Dubai’s Union Properties returns to profit after restructuring

Union Properties

• Developer merged three of its business units to save on expenses
• S&P says outlook for Dubai real estate companies is stable 
• Union Properties is back to evaluating potential opportunities 

Union Properties, one of Dubai’s oldest developers, announced on Monday a turnaround in fortunes – transforming a AED966 million ($263 million) net loss in 2021 to a AED30 million ($8.1 million) net profit last year.

The Dubai Financial Market-listed company also said revenue from customer contracts increased by 5 percent year-on-year to AED419.2 million in 2022 as its subsidiaries delivered “performance improvements supported by positive momentum in the UAE’s real estate sector”.

Last year Union Properties merged three of its business units – Edacom Owners Management Association, Uptown Mirdif Mall and Al Etihad Cold Store – into one single entity, Edacom Asset Management.

• Union Properties launches first project in seven years
• Union Properties finalises $162m deal to restructure its debt
• Dubai real estate prices haven’t yet peaked, says S&P

As a result administrative and general expenses declined 39 percent year-on-year to AED80.5 million in 2022. 

The results come as S&P Global Ratings said the outlook for rated Dubai real estate companies is stable, reflecting its expectation that growth will support strong cash flow, steady profitability and improving credit metrics. 

“Mounting economic pressures globally, including rising interest rates, inflation, and the devaluation of emerging currencies, may cool the demand for residential real estate,” S&P Global Ratings credit analyst Tatjana Lescova said. “This will lead residential real estate prices to stabilise in 2023.”

“Nevertheless, we expect continued deleveraging and improving rating headroom for Dubai real estate companies in 2023,” she added.

“We also expect ample liquidity and limited funding needs. Plentiful cash flow leaves headroom for higher capital expenditure, dividends or acquisitions.”

Amer Khansaheb, managing director of Union Properties, said: “Last year Union Properties’ new management team implemented their turnaround strategy and restored the company to profitability. 

“We completed our debt restructuring process and are in a strong position to leverage our expertise, reputation and sought-after land bank locations to drive growth and capture opportunities in the UAE’s flourishing real estate market.” 

During 2022 Union Properties completed AED595 million debt restructuring, marking a milestone by resolving legacy liabilities with the majority of its lenders. 

The company, which is best known for its Motor City development in Dubai, is currently conducting negotiations to restructure the remaining legacy related debt with Emirates NBD.