673,795Add: Income tax provision subsidiaries 68,620 113,336Total accrued income tax 33,010,942 31,787,131Less: Tax on interest previously settled (495,958) (789,996)Accrued income tax payable 32,514,984 30,997,135
Total accrued income tax 33,010,942 31,787,131Less: Deferred tax assets – Note 8(c) (256,367) (178,678)Income tax expense 32,754,575 31,608,453
During 2008, the Company’s accountsfor the years 2004 to 2006 werereviewed by the tax authorities whichresulted in additional tax liability inthe amount of US$3.7million. Anamount of US$1.4million wascharged to the statement of incomefor the year ended December 31, 2008and recorded under “Other taxes”,and the balance was transferred fromprovisions setup in previous years.The Group settled these taxes in 2009.
The tax returns for the years 2007 till2009 are still subject to examinationand final tax assessment by the taxauthorities. Any additional tax liabilityis subject to the results of this review.
VAT
The Company’s VAT declarations forthe years 2003 and 2004 were subjectto review and final assessment by thetax authorities which resulted in
additional tax liability in the amountof US$2.9million . As a result of thisreview, an additional tax liability in theamount of US$670,059 was accruedfor and charged to the statement ofincome for the year ended December31, 2008 under “Other taxes”. TheGroup settled these taxes in 2009.
(d) The movement of provision forend-of-service indemnity and othercharges is as follows:
2009 2008US$ US$
Balance at the beginning of the year 8,039,259 6,890,576Additions 861,008 1,499,712Settlements (148,126) (351,029)Balance at the end of the year 8,752,141 8,039,259
(e) During the year ended December31, 2009, the Group booked a provisionof US$7,007,910 to account for theeffect of an expected loss relating to a
previously recognized sale wherecertain legal and regulatory conditionsmight lead to the cancellation of thissale agreement.
(f) Due to related parties consists ofthe following:
December 31, 2009 2008US$ US$
Beirut Real Estate Management and Services s.a.l. 132,089 -Mounib Hammoud 8,057 8,057Selim El Zyr 282 282Aswaq Management and Services LLC - 21,715
140,428 30,054
The above balances are interest free.
17DIVIDENDS PAYABLE
Settled up to December 31,General Assembly Dividend December 31, 2009 2008Date per Share Declared 2009 Payable Payable
US$ US$ US$ US$ US$
June 29, 1996 0.20 30,918,413 29,257,046 1,661,367 1,729,664June 30, 1997 0.25 40,367,172 37,410,377 2,956,795 3,057,516June 29, 1998 0.25 39,351,753 35,801,313 3,550,440 3,657,988June 23, 2003 Stock dividend - 245,718 20,547 21,861June 12, 2006 0.6 94,831,106 88,850,695 5,980,411 6,847,853June 22, 2007 1.00 155,093,702 142,541,305 12,552,397 14,656,974July 15, 2008 1.00 155,090,832 134,141,915 20,948,917 33,017,706July 13, 2009 1.15 176,479,957 153,609,785 22,870,172 -
70,541,046 62,989,562
The General Assembly held on July13, 2009 decided to distributedividends on the basis of US$1.15 per share. Accordingly the Grouprecorded dividends payable in theamount of US$167.6million net ofdistribution tax in the amount ofUS$8.8million. An amount ofapproximately US$154million wassettled up to December 31, 2009.
The General Assembly held on July 15,2008 decided to distribute dividends
on the basis of US$1 per share.Accordingly, the Group recordeddividends payable in the amount ofUS$147.3million net of distribution taxin the amount of US$7.75million. Anamount of approximatelyUS$134million was settled up toDecember 31, 2009 (US$122million upto December 31, 2008).
The General Assembly held on June22, 2007 decided to distributedividends on the basis of US$1 per
share. Accordingly, the Group recordeddividends payable in the amount ofUS$147.3million net of distribution taxin the amount of US$7.75million. Anamount of approximatelyUS$142million was settled up toDecember 31, 2009 (US$140million upto December 31, 2008).
The outstanding balance of unpaiddividends relates mostly to unclaimeddividends and dividends pertaining toundelivered class (A) shares.
18DEFERRED REVENUES AND OTHER CREDIT BALANCES
December 31, 2009 2008US$ US$
Cash down payments and commitments on sale contracts 129,216,688 229,656,877Deferred rental revenue and related deposits 21,063,627 26,866,850
150,280,315 256,523,727
Cash down payments andcommitments on sale contractsinclude balances aggregating toapproximately US$127million thatrelate to 6 sale contracts with anaggregate potential gross sales value
of US$428.5million as of December31, 2009 (US$226million relating to 10 sale contracts with an aggregatepotential gross sale value ofUS$579million as of December 31,2008).
Deferred rental revenue and relateddeposits represent down payments onlease and rental agreements andreservation deposits for the rental ofreal estate properties.
153152
19LOANS FROM BANKS AND FINANCIAL INSTITUTIONS
December 31, 2009 2008US$ US$
Local bank loan I - 1,000,000Local bank loan II 1,987,023 -Loan guaranteed by Export - Import Bank of the United States - 1,347,054
1,987,023 2,347,054
LOCA L BANK LOAN I
In July 2001, a complementary loanagreement in the amount ofUS$10million was signed with aresident foreign bank and the totalloan amount was withdrawn up toDecember 31, 2004. This loan shall be paid in 10 equal semi-annualinstallments starting October 25,2004 and ending April 27, 2009. Theloan was subject to an annual interestrate of 3 months Libor plus 1%.
LOCA L BANK LOAN I I
During 2009, a joint venture entity ofthe Group signed a subsidized loanagreement with a local bank in theamount of USD9,950,249. Totalwithdrawals as of December 31, 2009amounted to USD3,974,046 of which50% was reflected in the consolidatedfinancial statements (50%proportionate consolidation). Theterm of the loan is seven years with 2 years, grace period, and bears aninterest of 3 months Libor + 2.5%before the subsidy, not exceeding6.5%. Interest is computed on aquarterly basis starting the date offirst withdrawal. Interest for the year2009 in the amount of US$6 thousandwas capitalized under inventory ofland and project in progress (Note11). The repayment of the entire loanwill be through 19 equal quarterlyinstallments of USD500,000 each andone last installment of USD450,249beginning on December 31, 2011 andending September 30, 2016.
During 2009, the Group signedanother loan agreement with thesame local bank in the amount ofUSD30,000,000. No withdrawals hadbeen made up to December 31, 2009.The term of the loan is four years withtwo years, grace period, and bearing
an interest rate equivalent to cost offunds + 2%, not exceeding 3.9%.Interest is computed on a quarterlybasis starting the date of firstwithdrawal. The entire loan will berepaid through semi-annualpayments starting on December 31,2011 and ending June 30, 2013.
LOAN GUARAN T E ED B Y E X PO R T- I M POR T BANK O F T H EUN I T E D S TAT E S
In July 2001, the Group signed an“Export Financing Credit Agreement”for the amount of US$14.71million tosupport the purchase of engineeringand construction services andequipment from the United States forthe waste treatment project. This loanwas guaranteed by the Export-ImportBank of the United States and financedby a resident foreign bank. An amountof US$13.47million was drawn fromthe loan. This loan was required by 10equal successive semi-annualinstallments, starting on October 25,2004. The loan was fully settled in 2009.This loan was subject to an interestrate of 0.25% per annum above Libor.According to the contract terms, anirrevocable stand-by letter of credit inthe amount of US$3.35million wassubmitted to the Export - Import Bankof the United States.
20CAPITAL
Capital consists of 165,000,000 sharesof US$10 par value, authorized andfully paid and divided in accordancewith Law 117/91 into the following:
> Class “A”, amounting to 100,000,000shares represented contribution inkind of properties in the BCD, based
on the resolutions of the HighAppraisal Committee. All Class Ashares were deemed to have beenissued and outstanding since theestablishment of the Group.
> Class “B”, amounting to 65,000,000shares represented capitalsubscription in cash and are allissued and fully paid at theestablishment of the Group.
Class “A” and Class “B” shares havethe same rights and obligations.
As of December 31, 2009, the Grouphad 10,810,278 “A” shares listed onthe London Stock Exchange in theform of Global Depository Receipts(GDR) (14,445,252 “A” shares as ofDecember 31, 2008).
21LEGALRESERVE
In conformity with the Company'sarticles of incorporation and theLebanese Code of Commerce, 10 % ofthe annual net income is required tobe transferred to legal reserve untilthis reserve equals one third ofcapital. This reserve is not availablefor dividend distribution.
22TREASURYSHARES
This caption includes 13,074,512shares class (A) and (B) as ofDecember 31, 2009 out of which500,072 shares represent GlobalDepository Receipts (GDR) (9,909,098shares as of December 31, 2008).
The treasury shares outstanding as ofDecember 31, 2009 and December 31,2008 were stated at the weightedaverage cost.
According to its articles ofincorporation, the Group maypurchase up to 10% of its sharecapital without the existence of freereserves, provided that it shall resell
these shares within a period notexceeding eighteen months.
As of December 31, 2009 and 2008,this caption includes 3,685,000 sharesthat were acquired from sale ofproperties.
23REVENUES FROM RENDERED SERVICES
December 31, 2009 2008US$ US$
Services rendered to a related party (Note 33) 1,668,464 5,863,908Services rendered to clients 836,636 742,814Broadband Network revenues 1,470,701 819,923
3,975,801 7,426,645
24CHARGES ON RENTED PROPERTIES
December 31, 2009 2008US$ US$
Depreciation expense (Note 12) 4,480,244 3,275,539Property taxes 2,281,075 2,617,131Maintenance and other related expenses, net 2,760,823 2,452,934
9,522,142 8,345,604
25COST OF SERVICES RENDERED
December 31, 2009 2008US$ US$
Cost of services rendered to a related party (Note 33) 2,014,242 5,210,812Cost of services rendered to clients 941,862 1,925Broad band Network cost of services rendered 1,714,768 1,500,004
4,670,872 6,712,741
155154
26GENERAL AND ADMINISTRATIVE EXPENSES
December 31, 2009 2008US$ US$
Salaries, benefits and related charges 17,711,736 13,879,041Board of directors’ remuneration 222,000 144,000Administrative expenses 6,404,938 5,328,641
24,338,674 19,351,682
The Group reallocated salaries,benefits and related charges andadministrative expenses amounting to
27OTHERINCOME
December 31, 2009 2008US$ US$
Gain on sale of investment securities 316,500 645,911Other 35,620 186,691
352,120 832,602
28INTEREST INCOME
December 31, 2009 2008US$ US$
Interest income from notes and accounts receivable 27,381,607 38,902,736Interest income from banks 9,662,402 16,593,374
37,044,009 55,496,110
29INTEREST EXPENSE
December 31, 2009 2008US$ US$
Interest expense from banks 11,382,997 12,133,674Interest expense on deferred credits - 8,175,885
11,382,997 20,309,559
30OTHER EXPENSES
December 31, 2009 2008US$ US$
Amicable settlements 3,953,792 -Loss on sales of fixed assets 324,169 570Other 459,586 -
4,737,547 570
31BASIC/DILUTED EARNINGS PERSHARE
The computation of earnings pershare is based on net income for theperiod and the weighted averagenumber of outstanding class (A) and(B) shares during each period net oftreasury shares held by the Group.
The weighted average number ofshares to compute basic and dilutedearnings per share is 153,227,172shares for the year 2009 (155,092,069shares for the year 2008).
32NOTES TO THE CASH FLOW STATEMENT
(a) Depreciation was applied as follows:
December 31, 2009 2008US$ US$
Depreciation of fixed assets - Note 14 5,744,045 5,349,366Depreciation of investment properties - Note 12 4,480,244 3,275,539Less: Depreciation allocated to inventory of land and projects in progress and other debit balances – Note 14 (686,565) (836,687)Depreciation charge for the year 9,537,724 7,788,218
(b) Interest expense consists of the following:
December 31, 2009 2008US$ US$
Interest charged as period cost 11,362,006 20,309,559Interest expense allocated to inventory of landand projects in progress – Note 11 20,596 197,238Total interest expense 11,382,602 20,506,797
During 2009, the Group settled anamount of US$3.9million
representing amicable settlements asa goodwill gesture for the withdrawal
of claims concerning offers regardingthe Beirut Souks.US$5.5million to construction cost
during the year ended December 31,2009 (US$3.3million during the yearended December 31, 2008).
157156
(c) Non-cash transactions in operatingand investing activities includetransfers from inventory of land andprojects in progress to investmentproperties in the amount ofUS$149,816,937 for the year endedDecember 31, 2009 (US$80,754,285 forthe year ended December 31, 2008).
(d) Non-cash transactions in operatingand investing activities includetransfers from inventory of land andprojects in progress to fixed assets inthe amount of US$2,400,043 for theyear ended December 31, 2008.
(e) Non-cash transactions in investingactivities include the effect of change infair value of available-for-salesecurities in the amount of US$217,800offset against “Cumulative change infair value of available-for-salesecurities” and “Accounts payable andother liabilities” in the amount ofUS$185,130 and US$32,670,respectively, for the year endedDecember 31, 2008.
(f) During the year ended December31, 2008, the Group transferredUS$1,224,748 from real estatedevelopment projects to fixed assets.
(g) During the year ended December31, 2008, the Group transferredUS$1,529,611 and its relateddepreciation in the amount ofUS$194,009 from investmentproperties to fixed assets.
(h) During the year ended December31, 2009, the Group transferredUS$597,175 from fixed assets toinvestment properties (US$527,335for the year ended December 31,2008).
(i) Cash and cash equivalentscomprise of the following:
December 31, 2009 2008US$ US$
Cash 119,731 88,252Current accounts 11,978,956 7,921,544Short term deposits 122,818,226 278,613,353Bank overdrafts (253,659,010) (176,996,835)
(118,742,097) 109,626,314
33RELATED PARTYTRANSACTIONS
These represent transactions withrelated parties, i.e. significantshareholders, directors and seniormanagement of the Group, andcompanies of which they are principalowners and entities controlled, jointlycontrolled or significantly influencedby such parties. Pricing policies andterms of these transactions areapproved by the Group’smanagement.
Cash and bank balances includeUS$53,920,710 as of December 31,2009 (US$54,009,732 as of December31, 2008) representing current bankaccounts with a local bank who is asignificant but minority shareholderof the Group.
Bank overdraft and short termfacilities include US$114,285,501 as of December 31, 2009(US$110,453,023 as of December 31,2008) representing short termfacilities with a local bank who is asignificant but minority shareholderof the Group.
Certain directors are members of theboards of directors of banks withwhom the Group has various bankingactivities.
General and administrative expensesinclude legal fees in the amount ofUS$120,000 for the year endedDecember 31, 2009 related to one ofthe firm’s legal counselors who isalso a member in the Company’sboard of directors (US$120,000 for theyear ended December 31, 2008).
The Group incurred various expenseson behalf of its related parties whosetotal balances due amounted toUS$1,710,214 as of December 31,2009 (US$5,864,520 as of December31, 2008).
Aswaq Management and ServicesLLC provided consultancy services toBeirut Real Estate Management andServices s.a.l. (BREMS) for theamount of US$24,188 for the yearended December 31, 2009.
During 2009, the Group chargedSolidere International Limited, anassociate, administrative expensesamounting to US$1,668,464(US$5,863,908 for the year 2008), in
addition to an amount of US$35,000(US$81,319 for the year 2008)representing payments on its behalf.
During 2009, the Group performedservices charges, for SolidereInternational Limited, an associate, in the aggregate amount ofUS$2,014,242 (US$5,210,812 for year2008).
Total benefits paid to executives andmembers of the Board of Directors(including salary, bonus and others),included within “General andadministrative expenses”, for the yearended December 31, 2009 amountedto US$4,161,268 (US$2,924,476 forthe year ended December 31, 2008).
Income arising and expensesincurred from the Group’stransactions with other relatedparties, other than those disclosed inthe financial statements, do not forma significant portion of the Group’soperations.
34COMMITMENTSAND CONTINGENCIES
contractors. On the basis of advicereceived from the external legalcounsel and the Group’s technicaldepartment, the directors are of theopinion that any negative outcomethereof, if any, would not have amaterial adverse effect on thefinancial condition of the Group.
(f) On June 7, 1997, the Group signedan exchange agreement with theLebanese Government. By virtue ofthis agreement, the Group acquiredadditional built up area ofapproximately 58,000m² and 556,340Class A shares in exchange forapproximately 15,000m² and thepayment of US$38.7million to restoregovernmental buildings.US$25million has already been paidand accounted for and the balance ofUS$13.8million continues to beincluded under accounts payable.According to the terms of theagreement, the Group undertook tobuild a governmental building and toconclude ten finance leases overseven years for certain buildingsbelonging to the LebaneseGovernment. In 1999, the governmentcanceled the exchange and financelease agreement. The implementationand the effect of cancellation is notyet determined and has not beenreflected in the accompanyingfinancial statements.
(g) In prior periods, the Groupsubmitted to the Ministry of Cultureand Higher Education claims totalingUS$17.7millions representingcompensation for delays that resultedfrom excavation works. These claimswere not yet approved nor confirmedby the concerned authorities norrecorded as receivables in theaccompanying financial statements.
(h) The Group has as a stand-by letter of credit in the amount ofUS$3,566,993 to be graduallydecreased starting June 2007 toreach US$3,035,622 in June 2011.This instrument is issued inguarantee of the US$14.7million USExport Import Bank of the UnitedStates facility whose outstandingbalance amounted to US$1.35millionas of December 31, 2008. Throughoutits life, this stand-by letter of creditshall be fully covered by a cashcollateral (Note 7).
(i) For the purpose of enhancing andimproving land value in Zokak Al Blattarea and to settle the recuperation ofa lot in that area, the Group signed in2002 an agreement with the ArmenianOrthodox prelacy to demolish thebuilding on the recuperated lot and totransfer corresponding building rightsto another adjacent lot with minimumbuilding rights of 4,900m² againstceding of owners’ shares from bothlots. Additionally, a built up area of5,335m² (US$2,700,000) remains as acontingent loss to the Group in casethe prelacy decides to build this areawithin the next 10 years following thisagreement.
(j) The Group has commitments andcontingencies in the form of letter ofguarantee and letters of credits in theamount of US$2,689,067 andUS$476,862 respectively as atDecember 31, 2009.
35CAPITALMANAGEMENT
The primary objective of the Group’scapital management is to ensure thatit maintains a strong credit rating andhealthy capital ratios in order tosupport its business and maximizeshareholder value.
The Group manages its capitalstructure and makes adjustments toit in light of changes in economicconditions. No changes were made inthe objectives, policies or processesduring the years ended December 31,2009 and 2008.
The capital structure of the companyconsists of debt and equity. Debtconsists of total liabilities less cashand bank balances. Equity comprisescapital, reserves, retained earnings,cumulative change in fair value andsurplus on sale of treasury sharesless treasury shares.
The Group monitors capital on thebasis of the debt-to-capital ratio(gearing ratio). The gearing ratio as atDecember 31, 2009 and 2008 was asfollows:
(a) An agreement between theCompany and the Council forDevelopment and Reconstruction(“CDR”) was promulgated throughDecree No. 5665 dated September 21,1994, duly approved by the Council ofMinisters. By virtue of this agreement,the Company was granted 291,800m²of the reclaimed land surface (totaling608,000 sqm) against the execution bythe Company of the sea landfill andinfrastructure works.
(b) The total projected cost forcompletion of the BCD project hasbeen estimated by management to beapproximately US$2billion. Thisamount is used as a base for thedetermination of cost of sales.
(c) Commitments for contractedworks not executed as of December31, 2009 amounted to approximatelyUS$93.9million (US46.5million as ofDecember 31, 2008).
(d) A lawsuit was raised in 1999against the Group by the “CDR”claiming reimbursement of anamount of LL5.4billion(US$3.6million) plus interest. Thisbalance represents paymentspreviously made by the “CDR” inconnection with the appraisal of theproperties in the BCD area and othertender documents. No provision wasset up against this claim since, on thebasis of the advice received from theGroup’s legal advisor, the directorsare of the opinion that this claim isnot based on sound legal grounds.
The Group has submitted to the“CDR” claims aggregatingUS$13.6million representing mainlychange orders to infrastructure worksin the traditional BCD which wereincurred by the Group on behalf of theGovernment. These claims wereneither approved nor confirmed bythe concerned party nor recorded asreceivables in the accompanyingfinancial statements.
(e) The Group is a defendant invarious legal proceedings and haslitigations pending before the courtsand faces several claims raised by
159158
December 31, 2009 2008US$ US$
Total consolidated liabilities 589,021,999 594,167,858Less: Cash and bank balances (177,622,687) (291,703,019)Total debt 411,399,312 302,464,839
Total equity 1,809,961,832 1,859,664,619Gearing ratio 23% 16%
36RISKMANAGEMENT
The Group’s principal financialliabilities, other than derivatives,comprise bank loans and overdrafts,deferred revenues and other creditbalances, dividends payable andaccounts payable and other liabilities.The main purpose of these financialliabilities is to raise finance for the
Group’s operations. The Group hasvarious assets such as accounts andnotes receivable and cash and bankbalances, which arise directly from itsoperations. The main risks arisingfrom the Group’s financialinstruments are interest rate risk,liquidity risk, foreign currency riskand credit risk. The Board ofDirectors reviews and approvespolicies for managing each of theserisks which are summarized bellow:
( A ) I N T E R E S T R AT E R I S K
The Group’s exposure to the risk ofchanges in market interest ratesrelates primarily to the Group’slong-term debt obligations withfloating interest rates. The followingtable demonstrates the sensitivity to areasonably possible change ininterest rates, with all otherconditions held constant, of theGroup’s profit before tax.
Increase/decrease Effect on profit in basis points before tax
US$
2009US Dollars +20 555,565US Dollars -15 416,674
2008US Dollars +20 829,148US Dollars -15 621,861
( B ) F O R E I GN C U R R ENC Y R I S K
Currency risk is the risk that thevalue of a financial instrument willfluctuate due to changes in foreignexchange rates. The Group is notmaterially exposed to currency risksince the majority of its financialassets and liabilities are denominatedin U.S. Dollars or in currenciespegged to the U.S. Dollar.
( C ) C R E D I T R I S K
The Group’s credit risk is primarilyattributable to its liquid fundsreceivables, other debit balances andinvestments in securities. The
amounts presented in the balancesheet are stated at net realizablevalue, estimated by the Group’smanagement based on priorexperience and the current economicconditions.
The Group’s liquid funds are placedwith prime banks. Investments insecurities are not covered bycollaterals. Other debit balancesconsist mainly of amounts due fromrelated parties.
The Group trades mostly withrecognized, credit worthy third partiesand monitors receivable balances andcollection on an ongoing basis.
The Group’s credit risk exposure isspread over 56 counter-parties; 6customers constitute 80% of the totalexposure and 50 customers constitutethe remaining 20%. The maximumexposure is the carrying amount asdisclosed in Note 9.
The Group’s assets and liabilities aresegregated by geographical area asfollows:
Lebanon Middle East Europe TotalUS$ US$ US$ US$
December 31, 2009Total assets 2,151,095,838 238,782,556 9,105,437 2,398,983,831Total liabilities 589,021,999 - - 589,021,999Net assets 1,562,073,839 238,782,556 9,105,437 1,809,961,832
December 31, 2008Total assets 2,142,380,808 296,444,933 15,006,736 2,453,832,477Total liabilities 594,167,858 - - 594,167,858Net assets 1,548,212,950 296,444,933 15,006,736 1,859,664,619
( D ) L I QU I D I T Y R I S K
Liquidity risk is the risk that aninstitution will be unable to meet itsnet funding requirements. Liquidityrisk can be caused by marketdisruptions or credit downgrades,
which may cause certain sources offunding to dry up immediately.
The Group’s objective is to maintain abalance between continuity of fundingand flexibility through the use of bank
overdrafts and bank loans.The table below summarizes thematurity profile of the Group’sfinancial liabilities as of December 31,based on contractual undiscountedliabilities:
Less than 3-12 1 to 5No Maturity 3 Months Months Years Total
US$ US$ US$ US$ US$
December 31, 2009Bank overdrafts and shortterm facilities - - 253,659,010 - 253,659,010Accounts payable and other liabilities 8,171,926 33,684,825 34,607,765 28,237,556 104,702,072Dividends payable 70,541,046 - - - 70,541,046Deferred revenues and other credit balances - - 21,063,627 129,216,688 150,280,315Loans from banks and financial institutions - - - 1,987,023 1,987,023Non-financial liabilities 7,852,533 - - - 7,852,533
86,565,505 33,684,825 309,330,402 159,441,267 589,021,999
December 31, 2008Bank overdrafts and shortterm facilities - - 176,996,835 - 176,996,835Accounts payable and other liabilities 1,171,616 11,624,934 58,516,731 16,858,140 88,171,421Dividends payable 62,989,562 - - - 62,989,562Deferred revenues and othercredit balances - - 26,866,850 229,656,877 256,523,727Loans from banks and financial institutions - - 2,347,054 - 2,347,054Non-financial liabilities 7,139,259 - - - 7,139,259
71,300,437 11,624,934 264,727,470 246,515,017 594,167,858
160
37FAIR VALUE OFFINANCIALINSTRUMENTS
The fair values of financialinstruments are not materiallydifferent from their carrying values.Market value has been used todetermine the fair value of listedavailable-for-sale assets. The fair
values of loans, notes and otherfinancial assets, and borrowings andother financial liabilities have beencalculated by discounting theexpected future cash flows atprevailing market interest rates.
38APPROVAL OFFINANCIALSTATEMENTS
The Board of Directors approved thefinancial statements for the yearended December 31, 2009,on April 9, 2010.
Copyright 2010
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HOWSOEVER WITHOUT PRIOR WRITTENPERMISSION FROM
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THE CITY’SANCHORPOINTS
37 MERIT CORPORATION HEADQUARTERS / G938 MOAWAD MUSEUM / H3
39 OTTOMAN LIGHTHOUSE / D940 PLATINUM TOWER / E2
41 SEMIRAMIS BUILDING / G542 STARCO COMMERCIAL CENTER / F3
43 TANIOS BUILDING / F544 THE LANDMARK / I5
45 UN HOUSE / I546 VIRGIN MEGASTORE / H7
47 ZAITUNAY BAY / E2 / CD3
A R C H E O L O G I C A L S I T E S
48 BELVEDERE SQUARE / F749 CASTLE SQUARE / F7
50 HADIQAT AS-SAMAH (GARDEN OF FORGIVENESS) / H651 MEDIEVAL WALL AND MOAT / F552 OTTOMAN WALL WALK / E6 - D9
53 PETIT SERAIL / G754 PHOENICIAN GLACIS / G8
55 PHOENICO-PERSIAN QUARTER / F656 ROMAN BATHS GARDEN / G557 ROMAN HIPPODROME / G4
M A I N G A R D E N S A N D O P E N S P A C E S
58 AJAMI SQUARE / F659 AMIR AMIN GARDEN / I560 BAB IDRISS SQUARE / F5
61 BASSEL FULEIHAN SQUARE / E262 DEBBAS SQUARE / I7
63 GENERAL FOUAD CHEHAB GARDEN / I364 GIBRAN KHALIL GIBRAN GARDEN / I4
65 GIBRAN TUENI MEMORIAL / G766 HARBOR SQUARE / F6
67 IMAM OUZAI SQUARE / G568 JEAN-PAUL II SQUARE / E5
69 KHAN ANTOUN BEY SQUARE / E670 MARTYRS’ SQUARE / H7
71 MINA EL HOSN SQUARE / E272 MUNICIPALITY GARDEN / G6
73 NEJMEH SQUARE WITH ITS CLOCK TOWER / H674 OMAR DAOUK SQUARE / F475 OMAR ONSI GARDEN / H5
76 RAFIC HARIRI MEMORIAL / H777 RAFIC HARIRI SCULPTURAL GARDEN / H4
78 RIAD EL SOLH SQUARE / H579 SAIFI SQUARE / I8
80 SAMIR KASSIR GARDEN / G781 SANTIYA GARDEN AND PROMENADE / E5
82 SEASIDE PROMENADE / C4 - A983 SHORELINE GARDENS / E4
84 WADI ABOU JAMIL GARDEN / G385 WATERSIDE PARK / CD486 ZEITOUNEH SQUARE / F3
BEIRUTCITY
CENTERLAND
MARKSP U B L I C B U I L D I N G S
01 HOUSE OF PARLIAMENT / G502 HOUSE OF PARLIAMENT ANNEX / H5
03 GRAND SERAIL / H404 SERAIL CLOCK TOWER / H4
05 MUNICIPALITY OF BEIRUT / G606 COUNCIL FOR DEVELOPMENT
AND RECONSTRUCTION (CDR) / G507 CENTRAL POST OFFICE / H5
R E L I G I O U S B U I L D I N G S
08 AL DABBAGHA MOSQUE / F709 ALL SAINTS ANGLICAN CHURCH / E3
10 AL MAJIDIYA MOSQUE / E611 AL OMARI MOSQUE / G6
12 AMIR ASSAF MOSQUE / G613 AMIR MUNZER MOSQUE / G5
14 MAGHEN ABRAHAM SYNAGOGUE / G415 MOHAMAD AL AMIN MOSQUE / H6
16 NATIONAL EVANGELICAL CHURCH OF BEIRUT / I417 NOURIA CHAPEL / H6
18 ST ELIE ARMENIAN CATHOLIC CATHEDRAL / J719 ST ELIE CATHOLIC CATHEDRAL / H6
20 ST ELIE MARONITE CHURCH / G221 ST GEORGE MARONITE CATHEDRAL / H6 22 ST GEORGE ORTHODOX CATHEDRAL / H6
23 ST LOUIS CAPUCHIN CHURCH / G524 ST NICHAN ARMENIAN ORTHODOX CHURCH / H4
25 ST VINCENT DE PAUL CHURCH / J626 ZAWIYAT IBN IRAQ SHRINE / G6
O T H E R B U I L D I N G S
27 AHLIAH SCHOOL / G328 AUDI SARADAR HEADQUARTERS / G5
29 BEIRUT SOUKS / EF5 / EF630 BESANÇON SCHOOL / G3
31 BEIRUT TRADE CENTER / H232 CITY CENTER DOME / I6
33 EL-BOURJ / G734 GRAND THEATRE / I6
35 LAZARIEH COMMERCIAL CENTER / I636 MARINA TOWERS / E3
SOLIDERE © 2010
