Union Properties Cuts Debt, Secures Growth Funding

Union Properties PJSC, a stalwart in the UAE's real estate market, has announced a remarkable achievement in its financial restructuring efforts. The company has successfully reduced its legacy debt from AED 1.47 billion at the end of FY2022 to AED 575 million by December 2024, with further plans to decrease it by an additional AED 150 million by the end of Q1 2025. This substantial debt reduction reflects Union Properties' commitment to financial health and operational efficiency.

In a strategic move that underscores the growing confidence of financial institutions, Union Properties has managed to lower the margin on the 3M EIBOR from 3.25 percent to 2.75 percent. This reduction not only decreases the company's financing costs but also enhances its profitability and liquidity. The successful debt restructuring strategy has led to a significant drop in financing costs, from AED 114 million in FY2023 to AED 32 million in FY2024, saving AED 82 million.

Union Properties has also secured additional bank loans amounting to AED 150 million, earmarked for new investments over the next 18 months. These investments are projected to generate an annual recurring income of approximately AED 40 million, further solidifying the company's revenue streams and supporting its growth ambitions.

As part of its asset divestment strategy, the company has generated AED 1.3 billion through the sale of plots, which will be utilized for debt settlement agreements and to cover preliminary costs of new real estate projects. This strategic asset management highlights Union Properties' adeptness at optimizing its portfolio for sustainable growth.

Looking ahead, Union Properties has unveiled plans to retain approximately 10 million sq. ft. of Gross Floor Area (GFA) from its current portfolio for future development. This decision is a testament to the company's robust asset base and its strategic commitment to driving sustainable growth in the UAE's real estate sector.

Given these positive developments and strategic initiatives, the outlook for Union Properties appears promising. Investors may consider a 'buy' position, as the company is well-positioned to capitalize on the UAE's burgeoning real estate market and generate substantial returns in the coming years.