Union Properties reaches agreement to restructure Dh946m in debt

Dubai developer Union Properties yesterday reached an agreement with Emirates NBD that restructured an outstanding debt of Dh946 million with the bank.

The deal with the emirate’s biggest lender, which includes payment of an initial amount, will significantly improve the company’s debt profile, Union Properties said in a filing to the Dubai Financial Market, where it shares trade.

The new agreement with better terms will reduce the developer’s debt instalments and improve its cash flow. Emirates NBD is the developer’s main creditor.

However, Union Properties did not give additional details about the new agreement.

“Restructuring our outstanding debt with Emirates NBD was our number one priority,” said Khalifa Al Hammadi, chairman of Union Properties.

“With better cash flows and the support of our main creditor, we can from this day [forward] exclusively focus on the development of our activities and projects.”

The company has dealt with legacy issues and it is now “fully geared for a new growth chapter”, he said.

Union Properties is the developer behind Dubai’s Motor City, Uptown Mirdiff and the Green Community. It reported total borrowings of Dh1.8 billion at the end of last year, of which about Dh1.4bn was due for repayment this year, according to its financial statements filed at the time.

In June, the company tabled a proposal to use up to Dh332.8m of its statutory reserve to write off historic losses. However, the request was rejected by shareholders.

A fully owned unit of Union Properties has also begun an arbitration process to recover about Dh1.5bn related to the construction of a project that was completed a decade ago, it said in a bourse filing in May.

The developer struggled to maintain profit growth amid a slowing property market and swung to a loss of Dh219 million last year, compared with a profit of Dh62m in 2018. It has not reported its first-quarter results for this year.

On Sunday, Union Properties said it had completed a blueprint of its three-year strategy and plans to unveil a new project in Dubai. Motor City Hills, a development next to the Dubai Autodrome on Sheikh Mohammed Bin Zayed Road, will have 195 villas, 490 town houses and six commercial land plots.