The losses amassed by Union Properties of Dubai to 1.96 billion dirhams – however the developer is assured


Union Properties’ is assured that any future turnaround will instantly enhance its prospects and scale back the amassed losses.
Picture Credit score: Ahmed Ramzan / Gulf Information

Dubai: The cumulative losses of Dubai grasp developer Union Properties on the finish of 2020 amounted to 1.96 billion dirhams, or 45.7% of the corporate’s share capital.

This will probably be a proportion that Union Properties should watch intently. If the amassed losses attain 50 p.c of paid-up capital, shareholders should determine how one can proceed and whether or not or not the corporate ought to proceed to function.

However the administration of Union Properties is sort of assured, and {that a} common restoration in the actual property sector is all it takes to make a distinction.

“These amassed losses are primarily on account of variations within the valuations of its actual property portfolio,” mentioned the developer. “These amassed losses might probably be recouped within the occasion of a rise in land costs in Dubai.”

The developer declared web income of 200.1 million dirhams for 2020, a wise shift from the lack of 224.3 million dirhams a 12 months earlier.

Motion plan

Union Properties, which has the Motor Metropolis venture in its portfolio of ongoing initiatives, is engaged on a three-year plan that:

• Restructuring of the excellent debt (final 12 months, it signed one with Emirates NBD for an publicity of practically Dh1 billion);

• Assortment of unpaid money owed (specifically by judicial and arbitration proceedings – final 12 months he lodged claims for 1.5 billion dirhams);

• Steady discount of working prices;

• Improvement of its “in depth” land financial institution;

• Improvement of belongings with recurring money circulation; and

• Deal with operational subsidiaries with a possible itemizing for sure entities. And concentrate on cash-generating actions.

The place do Union Properties’ losses come from?

• The developer suffered a “honest worth loss” of two.07 billion dirhams associated to funding properties acknowledged in 2017 (by correction of the gross ground space and reduce within the honest worth of the actual property portfolio);

• Normal decline of the actual property sector within the UAE;

• Depreciation of 503 million dirhams recorded in 2017; and

• Important hostile impression of the COVID-19 pandemic on the UAE’s general economic system and consequently on the Group’s actions.

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