Union Properties open to M&A options, expansion

Dubai-listed firm plans to expand operation to other geographies in Mena region

Nasser Butti Omair bin Yousef chairman of Union properties says his company is open to considering a tie or acquisition as the company looks to expand into other markets Chris Whiteoak / The National

The Dubai-listed Union Properties, whose board was restructured in May, is open to the possibility of a merger or acquiring another developer. The company plans to expand its business to markets in the broader Middle East and North Africa (Mena) region, its chairman said. 

“We are open for any good transaction,” Nasser bin Yousef told The National at the Cityscape Global in Dubai, when asked about the possibility of his company’s consolidation with another developer.

He declined to comment on whether the company was in talks with an interested party and if a deal is already on the table.

The real estate sector in the UAE, which recovered well from the 2008 financial crisis, has faced some headwinds in past few quarters.

Oversupply of residential units, difficulties in securing new finances and slower economic growth has pushed some developers to consider gaining scale through mergers and acquisitions.

In August, Abu Dhabi developers Eshraq Properties and Reem Investments said they are considering a potential merger to create the second-largest listed developer in the emirate. Talks are at an advanced stage for the potential deal, where Reem subscribes to a new share issuance offered by Eshraq, which in turn acquires Reem's entire business and assets.

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The deal, which is subject to agreement of final terms and regulatory approval, will be the second significant property market consolidation after Aldar Properties, the biggest-listed developer in the emirate, which merged with rival Sorouh Real Estate in 2013.

Union Properties, one of the oldest real estate developers in the UAE, reported its worst-ever quarterly loss in August after it wrote down the value of investments and booked provisions to cover accounting errors of the firm’s previous management. The company recorded a Dh2.3 billion net loss for the three-month period ending June, which contrasts with a Dh71.7 million profit for the same period in 2016.

Mr bin Yousef, who took over the firm in July after the reshuffle, said the firm had taken the decision to restate the results to “put the books in order”.

“People see this as a paper loss. It’s a valuation loss not a cash loss,” he said at Cityscape on Tuesday, adding that the company’s properties and its land bank remains intact. “We had taken a decision about the pricing of the lands. What did we do was we took fair market value for the assets, and we implemented it, and we took a good provision,” he explained.

The firm, which on Monday launched the Dh8 billion MotorCity master development, which will be built over a period of four years, plans to expand operations in other geographies.

“I don’t want, as new management, to stick to MotorCity forever,” he said, adding that company has been associated with this development for the past 10 years and it is time to “look to other developments in the UAE, outside the UAE and in the Mena region”.

"It is the right time, especially for Union Properties to build our asset value, to build our recurring income so we can enter into bigger projects in other areas [geographies]," he said.