The Quarterly '98
April - June
APRIL - JUNE 1998 A SOLIDERE PUBLICATION
«Beirut is back ... Our experience shows that Lebanon is ready for investment and the international investment community is also ready for Lebanon. »
Those were the words of HRH Prince Alwaleed Bin Talal AbdulAziz Alsaud at his press conference in the SOLIDERE headquarters on May 26, 1998, following the conclusion of a major land purchase agreement in the Beirut Central District. In developing a seaside 5-star Four seasons hotel on his part of the land, the Prince is teaming up with Marina towers, an important Saudi-Lebanese group acquiring the adjacent land for the construction of a luxury residential and tourist complex. The combined projects are estimated at a quarter of a billion US dollars.
The picture shows Prince Alwaleed and SOLIDERE Chairman and General Manager Nasser Chammaa visiting the site of the project on the reclaimed land.
( After the signing ceremony: in the middle, Prince Alwaleed and Mr. Chammaa; to their left, Saudi Ambassador Sheikh Ahmad Al-Qohaimi and representatives of the Saudi Lebanese group Marina Towers s.a.l, Messers, Khaled Al-Seif, Mohammad Al-Safadi and Joe Moawad; to their right, SOLIDERE board members Nabil Boustani, Maher Beydoun(vice president) and Basile Yared).
HRH Prince Alwaleed Bin Talal AbdulAziz Alsaud and a consortium of Saudi and Lebanese investors concluded with SOLIDERE an agreement for the purchase of 10,000 sq.m. of land in a prime BCD site on the reclaimed land, overlooking the western marina in the St George bay and the 70,000 sq.m. public park.
Kingdom Beirut s.a.l., a subsidiary of Prince Alwaleeds Kingdom Holding Company, acquired building rights for 26,640 sq.m. of floor space on one plot, to develop a 5-star Four Seasons hotel with more than 260 rooms.
Marina towers s.a.l. simultaneously acquired building rights for a luxury development comprising 41,600 sp.m. of residential and tourist facilities on the adjacent plot.
Kingdom Holding Company, is a major international investor with global interests in real estate as well as in hospitality, restaurants and entertainment, in addition to banking, agriculture, upscale fashion, retail, supermarkets, media, broadcasting, tourism, travel, automotive manufacturing, telecommunications, computers and electronics.
Marina towers s.a.l. is a consortium of three companies representing important Lebanese and regional investors. These are Stowmarket Holding s.a.l. subsidiary of Marketing and Construction Company (MAC) specializing in real estate in Lebanon; Safadi Group Holding s.a.l.; and Riyadh Holding s.a.l., represented by Mr Khaled Al Seif and also including such other Saudi groups as Jeraisy, Omran and Kendah. The stowmarket, Al Seif and Al-Safadi holdings have already acquired land in Beirut Central District for the development of a commercial complex.
The two developments will be linked, and enjoy access to the marina, through an underground pathway. The developers intend to coordinate their efforts in architecture and procurement to achieve harmony in design and to benefit from economies of scale, thus enhancing both projects.
SOLIDERE will continue to provide support to the two projects. In praise of the Company, Prince Alwaleed said: «It is the only time we have seen this level of professionalism in the Middle East».
Once completed in the year 2002, the prestigious, quarter of a billion dollar development will add to the international appeal of Beirut Central District by constituting, Prince Alwaleeds words, «the undisputed jewel of the Eastern Mediterranean».
Other second quarter sales
The second quarter sales also include:
- The sale to Mr. Jamil Ibrahim of a plot of land for a development in Foch street comprising 8,000 sq.m. of office and commercial space.
- The sale of Al-Mashtal s.a.l., represented by Messers. Sami Maaloof and Elie Baz, of 200 sq.m. of office space in Maarad street.
Sale agreements signed by SOLIDERE since inception amount to US$433,8 million, representing around 412,000 sp.m. of floor space. In addition, properties worth around US$248 million have been recupered since inception by their original owners, and the corresponding shares have reverted into Company possession. The amount corresponds to 425,000 sq.m. of floor space.
100 million loan to SOLIDERE
SOLIDERE signed on April 2 a five-year syndicated loan agreement for the amount of US$100 million, to be used for the completion of land and real estate development projects targeted for phase One.
Reflecting the global confidence in the BCD reconstruction and in SOLIDERE, a number of local and regional banks have participated in the syndication, which is lead managed by bank Audi s.a.l. They are: Arab Bank, Banque du Liban et dOutre-Mer, BNPI-Lebanon, ABN AMRO-Lebanon, Banque Libano-Française, National Bank of Kuwait-Lebanon, Gulf International Bank (GIB) and Citibank-Lebanon.
Annual report 1997
The annual report 1997, which has been printed in three languages, is currently being distributed.
The annual shareholders ordinary meeting, presided by SOLIDERE chairman and general manager Nasser Chammaa and attended by the board of directors, was held on June 29, 1998.
The general meeting look the following resolutions:
- to approve the auditors report and the financial statements for 1997.
- to agree to the distribution of a US$0.25 divided per share payable to shareholders whose names appear on SOLIDEREs registry at the end of the business day on Friday June 26, 1998. The payment of dividends will be effected on July 15, 1998.
- to grant the chairman and members of the board of directors the authorizations stipulated in articles 158 and 159 of the commercial Code.
- to clear the chairman and members of the board of any liability for matters relating to the management of the Company in 1997.
An extraordinary general meeting held on the same date approved the amendment of article 4 of the Articles of Incorporation, extending the term of the Company from the initial 25 years to 75 years, starting from the date of inception.
The Beirut Stock Exchange published these these resolutions in circular No 98/67, on July 1, 1998.
Performance of the shares during the 2nd quarter
SOLIDERE shares fluctuated within a tight range throughout the quarter, between a low of US$11 3/8 and a high of US$12 7/8 Share A closed the quarter at US$12 ¼, a 1.03% rise over the closing price at the end of the previous quarter, share B closed at the same level of US$12 ¼, representing a 2% drop compared to the previous quarter. However, both share prices rose at the end of June, after the extraordinary general meeting resolution to extend the term of SOLIDERE to 75 years.
A number of events took place this spring in the BCD, contributing to its revival. Official Lebanese events culminated in the Martyrs Day celebrations on May 6, They also included the formal opening of the recently completed parliamentary deputies offices, and the Beirut municipality handing over ceremony which followed municipal elections.
(Opening of the Aimf conference)
On the international level, in addition to the conferences organized by the UN Economic and social Council for Western Asia (ESCWA), the BCD hosted the 18th annual meeting of the AIMF, the International Assembly of Mayors of Francofone Cities, of which Beirut is a member.
The traditional Barghout flea market attracted as usual large numbers of buyers, sightseers and leisure-seekers. The opening of a photography exhibition in the municipality building heralded the «Photography Month» held in Lebanon throughout July. Other leisure activities included a concert of the British rock group Prodigy.
In his opening speech for the AIMF annual meeting, held in Martyrs Square on April 31 and May 1, French President Jacques Chirac commented:
«While walking through the Beirut Central District today. I have appreciated how much things have changed since my last visit. A new city is coming to life.»
Attended by 160 participants representing 60 Cities, the conference took the rehabilitation of Central districts as its theme, dealing with the revitalization of war-damaged cities in addition to districts suffering from aging infrastructure and demographic changes.
The AIMF resolved to provide a FF3 million funding for bilingual (French and Arabic) directional signs throughout Beirut.
The conference lauded the rapid progress in the BCD reconstruction, attributing it to the dynamism of SOLIDERE.
Young and old enthusiastically rallied in Martyrs Square on May 6 to attend the Martyrs day celebrations, led by Prime Minister Rafic Hariri.
Mrs. Hariri browsing through some antiques at the Barghout flea market.
The traditional Barghout flea market organized by SOLIDERE was held between June 11 and 21, offering a taste of the popular souks life. Visitors could stroll through stalls of antiques, jewelry, crafts and bric-a-brac, and also enjoy street entertainment, including mimes and musicians, and all kinds of food. Live music was provided at night, in addition to giant screens for worldCup fans.
A true link between old and new, the Barghout market evoked the famous Beirut fair, inaugurated in 1921 in the same surroundings, while simultaneously announcing the retail and entertainment outlets planned in this sector, of which an antiques quarter in nearby Uruguay street. In fact, participants as well as visitors expressed admiration for the Foch-Allenby area and several declarations of interest were received for commercial space there.
Beirut Trade Center Launched
In its June 1, 1998 meeting, the board of directors of SOLIDERE approved the launching of construction works in Beirut Trade Center (BTC), since the following conditions had been fulfilled to the satisfaction of the general management.
- Conclusion of negotiations with the most competitive contractor, the joint venture Binladin/AL Mabani, leading to a reduction both in the construction cost and the completion time.
- Pre-leasing of 60% of the development office space, amounting to 21,000 sq.m., for a period of 15 years. This was achieved through securing an anchor tenant, Société Générale Libano-Européenne de Banque, for 10,000 sq.m., in addition to Binladin/AL Mabani (2,000sp.m.) and SOLIDERE (9,000 sq.m.).
- Securing the required financing for the project.
To that effect, the Company is preparing the construction, leasing and financing documentation, due for signature by all concerned parties in the next few weeks. The Company will also proceed with marketing the remaining office space, the restaurants and the limited commercial space. The development is scheduled to take 26 months, with delivery expected in December 2000.
The BTC, based on a Webb Zerafa Menkes Housden (Canada) design, will constitute a landmark in Beirut. The 40-floor office tower, crowned with a panoramic restaurant, will be an intelligent building according to international standards, equipped with state-of-the-art facilities and amenities essential to the operation of leading business, including telecommunications, data transfer, security and building management systems.
SOLIDERE is progressing with its implementation of the real estate projects that are part of phase One of the BCD development and reconstruction.
Along with pre-construction and construction activities, the Company has been successfully engaged in the marketing of its real estate products.
SOLIDERE has also developed the legal and financial structuring for a number of its real estate projects into joint venture, offering participation to potential investors, combined with the pre-leasing or pre-sale of facilities being developed in order to reduce development risk.
The Company has been negotiating the implementation of such structuring with respect to the Beirut Trade Center and to some components of the Souks of Beirut.
In parallel with the south car park construction , the tendering of the superstructure is proceeding, with tenders issued for the supermarket,and for the souks proper following completion of their detailed design.
Construction is starting in August in the north car park and its superstructure, the department store and the multi-use building, for which the bids are being reviewed; and shortly thereafter in the entertainment center for which bids due by mid-July.
On the marketing level, the widespread interest in the gold souk shops is likely to be confirmed soon through pre-sale agreements. The supermarket is also eliciting serious interest.
SOLIDERE experts to award by the end of the summer the contract for the department store to a major international operator, and to sign an agreement for the variety store with a major gulf company having an international franchise. Finally, several bids for the entertainment center are currently under evaluation.
Following a successful marketing by SOLIDERE of its Foch-Allenby retail and office space, the company is finalizing is pricing policy with respect to the 145 units in the new Saifi residential project due for delivery by end 1999, and to the restored residential building.
In the administrative buildings pre-leased to the government, construction is expected to start during the summer in the Ministry of Finance, where bids are under evaluation, and in the three Serail hill buildings. Shorting works are proceeding for the Ministry of Interior.
The army officers club is advancing on schedule for delivery by end of 1998.
Army officers club from the sea (BTC behind).
On the reclaimed land, a 70,000-sq.m. area, treated and being equipped with infrastructure, is lending itself to real estate development, as the market has swiftly responded to the investment opportunities offered in this prime site.
Several major groups have already purchased land there,. Among the planed developments are (1) a four Seasons hotel and luxury residential and tourist complex, and buildings destined to serve as (2) headquarters for a major regional contracting firm, Consolidated Contractors Company s.a.l. (C.C.C.), and for Lebanese investment banks (3) Middle East Capital Group (4) Lebanon Invest, in some cases involving mixed-use residential and office towers.
These projects herald the large-scale quality developments which will characterize the entire reclaimed land, planned to accommodate a modern financial and commercial district, together with luxury residential and tourist facilities, all of which will enhance the international character of the BCD.
The fabrication of caissons for the second sea defense line has started on site, in parallel with the installation of the metallic structures used for pouring the steel going into the reinforced for the caissons. Other ongoing works are the execution of the ramp designed to slide the caissons into the sea, and the dredging of the landfill. The accropodes and rocks constituting the first defense line will be shortly placed on the sea wall.
Phase one the treatment of the original landfill has ended successfully, with 70,000 sq.m. already reclaimed. Civil works for the waste sorting plant complete. One-third of the plant components have been delivered with the balance expected by end July.
Infrastructure works have progressed on the 70,000 sq.m. treated out of the original landfill, which have been fully reclaimed. They are expected to be finalized in October 1998, including the underpass leading to the western marina.
With 90% of the infrastructure in the traditional BCD completed, the works now focus on street finishing and landscaping.
Description of pictures:
Mr. Nasser Chammaa guiding World Bank president James Wolfensohn around the BCD
Mr. Chammaa with Merrill Lynch chairman Winthrop H.Smith
Mr .Ian Sinclair and SOLIDERE vice president Maher Beydoun entering one of the Company's building
Mrs. Helene Carrere dEncausse and Mr. Michel El Khoury
During his visit to SOLIDERE headquarters, Mr. Ian sinclair, speaker of Australian parliament, described the BCD project as "one of the largest projects in the world" adding that "Beiruts position will enable Lebanon to play a major role in the region".
Mr. sinclair was accompanied by Australian parliamentary delegation. Other political and diplomatic personalities who stopped by the BCD during the second quarter of 1998 were:
Visitors from the financial world included :
World Bank president James Wolfensohn, who was able to observe the progress of works in the BCD since his June 1997 visit. Mr. Wolfensohn, who had praised the project and its unique financing method, also reasserted his confidence in the Lebanese economy. The world Bank has supported from the beginning the national postwar economic recovery and development program and has accelerated this year its aid to Lebanon.
Merrill Lynch chairman Winthrop H. Smith, whose trip to Beirut coincided with the governments announcement of its intention to raise US$1 billion in Eurobonds. Merrill Lynch was appointed by the government to manage the issue. Merrill Lynch had lead managed the SOLIDERE 1996 GDR issue.
A delegation of swiss banks representatives.
The BCD also Welcomed:
For more information Email : Solidere@Lebanon.com
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