Union Properties, Dubai’s second-biggest developer by assets, plans to repay AED2bn ($545m) of debt this year to cut interest costs and win bank support to restructure other loans.
The builder of Dubai’s Index Tower is seeking to convince banks including Emirates NBD to delay repayment on an additional AED3.5bn to AED4bn for five years, Chairman Khalid Bin Kalban said in a telephone interview from Frankfurt Tuesday.
Union Properties also repaid AED2bn in 2010, he said.
“We are pre-paying so we can sit and negotiate with the banks on restructuring some of the debt that will be left,” Bin Kalban said. The company is seeking to pay interest only and delay the principle repayment until 2016.
Union Properties has been in discussions with lenders for almost three months and the response has been “positive,” Bin Kalban said. The developer is repaying debt this year with the AED1.1bn it raised from selling the Ritz Carlton Hotel and another AED900m from property sales to repay debt in 2011, he said.
Union Properties said May 9 first quarter profit jumped 64 percent to AED82m ($22.32m), up from AED50m in the same period a year earlier.
The rise in profits was primarily due to the ongoing handover of properties at Union’s Index Tower and the Limestone House in Dubai International Financial Centre.
The company booked provisions worth AED65m for loss of valuation of some properties.
House prices in Dubai declined more than 60 percent from their 2008-peak amid a global economic crisis that caused lending to dry up and speculative demand to decline.
Investment bank Rasmala said in March that house prices across the UAE were set to decline a further 25-30 percent over the next two years due to a rising oversupply of property.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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