Union Properties debt cutting boosts shares

Union Properties shares jump on news of debt payments and Speedcar sale.

Investors welcomed news that Union Properties, one of Dubai's largest developers, is moving to reduce its debt.

The company's share price jumped 4 per cent in trading yesterday after it confirmed it would pay off Dh700 million in loans.

Union Properties also announced plans to bulk-sell units in two of its signature Dubai International Financial Centre projects, Index Tower, an 80-storey project designed by Foster+Partners, and Limestone House, a luxury apartment development. The company did not provide details of the volume or structure of the expected sales. The developer began handing over units in both projects this year, which helped the company to post a net profit of Dh82m in the first quarter, a 64 per cent increase from the same quarter last year.

Separately, a UK auctioneer said it successfully sold the cars and equipment from Speedcar, which was Union Properties' failed attempt to create a stock car racing series in the developer's MotorCity complex. No one met the original US$1.5m (Dh5.50m) asking price when the liquidator put the 27 cars and assorted gear on the market this year.

A representative of the auctioneer, GoIndustry DoveBid, said the items sold in a single lot to a buyer from the Gulf but declined to offer any further details.

Any opportunity to reduce its debt is good news for Union Properties, which was particularly hard hit by the downturn in the Dubai property market.

The company is carrying Dh6.4 billion of debt, with Dh2bn due for repayment in the next year, the company reported last month.

"What it does is clear the way in terms of liquidity, but this is still going to be low-growth business," said Chet Riley, an analyst with Nomura Securities. "All their exposure is still in Dubai."

Last November the company sold the Ritz-Carlton hotel in DIFC for Dh1.1bn.