Union Properties Q1 profit rises 67% to hit Dh50m

Union Properties yesterday reported a first-quarter profit of Dh50 million, up 67 per cent, from Dh30m reported during the same period last year, as revenues increased on handover of properties in MotorCity development.

Revenue rose 48 per cent to Dh846m from Dh572m, the company said in a statement to the Dubai bourse.

Gross operating profit stood at Dh179m, compared to Dh104m for the same period last year, registering an increase of 72 per cent.

The developer also took a provision for loss on valuation of investment properties of Dh70m.

Total assets at the end of March 31, 2010, were at Dh17.1bn, while total shareholders' equity stood at Dh5.5bn.

"We expect the second quarter revenues to be far better than the first quarter. We expect to handover units in Limestone and Index projects in June and July," Khalid bin Kalban, Chairman, Union Properties, told Emirates Business.

"Default rates have been in the range of 13 per cent to 15 per cent against an expected 40 per cent."

Kalban said the Dubai property market is stabilising, but banks do need to ease mortgage-lending norms.

"The market is returning to normalcy. The local banks are shying away expect for some foreign banks. It is difficult for an investor to get mortgages."

In another statement to the Dubai bourse, the company said shareholders had approved extending the term of a Dh405-million bridge loan provided by Emirates NBD on December 28, 2009 to March 31, 2014.

Shareholders also approved extending the maturity of a Dh2.1bn and a $188.4m syndicated loan facility signed June 19, 2007 to December 31, 2013 at an extraordinary general meeting held on April 29, the company said in a statement.

In March, Kalban said that the company was continuing talks for sourcing funding for the $460m (Dh1.68 billion) F1-X theme park in MotorCity.

Ritz Carlton deal

Union Properties expects to close deal on the Ritz Carlton hotel by the end of this year, but global liquidity crisis seems to affect investors sentiments, Kalban said.

"We have provided all the information to investors who are undertaking due diligence. We are also waiting to hear from them. It seems they are looking to arrange for finance," he added. The developer has priced the Ritz Carlton in Dubai International Financial Centre at Dh1.5 billion.