Dubai’s Union Properties settles $188m bank debt

Imago Images/Alexander Trienitz via Reuters Connect

• AED875m repaid
• Returned to profit in 2022
• Dispute over Motor City

Dubai developer Union Properties has repaid debts worth up to AED875 million ($187.6 million) to a “national bank”, according to a bourse filing, as efforts to restructure the company continue.

Union Properties, best known for its Motor City development in the emirate, announced the debt payment following a board meeting on Thursday and said the settlement would be made in four instalments over nine months.

The note on Dubai Financial Market added that the company had partnered with “a major real estate developer” in Dubai “to obtain approvals to increase the gross floor area and change the use of some land owned by the company and its subsidiaries located in the Motor City”.

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Aided by rebounding real estate prices, UP’s arrangement with its creditors is the latest in a series of restructurings by real estate developers and contractors in the Gulf’s commercial capital. 

Falcon City World of Wonders, a major development which stood idle for years, has auctioned off plots at steep discounts to original asking prices. Drake and Scull International, a contractor, remains in intensive care although Arabtec, one of Dubai’s leading developers, went out of business during the Covid epidemic.

Union Properties transformed a AED966 million net loss in 2021 to a AED30 million net profit last year. The resurgence continued this year, with reported profits of AED20 million for the first nine months of 2023.

Following the company’s annual general meeting earlier this year, managing director Amer Khansaheb said its ongoing recovery would be led by a return to real estate activity.

He conceded this would hinge on the result of a legal dispute with developer Dubailand over changes to the original masterplan for Motor City. There has been no update on the status of the court case.

In its most recent results, the company revealed accumulated losses had reached AED2.863 billion, representing 66.75 percent of the paid-up capital.