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Financially troubled Dubai developer Union Properties has completed a 595 million dirham ($162 million) debt restructuring, including the repayment of AED 223 million to lenders, as part of a comprehensive restructuring plan.
The restructuring is expected to significantly improve profitability and cash flow generation as the plan reduces financing costs. Also, the strengthened balance sheet will allow it to raise additional financing for future real estate developments, the company said in a statement on the Dubai Financial Market, where it is listed.
Union Properties, which began operations in 1987 and is known for building Dubai Motor City, has long struggled with debt and mismanagement. Last year, UAE authorities launched an investigation against its senior executives for fraud and other offenses. Later, its chairman, Khalifa Al Hammadi, was dismissed from the company's board and in December the company appointed a new board after dismissing four members and said it would file a liability lawsuit against them.
Earlier this year, its shareholders voted for the company to continue operating and approved a revised turnaround strategy at its annual general meeting. In July, the company merged three of its units Edacom Owners Association Management, Uptown Mirdif and Al Etihad Cold Storage, under the banner of Edacom, to help it achieve a cost saving of more than AED 7 million.
The developer reported a 2021 net loss of 966.76 million dirhams. As of H1 2022, accumulated losses were at AED 2.94 billion, accounting for over 68% of its capital. However, the company managed to deliver a net profit of AED 285,000 in Q2 2022 compared to a net loss of AED 12 million in Q1 2022.
(Reporting by Brinda Darasha; editing by Seban Scaria)
