Union Properties stock falls 4% despite big rise in profits
Union Properties stock fell almost 4 per cent yesterday despite an eightfold rise in profits in the first quarter.
Shares in the company closed down at Dh2.65.
Profits at Dubai’s second largest listed developer rose to Dh179.7 million for the three months to the end of March 2014 from Dh21.9m a year earlier as the Motor City developer settled liabilities with contractors and sold off high-value property assets.
The profits came on the back of an 11.6 per cent increase in revenues to Dh404m from Dh362.5m the year before, the company said in a filing to the Dubai bourse.
But revenue from Union Properties’ core business – property management and sales – fell 37.2 per cent from Dh25m last year to just Dh15.7m.
The company, which has spent the past five years tackling a massive debt burden after it was hit hard by the Dubai property market crash in 2008 and 2009, said that it had saved Dh100m by settling historic liabilities with contractors after it suspended work on schemes following the global financial crisis.
The company also reported that it had made a Dh77.8m gain on a portfolio of investment properties which it sold during the period for Dh308.7m.
Asset sales at the company are nothing new. The company was forced to sell many of its prestigious assets, including the Ritz- Carlton hotel and substantial stakes in Limestone House and Index Tower to major shareholder Emirates NBD in the aftermath of the global financial downturn.
Union Properties is currently attempting to take advantage of a resurgence in Dubai property prices by returning to development.
Last autumn UP announced that it would be resuming construction work on six Dubai schemes worth Dh4 billion, including a development of 70 shops called The Ribbon and 40 stores at an expansion of its Uptown Mirdif retail district.
And last month the company revealed that it was in high-level talks to resurrect a bid to bring Formula One racing to its Dubai Autodrome track in Motor City in Dubai.
UP is also tying up with Dubai Investments to develop pockets of land around Dubai’s Expo site.
“Union Properties is not a blue chip name in the UAE like Emaar and so it tends to attract retail investors who often invest on a very short term basis,” said Sebastien Henin, the head of asset management at The National Investor.
“A lot of them are backing Union Properties as a way of investing in the Dubai real estate market and were perhaps disappointed and hoped for better quarter-on-quarter results.”
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Published: May 7, 2014 04:00 AM