Solidere, the development company which has been responsible for the overhaul of large tracts of Beirut city centre in recent years, has reported a 90% drop in profits for 2012 to $16m (2011: $163m).
The company, which has redeveloped a large swathe of waterfront properties as well as building projects like Marina Towers, Beirut Tower and Platinum Tower, reported a 63% drop in revenues to $111m (2011: 296.3m), which is largely due to a significant fall in land sales.
The money generated from selling land plots owned by the firm last year dropped by almost 80% – from $241.7m down to $49.6m.
An analysts’ note published on the company’s results by FFA Private bank said the decline in revenues was due to the fact that it only made one significant sale of land for $50m during the year as property deals in the country waned.
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The company’s net debt also grew by a third to $518.4m (2011: 389.5m) as it continued to spend on infrastructure and site development. However, since its year end it has completed a $185m securitisation deal to help fund ongoing schemes.
Confidence in the Lebanese property market has waned due the the ongoing civil war in neighbouring Syria, which has seen some battles spill over into eastern areas of the country.
“In 2013, we expect revenues from land sales to remain challenging given the ongoing difficult macroeconomic conditions and political uncertainties in Lebanon and the region,” FFA Private Bank’s note said.
It pointed out that in the first four months of 2013, the property market in the country witnessed an ongoing slowdown. Property deals dropped by 9% during the first four months and the number of new construction permits dropped 12%.
However, it added that the value of property deals completed increased.
Despite the results, the company maintained its positive recommendation on the company’s stock, setting a target price of $17 on the shares. They are currently trading at $11, giving the company a market cap of just over $1.8bn.
“Overall, the Lebanese real estate market is maintaining a wait-and-see outlook. The current situation on the market can best be described as stagnating with limited transactions of new units taking place in the high end residential segment whereas developers keep on executing existing big projects in the pipeline.
