Union Properties' losses widen after taking a Dh1.6 billion hit on its property portfolio following the downturn.
Union Properties posts Dh1.56bn loss
Union Properties' losses widened to Dh1.56 billion (US$424.69 million) last year as the developer set aside more cash to cover soured property sales.
The developer of many of Dubai's high-profile projects, including the Ritz-Carlton hotel, has been hit hard by the downturn in the emirate's property industry.
The losses came despite an increase in overall sales to Dh4.9bn, a 71 per cent increase on a year earlier.
Dubai's developers have struggled to deal with a sharp fall in property prices since the downturn in the third quarter of 2008.
"If you look at the numbers, you'll see that there's a big gap between revenues and net income from the company - which is most probably related to the Dh1.1bn deal they have with Emirates NBD," said Marwan Shurrab, the chief trader at Gulfmena Alternative Investments.
The developer's shares fell 9.8 per cent after the release of earnings to 28.4 fils each.
Last month, Union Properties announced a deal with Emirates NBD to reschedule Dh2.7bn of debt, extending maturities by five years.
The developer also transferred Dh1.1bn of property assets, including substantial stakes in the company's flagship developments, Limestone House and Index Tower.
That left Union Properties with few remaining properties on its books. A few days after the deal was announced, Union Properties said it had replaced Khalid Al Jarwan as the managing director.
The developer may have incurred additional costs as a result of the transaction, analysts said.
Union Properties sold the Ritz-Carlton Hotel in November 2010 for Dh1.1bn, below its asking price of Dh1.5bn.
The developer said yesterday it had secured a loan of Dh400 million from Emirates NBD, its largest shareholder, to complete two stalled hotels under construction in Dubai's MotorCity.
"We will start repaying in two years," Khalid bin Kalban, the company's chairman, told Bloomberg News.
"The loan will help us complete the two hotels and also spend as we need to," he said.
Union Properties is preparing to tender a contract to finish the Renaissance hotel and the Marriott Courtyard in MotorCity, Mr bin Kalban added.
Emirates NBD declined to comment.