Dubai: Union Properties is still in negotiations with its main lender Emirates NBD to restructure the ‘legacy’ debt the Dubai developer has been carrying on its books. Last year, Union Properties had completed a Dh595 million debt restructure, that helped it make some much needed progress towards a new turnaround plan.
That deal meant it resolved ‘legacy liabilities with a majority’ of lenders. “The restructuring supports improved profitability and cash flow generation by effectively reducing the company’s financing costs,” the developer said in a statement announcing its 2022 financials, which saw it return to profits of Dh30 million after a staggering Dh966.8 million loss the previous year.
“It strengthens Union Properties’ balance-sheet and enables it to raise additional financing for future real estate developments.”
Union Properties’s overall exposure to banks is over Dh822 million.
"We completed our debt restructuring process and are in a strong position to leverage our deep expertise, reputation, and highly sought-after land bank locations to drive growth and capture opportunities in the UAE flourishing real estate market," said Amer Khansaheb, Managing Director. "Union Properties is now on a solid foundation to deliver long term and sustainable value for its shareholders and is evaluating a number of potential development opportunities.”
Analysts say that Union Properties should consider selling non-core assets and try and leverage more from the land bank it holds, especially the Motor City, which is starting to rise in prominence as a mixed-use destination.
What caused the problems at Union Properties?
Last year turned out to be decisive for the company after it suffered successive yearly losses. The developer of some of the most enduringly popular communities such as Uptown Mirdiff also saw a management shake up, and investigations being launched for financial mismanagement against the earlier team. Accumulated losses too had reached a point where some were questioning whether Union Properties could carry on.
The existing management then came up with a turnaround strategy with an emphasis on new projects at Motor City, and simultaneously rework its debt payment arrangements. If the deal with Emirates NBD closes, that should free up more time and resources for Union Properties as it chases a revised future.