Stock Union Properties Dubai
Union Properties had been working on a debt restructure since the new management takeover. The developer is also undergoing a major transformation from within as it tries to get rid off legacy losses. Image Credit: Ahmed Ramzan/Gulf News

Dubai: The Dubai developer Union Properties has received its biggest boost since a new management took over, confirming that it has restructured a Dh595 million debt restructuring. This includes repayment of Dh223 million to lenders, as ‘part of a comprehensive restructuring plan agreed by all parties’.

The deal will also likely help secure financing for new projects, according to the developer.

Union Properties' shareholders were certainly thrilled by the development, leading to the stock gaining an immediate 4 per cent in heavy volumes on the DFM. The stock is now up 3.6 per cent to Dh0.259. (The stock's 52-week high is Dh0.42, and Dh0.22 being the lowest.)

“The successful completion of our debt restructuring process is an important milestone in Union Properties turnaround strategy, placing us on a firm foundation to drive future growth and value creation for our shareholders,” said Amer Khansaheb, Board Member and Managing Director.

“With a bolstered balance-sheet and improved free cash flows, we are now in a strong position to leverage our deep expertise, reputation and highly sought-after land bank locations.

“The strong performance and outlook for the UAE’s real estate market provides significant opportunities for Union Properties, including the potential for new real estate developments.”

The mention of new projects is informative - while the developer has the land available in Motor City, market sources were saying that UP first had to reach a deal with lenders before it can initiate serious operational moves. Now, it has got that deal.

Union Properties turnaround plans
It was last year that a newly reconstituted Board of Directors and management took over at Union Properties. They immediately went in deep to come up with a series of steps that would revive the company's standing after years of sizeable losses.

Even when Dubai's property market took off in 2021, Union Properties was grappling with legacy issues. It's biggest strength in the near term will be the Motor City community, where it has more land bank to utilise.

Union Properties is also pursuing claims against some of its past board members.

Subsidiaries can help

The market is also expecting some action at some of the UP subsidiaries, including possible sell-offs or stake sales. "Some of these entities are operationally resilient and could bring in top dollar if UP were to consider any deal involving them," said an analyst.

In July, UP had merged three of its units under the banner of 'Edacom Owners Association Management'.

In a statement, the company said: “Union Properties’ management remains focused on improving the efficiency of the business and driving cost synergies across its subsidiaries and is confident in its debt servicing abilities going forward.

“The strong brand of the group and its subsidiaries is being leveraged to accelerate growth and capture emerging opportunities created by the positive momentum in the UAE’s economy and real estate market. Union Properties also continues to focus on driving improvements in its governance and internal controls as it moves forward in its turnaround strategy.”