In the wake of criticism from a wide array of religious and political leaders, threats of an outright ban, and the very public defacement of certain controversial images from Tyre to Tripoli, the outdoor advertising industry appears ready to engage in a bit of belated self-regulation. To understand exactly what this will mean, EXECUTIVE sat down with Antonio Vincenti, CEO of the billboard giant Pikasso, who has been at the forefront of efforts to repair the industry’s own image.

Q: Describe Pikasso’s current role in the regional advertising marketplace.

A: We are in Lebanon, Jordan and Iraq – Iraq since January. We have forty competitors, more or less, in Lebanon and forty in Jordan and we are the largest company in Lebanon. What we do is rent locations from municipalities or from landlords, we install the boarding and then we rent it by creating networks.

Q: What is at the center of the controversy over outdoor advertising in Lebanon?

A: In a country where you have 17 communities living together, I think we must, if we want to preserve civil peace, respect the beliefs of all of the 17 communities. Now, where does the border stand between what is permitted and what is not permitted? Thank God, general security has a very open minded attitude. Since the beginning of the year (when they became the official censor), we have never had any problem with general security. And I can tell you that they are very liberal in their way of guarding permits. What does this mean? It means we should be very responsible toward this open-minded attitude of the censor. If we say, yes we have had a problem with religious authorities, but we have the permit from general security, then the attitude of general security the next day is to refuse all visuals or half of them, whenever they feel as though they will have the smallest problem – which is a pity. That is why we need to have self-censorship, self regulation – a logical attitude. You know you have visuals you should not accept and you should not accept them nor you should post them.

Q: What will self-regulation entail exactly?

A: After the Association for the Defense of Moral Values in Lebanon asked the justice minister to [crack down] on certain billboards. I advised my colleagues and competitors to take care and be very cautious. We also attempted to create a dialogue among companies. We are all working in the same sector but each one has different values and ethics. So, we suggested, and we will create, groups composed of the president of a municipality, three or four billboard companies, the local association of traders, a representative from the ad agencies and a representative of the ministry for the interior. Our industry objective now is to reduce the number of billboards by 25% in crowded areas. We will start this with the municipality of Antelias. The president there said he would like to be the first one to try this.

Q: Where, from within the industry, have most of the problems with visuals come from?

A: The problem comes from a lot of small agencies – they don’t care, they [produce] vulgar creations and post it everywhere. This is what disturbed and created this problem from all the religious authorities. Now, I would defend to hell pure creativity and the body of a woman on a billboard, if it is done with class, with creativity by a big agency, for a big brand with class. I do not want to be associated with a cheap product, cheap creativity and a vulgar thing.

Q: Some tiles have been taken out of less vulgar billboard visuals though, like one example along the highway to Sidon where Haifa Wehbe’s shoulders were removed.

A: This I am not aware of. A shoulder would never be a problem. Look billboard posters have abused the usage of their billboards, putting images that hurt the feelings of certain people. But if I have a big brand like Aïshti, who wants to put a half naked woman or L’Oreal, I will do it, but I won’t put it in a sensitive area. I would put it in Jounieh for example.

Q: Pikasso has never had a problem with its 3,000 plus billboards?

A: No, thank God. I just had two unipoles for a brand of underwear. I asked them to change the visual and they refused so I stopped the contract. It is not worth it. We want to be responsible. We don’t want to be used by some product or agency in order to sell some products with those provocative visuals.

Q: Has Pikasso ever had to bend the rules in order to compete in the market?

A: We respect the law as much as we can and we only stop respecting the law when our survival is at stake in a city or town. What does this mean? That we would exclude ourselves if we tell a president of a certain municipality, look we don’t install here because it does not respect the law [regarding the spacing of billboards]? Sometimes, I have no choice, or I would exclude the company from the market. If I am in a city where I have installed some billboards and then the council decides to give a competitor space at 50 meters away from me, what should I do? Dismount the billboard and exclude Pikasso from the city?

Q: Since the main advertising law stipulates that billboards should be kept 100 meters apart in all public areas, considering that 60% of the country’s 10,000 billboards are concentrated between Khaldeh and Jounieh, a stretch that only accounts for 10% of the country’s total area, won’t a 25% reduction significantly hurt revenues in these overcrowded, but profitable locations?

A: With the clutter prices are going down. Now, after the industry changes, it will be even better. It will make billboards more attractive and the sector more organized.

Q: Does Pikasso hold any of the billboards where the visual is repeated over and over again ad naseum?

A: No. I think this is not very smart, although there is a saying in Arabic: “Repetition is a good lesson for donkeys.” They believe that, but it is totally wrong.

Q: What’s to say that your 40 or so competitors will do a better job of self-regulating their visuals and, on top of this, agree to voluntarily reduce the number of billboards, especially if some are already apparently willing to push the borders of the industry.

A: Now, I think that general security will be much more rigorous on the permits they will grant and, therefore, you will see that we have less and less of those problematic visuals. I think that our competitors understand that we are all seriously under threat and that we are playing with fire.

Q: According to one published report, Jounieh recently estimated that it should be generating as much as $666,000 per year from taxes on billboards. But, last year, it only saw $26,000 (LL39 million). What accounts for this discrepancy?

A: I will tell you that the figure is wrong in Jounieh. We alone pay the amount of LL40 million annually. I have a colleague who pays LL40 million. I said to myself maybe this is for political reasons, they are attacking the old municipal council. What I have heard though is that a lot of companies have not paid their taxes elsewhere and what I think we should do is haul them in front of the courts and not let them get away with that. We at Pikasso pay rigorously all of our municipal taxes, even during the war, and this is a point of honor for me because it is an obligation.

Q: Although general security has censorship power over billboards, why have you opposed the formation of a specialized body, such as a bureau for the verification of advertising, such as has been recently proposed?

A: In Lebanon, when you create a new authority or council, you will put people together that will argue and fight with each other. We know the people now, and we know that they are good people. We think that one control from general security is more than enough. We have the law, we have to respect the law – we have to be responsible and mature. I think that maneuvering smartly among all those things will be enough.

Less popular cruises?

While 60 cruise ships dock at Beirut each summer only one, the Ausonia, takes on new passengers, and for three years now, Lebanese holidaymakers have signed up for the weeklong Greek island cruise, organized by the Cypriot company, Louis Cruise Lines. That was until this year, when prices went up by about 5%, noted Toufic Keyrouz, general manager of the travel agency Lebanese International Tours, who feels that the budget cruise may have had its day.

Paul Zahlan, a director of Lebanon

Paying the hospitals

After much back-and-forth in the media, in mid-July an agreement was finally hammered out between the Syndicate of Hospitals and the various government entities and public employee groups that collectively owe almost LL500 billion in unpaid hospital bills. The terms of the deal stipulate that the hospitals

Interminable terminal

The saga concerning the private jet terminal at the Beirut airport continues. The new terminal was supposed to open its doors last June, but until now it has not.

Welcome backSince September 1, the Lebanese authorities have again been allowing South Koreans to obtain visas upon arrival in Lebanon. The practice had been discontinued in November 2003, when the Lebanese government imposed visa restrictions on a number of countries. South Korean embassy officials declined to offer an explanation for their country

Among globally active real estate funds, investment firm Colony Capital has made their mark after over 13 years of investing in real estate to the tune of almost $1 billion annually and managing equity capital on behalf of leading institutional investors. By identifying and buying real estate, real estate-dependent companies, distressed assets and non-performing loans, the firm’s funds year after year realized internal rates of return in excess of 20%.

With leisure-related projects in hospitality, resorts and gaming strong in the list of participations, the company’s pedigree of past or present investments in high-profile properties includes names such as the Las Vegas Hilton, the Savoy Hotels chain in the United Kingdom, the Fukuoka Dome baseball arena in Japan, and the Costa Smeralda resort of Agha Khan fame on Sardinia. Last month, Colony made headlines by being in negotiations over acquiring several casinos in the United States.

Earlier this year, Colony Capital set up an office in Beirut, the 13th branch in their global network. Also notable from a local perspective is that Colony’s founder and chairman, American entrepreneur, Tom Barrack, has roots in Zahle, and that one of Colony’s 12 principals is Lebanese Naji Boutros, who joined the firm last year after acquiring a strong reputation as head of Middle East and European real estate at Merrill Lynch. EXECUTIVE talked to Boutros about the regional and local financial market in real estate investments, and about what it takes to be a Lebanese success story in global finance.

Why is real estate so very important for Middle Eastern financial markets?

Middle Eastern investors have always acquired real estate and globally are today among the most important investors in this field. I think that three factors make real estate a favorite asset class for Middle Eastern investors. For Islamic investors, if it is structured properly, real estate is SHARI’A-compliant. Secondly, real estate is not volatile; it is a hard asset. The third reason is what happened during the tech crisis, where a lot of money was wiped out.

How does the Middle East figure in Colony’s investment strategy? Are there projects that you would qualify as totally off market?

We are working with top decision makers in the Middle East who are offering us a lot of incentives to be with them, because we bring brand recognition to their local market. These economies range from monarchies to pluralist secular democracies. You can imagine which one that is, Turkey.

Is the participation of Middle Eastern investors in Colony Capital evolving positively then?

A year ago, we had zero participation of Middle Eastern investors in our worldwide operations. Today, it stands at 5%. That is fantastic. They like it and want more and more and more. I anticipate this participation to quadruple within 24 months to then be in the 20% of our global operations. We would like to become the vehicle of choice for Middle Eastern investors globally investing in real estate. By aligning our interests with theirs’ and by having such a sophisticated global experience platform at their service, we are doing well.

The current economic environment seems to correlate once again high revenues for the Middle East with somewhat subdued outlooks for many developed markets. Do you see another wave of Arab investments flowing out of the region?

I think what we are seeing is a recalibration of Arab investments. You have some repatriation of money back from the US. We don’t really know the number but it is a lot of money. That money went back to the Middle East, plus you have the generation of additional capital from oil prices and other factors. Smart Arab investors are channeling this money towards productive investments in their own countries. I cite what Dubai has done, which is incredible. Chapeau bas, there is one decision maker and so much attention and focus goes towards productive investments in his own country. I am today an amazed believer and supporter of what is happening in Dubai. We are talking about medical tourism in Lebanon but Dubai goes out there and proactively attracts the Mayo Clinic and the Harvard Medical Institute.

The presence of Colony in the region is relatively recent. When did you open your office here in Beirut?

We started our institution and moved in about five months ago.

How many staff do you have?

We have six highly qualified staff, and we are hiring the best out of Lebanon and bringing back the best Lebanese from outside to Beirut. We looked in Lebanon unsuccessfully for five months before bringing people back from the outside.

Is Lebanon a great location where you as real estate funds or financial firms in general can work on a Middle Eastern scale?

It is not a great location. The one attraction is that Lebanon is closer to Middle Eastern clients and the more these clients will come to Beirut, the more financial services will locate here. The second attraction is that Lebanese like to be back here. There are top financiers around the world working with investment banks and investment companies like ourselves, who are willing to come back to Beirut. They are ready to make huge sacrifices to be in Lebanon. But if you were to approach it objectively, why would Lebanon be better than a place like Dubai or Switzerland, where you have so many incentives for firms to operate in?

How do you evaluate the local market conditions for real estate investments?

To us as global real estate investors, the most important thing is who is behind a particular project and which asset management company is doing the work. We find it extremely disturbing that you have many briefcase salesmen in Lebanon, but very few long-term driven, institutional transparency-type of asset managers and real estate brokerage houses. That is what is missing. Recently we start to see global powerhouses like Coldwell Bankers coming here and we like that.

But is there not an overemphasis on real estate in Lebanon’s investment landscape?

I think the focus should be productive real estate versus real estate that you trade, which is totally unproductive for the economy. It should be operating real estate where you employ people. The focus of investors should be channeled towards hotels, not towards residential accommodations. We’d also like to see world-class urban planners to come and help in setting the right regulations that are essential for the long-term benefit of the country. What really annoys me in this country is that people think that a plot of land has the more value the more meters you can build on it. This is absolutely wrong, because values are driven by demand and not by supply. People should ask, ‘how can I attract the most value for my land, how can my land be competitive versus somebody else’s land’?

How can one increase the competitiveness of land?

In Sardinia, for example, we went to the urban planning authorities and told that them we want to build less than what is allowed. By doing so, we created a scarcity of buildable land. When you create that rarity factor you attract the crème de la crème. The billionaires will come to you. Lebanon is not doing that. What we have to address is the competitive edge of Lebanon. To me it is very simple: We have a beautiful mountain area, which is green and attracts our tourists. We have cultural heritage, and a few unspoiled beachfront spots. What we have to do is optimize the value of these places.

Is Lebanon then a good market under the perspectives espoused by Colony, namely to focus on undervalued properties and apply a “cautiously contrarian” approach?

Yes and no. Yes, because we can find value investments in Lebanon. There are distressed sellers in Lebanon, be they distressed individuals or banks, who would like at attractive prices to dispose of their non-performing loans and real estate owned. What is unfortunately detracting us from here, is number one that we are having difficulties in finding sizeable deals. Number two, we are having difficulties in finding unique deals; number three, we are having difficulties in keeping the noise away – you can interpret that in any way you like.

Does that indicate that you have not executed projects here?

We are not yet comfortable with stability and transparency, which goes back to noise. And we haven’t yet seen the incentives that could be offered to a global group such as ourselves. All of this to date is pointing us to analyze a lot of things in Lebanon but not yet make any investments here. We haven’t found the right deal yet. What we are doing instead is using our base in Lebanon to analyze and make investments in other parts of the world.

So beyond nice buildings and nice scenery, what values do you find in Beirut and Lebanon that contribute to your performance?

We love being here, we love the culture of this place we love the beauty of this place, the human being. This is a place that has generated intellectual capital and achievers found around the world – be they doctors, engineers, or financiers. That is why I say that we’ve got an amazing brain center at Colony in Beirut.

[Colony Capital CEO] Tom Barrak has got an amazing love for this place. When we acquired Costa Smeralda, Tom said in his opening speech, “the Phoenicians are back.” and he was so proud of it. We love this place and I cannot describe how much it hurts us because we are operating globally and we contribute and add value to all these places globally and we want to do that in Lebanon and we want to see this place get better.

How does one take his or her heritage and advantage of being Lebanese to become a true real success in finance?

What you need to do is forget everything you learned at school and remember what your grandmother told you, which is walin haram, watch out from the bad people. Your reputation and credibility and long-term relationships, this is what matters, but stay away from bad people. Give it your best shot, work hard. This is not stuff they taught you at school but I think this is the basis of success. To be appreciative, and hard working and remember what your grandmother told you.

From your experience, would you endorse the statement that a Lebanese should go abroad to succeed?

I left Lebanon with $2,000 in my pocket and worked hard. I busted my chops, cleaning dishes and doing whatever. I had a scholarship at a university in the US, got educated at Stanford and Notre Dame and I did well at work. Now I work with Colony, and I am giving back to Lebanon. I like to give back more to Lebanon. Would I have had this opportunity if I didn’t leave? I don’t think so. My mind, the way I think would be different if I would have remained here. I encourage the young people to go wherever their opportunity is. Don’t forget Lebanon; be like what the cedar is like. You have your roots here, and when you find your roots, then you can grow high into the sky. This is a great place to be from, and we have a lot to give back to it. In order to give back to it, one has to find his opportunity wherever it is. If it is in shoe shining, in planting grapes, be the best shoe shiner and the best viticulturist around. Be the best; give it your best.

With those principles on your internal billboard, you yourself rose from starting out with $2,000 in your pocket to what net worth today?

My net worth is measured in terms of the friends and relationships I have, the family I have. That’s my net worth. What we must focus on are the essentials, the priorities in life. Start from the foundation up, fix the human infrastructure and let’s stop all this plastic surgery business. Let people focus on what it is deep inside that governs their lives. Otherwise you end up building a society with false expectations, starting with the children.