x Abu Dhabi, UAEFriday 19 January 2018

Union Properties cites decline in property values for another loss

Dubai developer Union Properties reported a Dh1.5 billion loss for 2010.

Union Properties, a Dubai developer, reported a Dh1.5 billon (US$408 million) loss yesterday, citing a drop in valuation of its properties.

Shareholder equity in the company last year fell to Dh3.9bn, down from Dh5.4bn in 2009, when the company reported a net loss of Dh498,000.

Revenue for last year fell to Dh2.8bn, compared with Dh5.4bn a year earlier.

Once the second-largest developer in the emirate, Union is best known for MotorCity, the racing-themed mixed-use development in Dubai. But the company has been buffeted by the downturn in the market.

The annual revenue was in line with forecasts, but the impairments that led to the Dh1.5bn in losses were larger than expected, said Chet Riley, an analyst with Nomura Securities.

Union reported net operating profit of Dh186m for the year, compared with Dh372m for 2009.

The company has been "cash-flow positive" for the past two quarters, Nomura estimates. But "asset sales are probably still required to finance the existing development pipeline", Mr Riley said.

Last November the company announced the sale of the Ritz-Carlton to a private company in Abu Dhabi for Dh1.1bn. Ten months earlier it had announced an asking price of Dh1.5bn.

"The proceeds generated from the transaction will be directed toward reducing the company's overall debt position and completing few remaining assets at our flagship development, the MotorCity," the company announced at the time.

The company's cash flow should be boosted by the handover of units in Index Tower, the 80-storey office and residential tower in the Dubai International Financial Centre, Mr Riley noted.

However, "it is hard for us to see Union Properties prospects improving over the short term unless significant asset sales can be consummated in 2011", he said.

Yesterday shares closed at Dh0.36, unchanged from a day earlier. In July 2008, the shares were trading at Dh5.10.