Dubai developer Union Properties swung to a profit in the third quarter, following a turnaround strategy it employed to boost growth.
Net profit for the three-month period ending September 30 reached Dh509.2 million, compared to a loss of Dh81.5m during the same period last year, the company said in a statement to Dubai Financial Market, where its shares trade. The developer reported a Dh822m gain on fair valuation of investment properties during the period. Revenue from contracts with customers, however, dropped 15 per cent year-on-year to Dh90.5m.
“In the span of three months, we have restructured the bulk of our debt, substantially reduced our operating costs and reinstated our credit reputation," Khalifa Hasan Al Hammadi, chairman of Union Properties, said.
"Our major achievement has been without a doubt the successful restructuration of our balance sheet notably by integrating an unclaimed Gross Floor Area (GFA) owned by our group.”
The company, whose projects include Motor City and Uptown Mirdif, reached an agreement with Emirates NBD in August to restructure an outstanding debt of Dh946m. Union Properties also approved the sale of a 40 per cent stake in its subsidiary Dubai Autodrome for Dh400m last month.
“Now that we have cleaned as well as restructured our balance sheet…. all our focus will be on our operations and business development. We are dedicated to keep on with this positive momentum through transactions and projects that will add value for our shareholders,” Mr Al Hammadi, added.
During the nine-month period, the company reported a profit of Dh349m, compared to a loss of Dh164m during the same period last year as gain on fair valuation of investment properties climbed to Dh822m from Dh9.6m a year ago.
Total assets rose 5 per cent to Dh6.2 billion at the end of September, from Dh5.9bn at the end of December last year, the statement said. The company also said it “cleared all losses for 2019 as well as for the first and second quarter of 2020 and reduced its accumulated losses below the critical threshold of 50 per cent to 41.8 per cent”.
Union Properties is also planning to list three of its subsidiary companies – facilities management firm ServeU; The FitOut, which specialises in interior fit-outs of offices, hotels and restaurants, and Dubai Autodrome – on the Dubai Financial Market as it restructures its business.
Union Properties has built more than 60,000 units in recent years across a number of projects in Dubai.