Union Properties, the master developer behind Dubai's Motor City district, reported a 32 per cent increase in third quarter losses due to lower revenues and a loss incurred on the value of financial assets it holds.
The company reported a loss of Dh81.5 million for the three months to the end of September, compared to a loss of Dh61.8m in the third quarter of 2018, according to financial statements filed to the Dubai Financial Market, where its shares are traded. Revenue for the third quarter dropped 29 per cent year-on-year to Dh106.2m.
The company declared a net loss on financial instruments held of Dh37.6m in the third quarter, compared to Dh7.5m during the same period last year.
Finance costs also rose to Dh48m during the period, from Dh34m last year and it declared a loss on the disposal of investment properties of Dh696,000 during the period, it said.
During the nine-month period, the company reported a loss of Dh163.8m compared to a profit of Dh145.6m during the same period last year. Revenue reduced 19 per cent year-on-year to Dh313.8m and it lost Dh90.8m on the value of financial assets. Notes to the accounts state the loss was incurred following the sale of investments in funds and equities worth Dh204.4m.
In a separate filing, the company said it now has accumulated losses on its balance sheet of about Dh2.08bn, most of which relates to a Dh2.3bn loss declared in August 2017, when it wrote down the value of its land by Dh1.2bn and deemed about 2 million square feet (185,800 sq m) of its 14 million sq ft site to be undevelopable, causing a further loss of Dh690m. A Dh503m charge was also taken at the same time against an asset on which it had previously reported a gain, with the firm citing a "suspected irregularity" over the way it had previously been accounted for.
The company said it is taking measures to address accumulated losses by developing its land bank and creating assets with recurring income. It is also “aggressively following up on its outstanding receivables through legal process which would also result in reduction of accumulated losses in the event that the case is won and the amount is recovered”.
“The losses are predominantly due to the valuations of the real estate portfolio which are marked to market. These losses will be recouped in the event of an increase in the prices of lands in Dubai.”
By the end of September, Union Properties reported net equity worth Dh2.93bn, down from Dh3.11bn at the end of last year.
