Dubai – Mubasher: Union Properties turned profitable in the first half (H1) of the year, registering a net profit of AED 32.4 million in H1-21, versus losses of AED 160.4 million in the same period of 2020.

The improvement in the real estate developer’s financial results is mainly due to the fair valuation of investment properties at AE 78.9 million, according to the unaudited interim financial statements.

Union Properties also registered a net gain on financial instruments at fair value through profit or loss (FVTPL) at AED 8.4 million, compared with a net loss of AED 74.3 million in H1-20, according to the company’s disclosure to the Dubai Financial Market (DFM) on Sunday.

Revenue from contracts with customers increased to AED 99.2 million, from AED 83.3 million, while other income increased to about AED 33 million in H1-21, compared with roughly AED 9.2 million in H1-20.

Finance cost also decreased by 32% to AED 44.5 million, from AED 65.4 million in H1-20.

It is worth noting that Union Properties turned to profitability in 2020 and the first quarter (Q1) of the current year, compared with losses in 2019 and Q1-20.

Moreover, Union Properties disclosed that accumulated losses reached about AED 1.93 billion, at 44.96% of capital, by the end of June 2021, due to a fair value loss of AED 2,076 related to investment properties recorded in fiscal year (FY) 2017, impairment of AED 503 million recorded in the same period, the general decline of the real estate sector, the material adverse impact of the coronavirus (COVID-19) pandemic on the overall economy and consequently on the activities of the group.

The real estate firm says it is addressing the accumulated losses by restructuring its outstanding debt to reduce finance cost, recovering outstanding receivables, continuously reducing operating costs, developing its extensive land and assets with recurring cash flow, with a strong focus on the operating subsidiaries and cash-generating activities with the potential listing for certain subsidiaries.

It further explained that "these accumulated losses are predominantly due to variations in the valuations of its real estate portfolio (marked to market). These accumulated losses could potentially be recouped in the event of an increase in the prices of lands in Dubai."