Dubai developer Union Properties swung to a net loss of Dh966.76 million ($263m) in 2021 from a net profit of Dh200.98m the previous year despite a rise in revenue after it rectified the value of its property portfolio that “had been inflated in prior years” and the company is now restructuring operations.
Revenue from contracts with customers rose 6 per cent annually to Dh398.7m last year, largely driven by the recovery in the UAE’s real estate market as the country rebounded from the coronavirus slowdown, it said in a statement to the Dubai Financial Market, where its shares are traded.
A new board, appointed in December, changed the company’s independent valuer and found that the carrying value of its property portfolio “had been inflated in prior years".
Union Properties booked Dh1.11 billion in 2021 losses from the valuation of its properties compared with a Dh743.6m gain the previous year, leading to an overall loss last year.
The company also faced an impairment of Dh154.64m relating to investments in quoted funds and quoted equities, which are “suspected to have been misappropriated by the company’s former officials”, the developer alleged.
Union Properties' shares were down 4.12 per cent to 23 fils on the DFM at 10.31am UAE time. They are down 28 per cent since the start of the year.
“2021 has been a difficult year for Union Properties, as we uncovered widespread fraud and misconduct by the company’s former management involving forgery, misappropriation of funds and various other financial violations,” said Amer Khansaheb, board member and managing director of Union Properties.
“These have negatively affected the company’s financial health and been a severe breach of shareholder confidence.
“We have commenced the implementation of an emergency business restructuring programme to restore shareholder value, and negotiations are continuing with our two major creditors banks to restructure the loan facilities. Good progress has been made with one of the local Islamic banks, and we remain in constructive discussions with other major creditor bank.”
Mr Khansaheb said the company will continue to review its entire portfolio to determine where it could generate further value and liquidity through the disposal of non-core assets.
The Securities and Commodities Authority (SCA), the UAE's markets regulator, filed a complaint against Union Properties' senior executives in October last year, accusing them of selling one of the company's property assets at a price below its real value, forgery, abuse of authority, fraud and damage to the interests of the company.
A new board was appointed in December, and a complete financial and accounting review was conducted by a third party.
The preliminary findings included “violation of accounting standards and manipulation of records as well as misappropriation of funds and properties along with other violations, which took place over several years”, Union Properties said.
We have commenced the implementation of an emergency business restructuring programme to restore shareholder value, and negotiations are ongoing with our two major creditors banks to restructure the loan facilities
Amer Khansaheb,
board member and managing director of Union Properties
In a separate filing to the DFM, the company said it is taking measures to address the accumulated losses, including presenting a recovery plan to the SCA; developing a business plan that focuses on closing out existing projects and refocusing on core business activities to win new projects; improving efficiency; recovering misappropriated funds through legal measures; restructuring outstanding debt to reduce financial costs; recovering outstanding receivables through court and arbitration; developing its land bank; and focusing on cash generating activities, among others.
Union Properties' new management team is also developing a growth strategy to generate shareholder value, the statement added.
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Expert input
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
'Outclassed in Kuwait'
Taleb Alrefai,
HBKU Press
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MATCH INFO
Manchester United 1 (Greenwood 77')
Everton 1 (Lindelof 36' og)
The biog
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Price, base: Dh198,300
Engine: 2.0L in-line four-cylinder
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Match info:
Manchester City 2
Sterling (8'), Walker (52')
Newcastle United 1
Yedlin (30')
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WORLD RECORD FEES FOR GOALKEEPERS
1) Kepa Arrizabalaga, Athletic Bilbao to Chelsea (£72m)
2) Alisson, Roma to Liverpool (£67m)
3) Ederson, Benfica to Manchester City (£35m)
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5) Angelo Peruzzi, Inter Milan to Lazio (£15.7m
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
