Debt payments and non-cash provisions against valuation of properties have wiped out Union Properties PJSC's profits, with the developer reporting a net loss of Dh439 million in the first six months of the year.
The results show an increase in loss from Dh299 million in the same period last year.
The company attributes the loss to non-cash provisions, but Matthew Green, head of research and consultancy at CB Richard Ellis, a real estate services company, said a key reason was lack of income-generating assets in the company.Union Properties sold off its Ritz-Carlton hotel last year for less than the asking price of Dh1.5 billion, and used some of the money to reduce its debt.The delay in the handover of other properties also means that the company is not making the revenue it would otherwise, Green said, but as projects are completed and the company has more long-term income-generating assets, its outlook would improve.
Total consolidated bank debt fell to Dh6.2 billion from Dh6.9 billion in the first half of last year as the company continues to hand over properties in the Index Tower and Limestone House in Dubai Financial Centre.
Union Properties also said revenue for the first half of the year increased 44 per cent to Dh2.249 billion from Dh1.558 billion in the same period in 2010.Total shareholder equity reached Dh3.5 billion, while the gross operating profit was Dh415 million, a 37 per cent increase year-on-year.
Green also said that as more properties come on the market, Dubai would witness a decline in rents. However, some assets located in areas experiencing high demand would not see much movement. "It depends on the quality," he said.Union Properties said that all segments of the company were performing in line with expectations.
From / Gulf News