Dubai-based developer Union Properties swung to profitability in the third quarter of 2022, as its turnaround and debt restructuring strategies built momentum amid a rapid recovery in the emirate's real estate market.
Net profit for the three months to the end of September reached Dh825,000 ($224,640) from a loss of more than Dh31 million in the same period a year ago, the company said in a regulatory filing to the Dubai Financial Market, where its shares are traded.
Revenue from contracts with its customers grew almost 3 per cent annually to Dh101.2m, while other operating income increased by more than 21 per cent to Dh3.4m, the developer said on Tuesday.
The company also significantly narrowed its operating loss in the quarter to Dh578,000 from Dh8.2m a year earlier.
“We have maintained our strong growth trajectory in the third quarter building on the positive momentum in the first six months of 2022," Amer Khansaheb, board member and managing director of Union Properties, said.
"We are continuing to see the positive benefits of our business turnaround strategy and remain confident that we will see further progress in the months ahead."
The company remains focused on "driving growth and delivering cost efficiencies", particularly at a subsidiary level.
"Looking ahead, we are cautiously optimistic as we explore several development options that we expect to generate long-term value for our investors,” he said.
Union Properties ran into trouble last year after the UAE's market regulator, the Securities and Commodities Authority, filed a complaint against its senior executives in October, accusing them of forgery, abuse of authority, fraud and causing damage to the interests of the company.
The review uncovered "widespread fraud and misconduct by the company’s former management involving forgery, misappropriation of funds and various other financial violations," Union Properties said.
That caused the company to swing to a Dh966.76m loss in 2021, compared to a profit of Dh200.98m the previous year, despite an increase in revenue after it rectified the value of its property portfolio that “had been inflated in prior years”.
A new board was appointed in December and a complete financial and accounting review was conducted by a third party.
Last month, Union Properties reached an agreement with its creditors to restructure Dh595m of debt, which it said will allow it to capitalise on the bounce back in the UAE's property market. The deal, which was agreed upon by all parties, included a repayment of Dh223m to the company's lenders.
The did not give details of its “comprehensive restructuring plan”, but reiterated at the time that the move is a "major milestone" in its turnaround strategy.
Through the first nine months of 2022, Union Properties swung to a loss of about Dh11.4m, from a profit of Dh1.34m in the same period last year, according to the bourse filing on Tuesday. Revenue, however, improved to Dh305m, up 3.4 per cent from Dh296m a year ago.
Operating profit through the first three quarters of the year rose to more than Dh7.1m, from a loss of almost Dh40m last year, it added.