But there was one further detail mentioned in the UP statement — that shareholders meeting decided “not to grant approval” that would have allowed the “Chairman of the Board of Directors and Directors to participate in businesses which might be in competition with the Company’s business…”.
It presents a dilemma for some of the directors. Khalid Bin Kalban, who is chairman of Union Properties, is also the Managing Director and Chief Executive of Dubai Investments. Whether that constitutes competition for UP is a moot point.
In a personal statement issued to some media outlets, Bin Kalban said: “The decision on the Chairman’s post at Union Properties is on hold and awaiting the decision from the SCA on the resolutions of the company’s annual general assembly meeting.”
The UP stock was suspended from trading on Thursday. Last week, the developer had called a shareholders meeting to approve its results for 2016 and also greenlight the issuance of dividends.
“Dubai Investments and UP have a symbiotic relationship, sharing stakes in land banks/projects, facilities management resources and the like,” said an analyst who tracks the UAE realty sector, and did not wish to be named. “This close association has been critical for UP in recent years, especially given the difficulties it has had with performance. Central to that has been Bin Kalban’s role at the top.”
Its 2016 numbers have been particularly underwhelming, with profits halved to Dh211.4 million from Dh434.6 million the year before. Revenues too took a 22 per cent dive, to Dh1.2 billion.
“Union Properties requires a drastic boost in its fortunes — not all of the problems with the 2016 results came because of a weak market,” said a shareholder on the condition of anonymity. “If that were so, other listed and non-listed property firms in Dubai would not have posted fairly high profitability last year.”
Improve cash flow
The current sentiments are quite a departure from those in early 2016, when the developer posted Dh400 million plus profits. It had projects on the ground at Motor City and had launched Green Community West Phase 3. There was talk about adding further income generating components to its Motor City base and which would have helped improve the cash flow. At the same time, some longer term projects such as a mixed-use tower complex, were delayed so as to focus on existing work.
During this phase, Dubai Investments maintained a close association with Union Properties, through jointly managing the build up of Green Community Phase 3.
“Dubai Investments’ support has been crucial for UP … and with Khalid Bin Kalban at the helm of both created synergies,” said another analyst. “That UP shareholders have now voted for a provision on board members having dual roles in other companies, present a challenge. And it will need a speedy resolution on what the company plans next.”
One possibility is offering shares in Emicool, the facilities management firm jointly owned by Dubai Investments and UP. A public float had been sounded out for some time, but then the market uncertainties forced the owners not to commit to a firm dateline.
All through recent months, there has been investor talk about a strategic investor coming on board at Union Properties, and bringing in much needed funds. The developer has a stellar track record of communities such as Uptown Mirdif and Green Community. It had in the past also built niche and upscale high-rises in locations such as the DIFC (Dubai International Financial Centre). These interests were sold in the post-crisis years.
Factbox: Khalid Bin Kalban remains on Union Properties’ board of directors
* After the April 24 shareholders meeting, Union Properties’ board of directors continues to feature Khalid Bin Kalban, who entered the meeting as Chairman. There are six other members on the board.
By Manoj Nair Associate Editor
Gulf News 2017. All rights reserved.