Union Properties reported its worst ever quarterly loss for the second quarter of the year, after the company’s new management sharply wrote down the value of its investments.
The developer, primarily known for its projects in Dubai ’s Motor City, reported a Dh2.3 billion net loss for the three months to the end of June, compared with a Dh71.7 million profit for the same period last year.
The company’s shares fell more than 7 per cent in early trading on the news.
The loss came as Union Properties booked Dh2.8bn worth of provisions for the quarter, as part of an overhaul of the company’s finances by the company’s new management.
“The actions we have taken this quarter are in line with protecting the intrinsic value of the UP brand and its proud heritage and take a one-time charge for the accounting irregularity by the previous management,” said the Union Properties chairman Nasser Bin Yousef.
“We are confident that with the developments we are planning this year, we will quickly bring back the recognised value for the long-term sustained growth of the company.”
The company said the provisions related to the restatement of a Dh503m gain from its accounts from 2015 relating to a fair value gain applied to the unbuilt gross floor area on a plot of land in Motor City, valuation losses on its investment properties and development portfolio, and the managed winddown of its contracting subsidiary Thermo.
“The provisions reflect the new management team’s prudent approach to risk and in its treatment of unbuilt or floating gross floor area from an accounting standpoint,” the company said.
A new chairman and vice-chairman were appointed in May after an impromptu board reshuffle saw the resignation of three directors, including its chairman Khalid bin Kalban. A new chief executive, Ahmed Khouri, was appointed last month.