Union Properties to IPO unit in second half of 2018

The public offering is part of the Dubai-listed developer's strategy to diversify revenue sources

The developer said it posted a preliminary profit of Dh180 million in the first quarter of 2018. Antonie Robertson / The National

Union Properties, the property developer that posted its worst quarterly loss in the second quarter of this year, said on Monday it plans to sell shares in its facilities management unit through an initial public offering in the second half of next year.

The  company will sell 100 per cent of ServeU  by listing the unit on Dubai bourse and will use the proceeds from the sale to boost its investment portfolio and operations, it said in a statement to Dubai Financial Market (DFM), where its shares are traded .

"2018 marks a new phase of development and growth for Union Properties," said group chief executive Ahmed Khouri. "After the group's extensive changes in management, structure and strategy in 2017, the company now has a unique position that will help it continue to strengthen its portfolio, diversify its revenue streams and enter new markets in the Middle East and beyond."

Union Properties, which restructured its board in May, is seeking to diversify its income streams and expand its footprint outside its home market of the UAE. It posted its biggest ever quarterly loss of Dh2.3 billion in the second quarter after a Dh2.8bn write-down of the value of its assets by its new management team. t also swung to a Dh45 million loss in the third quarter of 2017 compared with a Dh32m net profit reported in a year-earlier period.

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A new chairman and vice-chairman were appointed in May after an impromptu board reshuffle saw the resignation of three directors, including the chairman Khalid bin Kalban and Mr Khouri was appointed as new chief executive in July.

The developer is also launching new projects to expand its portfolio of properties, focusing on income-generating assets .

Earlier in the year, the company set up Union Malls to provide retail and leisure options at its developments and launched its inaugural mall in Motor City. It also established Al Etihad Hotel Management, its wholly-owned unit to develop and manage luxury hotels and furnished residences in Dubai.

The company, which already has three hotels under development in its flagship master development MotorCity, plans to extend hospitality and facilities management services for around 3,000 serviced apartments and 3,500 hotel rooms and later expand the scope of business to other developments in Dubai.

The developer also launched this year an investment arm, UPP Capital Investment that will focus both on direct and indirect property investments.

The IPO of ServeU is one of string of much-anticipated flotations in the UAE and beyond.

Abu Dhabi strategic firm Mubadala Investment Company is planning to sell shares in Emirates Global Aluminium, one of the world’s biggest aluminium producers, while state-owned Abu Dhabi National Oil Company is expected to IPO more of its subsidiaries after listing its distribution unit in Abu Dhabi this month.

The regional equity markets are also eagerly awaiting the IPO of a five per cent stake of Saudi Aramco, which could fetch as much as US$100bn, making it possibly the biggest ever share float globally. The Saudi stock exchange or Tadawul is also slated to list its shares, while Kuwait and Oman are mulling selling shares in their exchanges to the public.

Separately, Bahraini Islamic lender Ithmaar Holding said on Monday it has received approval from the UAE’s Securities and Commodities Authority to list its shares on the DFM and is only waiting for a nod from the Central Bank of Bahrain in order to join the Dubai exchange.