Union Properties mulls sell-off of some assets

Chairman says sale of some assets would generate liquidity and enhance revenues.
Union Properties mulls sell-off of some assets
MEGA PROJECT: Dubai Properties Motorcity development.
By Tamara Walid
Wed 13 Jan 2010 12:30 PM

Dubai's Union Properties is considering the sale of some of its completed property assets to generate liquidity and enhance revenues, its chairman said, as the company struggles amid a real estate downturn.

Khalid bin Kalban said in an interview there were many debt-free assets available for sale.

"We are looking at selling some of the assets of the company to generate further liquidity to complete the second phase of the projects and look at growth," he said late on Tuesday.

"The most important part of the agenda for 2010 is how we can grow the revenues of the company."

Union Properties is the third-largest real estate developer by market capitalisation in Dubai, one of seven members of the United Arab Emirates, and has a land bank of around 9 million square feet (836,000 square metres) for future development.

The company is negotiating for the sale of some property assets, Kalban said, adding he hoped to complete a deal in the next two months.

"Most buyers want to buy an existing building with an existing income and make 7-8 percent return on their investment," he said.

The firm suffered from poor results in the second and third quarters of 2009 and said it expected to take a revaluation loss on its property portfolio and provisions in the fourth quarter.

The developer made a net loss of 152.3 million dirhams ($41.46 million) in the third quarter, due to lower revenues and provisions against contracting-linked losses.

Dubai's once-booming property sector crashed at the end of 2008 as the global financial crisis hit the emirate, leading to a sharp fall in prices, project cancellations or delays and thousands of job losses.

Kalban said in November the company would benefit from the handover of two major projects - Index, an 80-storey multi-purpose tower, and Limestone House - in the first quarter of 2010.

He said on Tuesday the company has already started delivering some of the units.

"There is a land bank available and we need to build," he said. (Reuters)

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