Dubai real estate developer Union Properties swung to a second quarter net profit from a year-earlier loss as costs fell and gains on fair valuations of investment properties boosted income.
Net profit attributable to the company’s shareholders for the three months ending June 30 reached Dh24.7 million compared with a Dh2.29 billion loss a year earlier, the company said on Tuesday in a statement to the Dubai Financial Market, where its shares are listed.
Gains on valuations of properties in the second quarter rose to Dh120.67m from a valuation loss of Dh2.1bn a year earlier. Direct costs fell 70 per cent to Dh93.1m from a year earlier.
Other income for the developer surged to Dh65.4m at the end of June from Dh4.1m reported for the same period in 2017. Union Properties’ share of income from associates and joint venture also more than doubled to Dh21.4m at the end of second quarter this year from Dh8.8m a year earlier.
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[ Union Properties swings to record Dh2.3 billion quarterly loss ]
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Union Properties, which restructured its board in May last year, has struggled to maintain profitability amid sliding real estate prices in the UAE. It is looking to diversify income streams, expand its footprint outside its home market and enter new business lines to boost revenues.
The developer, in the second quarter of last year, posted its biggest-ever quarterly loss of Dh2.3bn after a Dh2.8bn write-down of asset value by its management team that took over last year. After the massive loss in 2017, it reported a Dh180m drop in its first quarter net income.
The company plans to sell shares in its facilities management unit through an initial public offering in the second half of this year. Union Properties will float 100 per cent of ServeU by listing the unit on the Dubai bourse and will use the proceeds from the sale to boost its investment portfolio and operations, it said in December.
Union Properties shareholders approved the board’s plan to shore up the company's finances through the issuance of up to Dh1bn in sukuk and increase the company’s foreign ownership limit, as the firm continues to re-organise its business amid tough market conditions.
The developer in May said it will privately place the Islamic bond to one or more qualified investors.
