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Wed 27 Jan 2010 10:05 PM

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Dubai's Union Properties upbeat about 2010

Company to book profits on major projects as liquidity position improves.

Dubai developer Union Properties expects 2010 to be better than last year as it completes and hands over projects, and will look to sell assets to help cover debts, its chairman said on Wednesday.

The third largest developer by market value in the Gulf emirate, where property prices have tumbled by some 50 percent since their peaks, has been hit hard by the financial downturn heightening concerns over its debt position.

Speaking to Reuters in an interview, Kahlid bin Kalban said: "I am very positive about 2010 because there is a major project in the DIFC that will be completed, a Ritz Carlton tower that will be handed over to investors around May ... and the company will book profits on this."

He added: "We are in a much better position than three months ago ... From a liquidity point of view, debt rescheduling, and cash, we are in a much better position."

Kalban said the firm's $1.77 billion debt position, which it was due to begin paying back in 2010, is now due in 2011.The first payment is about $190.5 million.

Its shares tumbled 5.6 percent on Wednesday closing at their lowest level since February after hitting a 7 year intraday low, and extended losses after Credit Suisse slashed its price target on the stock to $0.08 from $0.21 on Monday.

The index ended 0.6 percent higher.

Credit Suisse said even if Union Properties overcame its current liquidity squeeze, there would not be much equity value left after meeting its debt obligations.

Kalban told Reuters he expected the firm's fourth quarter operating profit to be about $54.4 million before taking provisions and full year about $122.5 million.

Samer al Jaouni, general manager, Middle East Financial Brokerage Co, Dubai, said:"Union Properties' liquidity issues are a big concern."

He added: "There is uncertainty over whether a third party can come in help the company and it's a very difficult environment in which to find financing. The stock will be under big pressure for the coming days."

The property developer, which rivals Emaar Properties and Deyaar fell into the red in the last two quarters.

Kalban said the firm is finalising the sale of two large supermarkets in Dubai worth in total about $40 million.

The firm, which last year suspended its Formula One theme park, is also in talks to sell its 50 percent stake in its subsidiary, Emirates District Cooling (Emicool).

He told Al Arabiya television earlier on Wednesday the company was in a "good" financial position with regard to operating revenue and will focus on the speedy delivery of units to its customers.

Kalban said some shareholders of Union Properties and rival developer Deyaar had discussed a possible merger but with no outcome, although this had not been discussed at board level. (Reuters)

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