Union Properties PJSC, a Dubai developer, is in talks to settle 2.2 billion dirhams ($599 million) of debt through measures that will include property swaps, its chairman said.
The company is negotiating with banks including Emirates NBD PJSC and Abu Dhabi Commercial Bank PJSC, Khalid bin Kalban said today in an in interview. Options may include the sale of assets to the banks or investors, he added.
“We are trying to reduce the company’s costs,” he said. “Today, the biggest expense at the company is borrowing.” Union Properties paid around 150 million dirhams in interest last year, he said.
Dubai developers have struggled to survive after the property market collapsed in 2008, leaving the emirate with a mountain of debt. Union Properties halted projects after credit dried up and customers defaulted. In 2009, the company suspended work on F1-X, a Formula One theme park in the MotorCity development at the Dubai Autodrome race track.
Union Properties made a profit of 170 million dirhams last year, the chairman said. That followed net losses in the previous three years, according data compiled by Bloomberg.
The developer plans to reduce its liabilities to 400 million dirhams, the chairman said. The value of the company’s assets will be about 5 billion dirhams after the debt reduction plan is completed.
Union Properties is planning to spend 60 million dirhams expanding its retail outlet in its Mirdif development in Dubai. It plans to add 200,000 square feet (18,580 square meters) to its existing mall. The company is also considering building single-family homes at its Green Community development, he said.
“There is a shortage of villas and I think the first phase will probably include 100 villas,” the chairman said. “We are also going to release some land plots for sale in MotorCity,” he added.