Union Properties (UP) expects recurring revenues from its leasing portfolio to more than double to Dh500 million from 2010 onwards from the current Dh160 million, a top company executive said.

"About 2,000 units not sold or defaulted will be transferred to our rental portfolio. And so we expect our rental income to increase to Dh500m from next year onwards," UP Vice-Chairman Khalid bin Kalban said yesterday.

The company has estimated the new rental income figures on a conservative basis. Rentals for retail have been estimated at below Dh100 per square foot, office space at Dh60 per square foot and residential (a two-bedroom apartment) for less than Dh75,000 per year, said Kalban.

"We like to be conservative and believe those [targets] are achievable. People are achieving much more than that. Our units are in good locations and high quality ones."

The company already has 550 units in its rental portfolio and the new units will be handed over in MotorCity, Green Community, Index Tower and Limestone Houses. Besides, Ritz Carlton Hotel will become operational by the second quarter of 2010.

Kalban believes the developer will maintain operating profits in the fourth quarter of 2009 compared to same period last year.

"We expect our core business in the fourth quarter to be better than the third quarter of 2009 and even fourth quarter of 2008. However, we do see some revaluation losses in the [fourth] quarter and may be forced to take provisioning on contracting liability as well."

Earlier this month, Union Properties reported a net loss of Dh152m in the third quarter due to provisioning against contract-related activities and lower valuation of investment properties.

Union Properties is 49 per cent owned by Emirates NBD, which is 56 per cent owned by the government.

Kalban ruled out any immediate merger plans, but said the option could be considered if the other entity bought financial assistance.

"We are not aware of any proposals. These talks are just speculation. But a merger with a similar entity may be possible if some financial assistance was coming through."

?Asked if the company had recorded any defaults, Kalban said they were registering defaults in the range of 15 per cent, with most of them coming from investors who had taken mortgage from Amlak Finance and Tamweel.

The two Dubai-based Islamic mortgage companies are expected to be merged in the first quarter of 2010, Tamweel's Chairman Sheikh Khaled bin Zayed Al Nahyan said on November 20.

"We thought default percentage will be more than 40 per cent when we started the year but now we are registering defaults of 15 per cent only. The majority of them have come from people who have taken mortgages from Amlak and Tamweel. Those two companies have stopped paying developers."

Kalban said the company currently has a land bank of nine million square foot in prime areas of Dubai including DIFC and Meydaan.

"We will start developing once we finalise our projects," he said.

Union Properties is also not looking to appoint a chief executive officer any time soon. "We don't need a CEO at this point of time and when the company requires we will announce a new one," he added.


F1-X theme park

Union Properties has appointed consultants for finalising debt for F1-X theme park, Vice-Chairman Khalid bin Kalban said.

"We appointed a consultant a month ago and he is finailisng the strategy. We are looking for investors who will be part owners." The company has invested Dh950 million for the development of the theme park, but currently the project is not on its priority list as there are no commitment to third party, he said.


Still interested in DIFC


Union Properties Vice-Chairman Khalid bin Kalban confirmed that Dubai International Financial Centre (DIFC) was still interested in buying units worth Dh1.8bn in the Index Tower in DIFC.

"They are still interested and discussions are going on with DIFC.

But they are telling us to complete the project first."

It is working to handover Limestone House and Index Tower in DIFC between March and May 2010.

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