Union Properties full-year loss more than triples from 2009

Dubai: Union Properties, Dubai's third largest real estate developer by market value, said yesterday its full year net loss more than tripled to Dh1.5 billion from Dh498 million a year ago.

Revenues in the 12-month period almost halved to Dh2.9 billion, from Dh4.4 billion in 2009, the company said in a statement posted on the Dubai Financial Market's website. Earnings per share for 2010 were Dh0.45 compared with Dh0.15 in 2009.

The company made a profit of Dh186 million in 2010, against Dh372 million the previous year. Its total assets reduced to Dh14.9 billion from Dh17.4 billion in 2009 while shareholders' equity decreased to Dh3.9 billion from Dh5.4 billion.

Chet Riley, an analyst at investment bank Nomura in Dubai, said in a note to investors that it was hard to see Union Properties' prospects improving over the short term unless significant asset sales could be completed in 2011.

"Union Properties reported a net loss of Dh1.5 billion (Dh778 million in the fourth quarter), with impairments on properties of an equivalent amount. This suggests to us that the company is broadly break-even for the year," Riley said. "But even stripping out property impairments, we think Union Properties would have been loss making in the fourth quarter (about Dh30 million), largely owing, in our view, to significant financing costs.

"We retain our Reduce recommendation and expect the stock to underperform on this result."

Hotel portfolio

Union Properties finalised the sale of the recently opened Ritz-Carlton Hotel at Dubai International Financial Centre in November last year. Khalid Al Jarwan, General Manager of Union Properties, said the proceeds from the Dh1.1 billion transaction would be directed toward reducing the company's overall debt position. Riley added: "The company's asset base has fallen Dh2.5 billion, from Dh17.5 billion to Dh14.9 billion, with Dh1.5 billion as a result of property impairments.

"The balance of Dh1 billion could be a result of the sale of the Ritz Carlton, and debt repaid with the proceeds, although it is unclear to us whether the sale was concluded in 2010 or yet to be reported in the first quarter of 2011 results, which we think is more likely," he said.

"Either way, we do not expect any meaningful profits to accrue from the sale of one of Union Properties' crown jewels."

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