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Union Properties to continue cutting legacy debt in 2025

By Pramod Kumar
An impression of the Takaya project in Motor City. Union Properties says it is planning to launch two new developments soon Union Properties/X
An impression of the Takaya project in Motor City. Union Properties says it is planning to launch two new developments soon

Union Properties will continue to cut its legacy debt this year after lowering it by nearly 40 percent since 2022.

As part of its recovery plan, the Dubai-listed developer reduced its legacy debt to AED575 million ($156.6 million) by the end of December 2024, from AED1.47 billion in 2022. It will repay another AED150 million by the end of Q1 2025.

The developer has lowered the margin on the three-month Eibor from 3.25 percent to 2.75 percent thanks to growing trust among banks.

In addition, the company behind the Motor City development secured additional loan of AED150 million from a local bank to fund new investments over the next 18 months.

These investments are forecast to generate an annual recurring income of AED40 million.

Under its debt restructuring strategy, Union Properties has lowered its financing costs from AED114 million in 2023 to AED32 million in 2024, supporting profitability and liquidity.

The company has sold plots, generating AED1.3 billion to put towards debt settlement agreements and fulfilling preliminary costs for new real estate projects.

As part of its five-year strategy, the developer will retain land of 10 million sq ft of gross floor area from its current portfolio for development. It plans to launch two new projects soon in the mixed-use, residential and commercial segment.

“With the successful reduction of our legacy debt and acquisition of new funding to advance our strategic expansion, we are paving the way in a new era of growth and possibilities,” said CEO Amer Khansaheb.

Last April the company announced plans to repay AED966 million to lenders in 2024 as part of its debt restructuring plan.

The developer reported a net profit of AED3 million in the third quarter of 2024 after revenues rose 7 percent year on year to AED389 million. The accumulated losses reached AED2 billion at the end of the third quarter, representing 47.8 percent of the capital.  

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