Union Properties appoints new chief executive as it looks to cut losses

The developer has struggled to maintain profitability amid softer market conditions

DUBAI, UNITED ARAB EMIRATES – Mar 1: View of the residential project by  Union Properties at Motor City in Dubai. (Pawan Singh / The National) *** Local Caption ***  PS01- MOTOR CITY.jpg

Union Properties, the master developer behind Dubai’s Motor City district, appointed Khalifa Al Hammadi as chief executive as the company continues to restructure and manage its accumulated losses.

The developer has struggled to maintain growth in profitability in the wake of a softening real estate market in the UAE.

In the second quarter of 2017, Union Properties posted its biggest quarterly loss of Dh2.3 billion after a Dh2.8bn write-down of asset value by its management team.

The company has reported a loss for each of the three quarters this year and made senior management changes to steer it through its restructure.

Last month, Union Properties reported its third quarter loss widened 32 per cent on the back of lower revenues and a loss incurred on the value of financial assets it holds.

The quarterly net loss reached Dh81.5 million, deepening further from Dh61.8m reported at the end of the third quarter of 2018. Revenue for this third quarter dropped 29 per cent year-on-year to Dh106.2m.

The company also declared a net loss on financial instruments held of Dh37.6m in the three months to the end of September, compared to Dh7.5m during the same period last year. The company has accumulated losses on its balance sheet of about Dh2.08bn, most of which relates to a 2017 write down of asset values.

The company is trying to address the accumulated losses by developing its land bank, creating assets with recurring income and “aggressively following up on its outstanding receivables through legal process”, Union Properties said.

Sarmad Khan