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Union Properties in debt deal with Emirates NBD
Developer to repay 1.1 bln dirhams using asset transfer; Extends remaining 2.7 bln dirhams debt to 2017
January 18, 2012 2:02 by Reuters
Dubai’s Union Properties has reached a 3.8 billion dirhams ($1.03 billion) debt deal with major shareholder Emirates NBD, the developer’s chief executive told al-Bayan newspaper on Wednesday.
The real estate firm will transfer assets worth 1.1 billion dirhams to the bank, Dubai’s largest by market capitalisation, which will now own a significant percentage of two developments in Dubai’s financial district, Khalid Bin Kalban said.
Union Properties’ remaining liabilities to ENBD, worth 2.7 billion dirhams, would be extended until 2017, the CEO added, although he declined to comment on the interest rate the company would pay on the revised debt.
Like many real estate firms in Dubai, Union Properties has been hit by the slump in the emirate’s property sector which has seen prices fall by more than half and large numbers of projects cancelled or put on hold.
Union Properties’ third-quarter net loss more than doubled as it booked additional provisions amid a sharp drop in asset valuations.
In June, the developer said it would repay 2 billion dirhams in 2011 and was in the process of renegotiating terms on its other obligations to extend the tenor.
Emirates NBD is the largest shareholder in Union Properties, owning a 47.6 percent stake, according to the Dubai Financial Market.
Union Properties’ shares are down 95 percent from a 2008 peak and were flat at 0610 GMT. ($1 = 3.6730 UAE dirhams) (Reporting by Azza Al Arabi; Writing by David French; Editing by Matt Smith) *image from dubaiexpoblog.com