Union Properties has presented its turnaround strategy at its latest AGM as it looks to recover from “widespread fraud”. The property firm will focus on leveraging its existing market-leading real estate portfolio and services subsidiaries to benefit from the strong positive momentum in Dubai’s real estate markets.
All resolutions proposed to the AGM were approved including the authority to appoint legal and financial experts to file and follow up on legal proceedings against the company’s previous board members, who were dismissed at the company’s previous general assembly in November last year. The AGM also approved the appointment of new auditors for the 2022 year.
Union Properties’ core focus is on returning to profitability by optimising its cost base and restructuring its debt, which it says it continues to make good progress on.
Amer Khansaheb, board member and Managing Director of Union Properties, said the AGM “marks a significant step towards resolving the company’s legacy issues and progressing with the company’s rejuvenation, as shareholders endorse our new turnaround strategy and affirm their support for legal action against the previous Board and management.”
He added: “We believe Union Properties has a strong portfolio of assets that is unique in Dubai’s real estate market and that this is the right time for the company to capitalise on its strengths to realise value from the strong momentum in the UAE’s property market.”
While focusing on restructuring operations to optimise costs and create a leaner organisation to achieve profitability, Union Properties is also implementing several green initiatives that will enhance its resource efficiency and reduce waste across its communities. “Our long-term vision is to become a leader in sustainable development in the region, in line with the emirate’s 2040 Urban Master Plan.”
Last year, the company discovered that the carrying value of its property portfolio had been inflated in prior years. “2021 has been a difficult year for Union Properties as we uncovered widespread fraud and misconduct by the company’s former management involving forgery, misappropriation of funds and various other financial violations which has negatively impact the company’s financial health and been a severe breach of shareholder confidence,” Mr Khansaheb said in March.
Its focus is now on addressing these challenges head on and rebuilding shareholder trust. It has implemented an emergency business restructuring program to restore shareholder value and negotiations are ongoing with two major creditors banks to restructure loan facilities.
Having discovered gross misconduct and widespread fraud that had been perpetrated by the former Directors and Management of Union Properties over several years, a new Board members were appointed in December 2021.
The new management team is focused on recovering the misappropriated funds through the legal procedures. It is also developing a new growth strategy to generate shareholder value and is considering unlocking value from its existing assets to free up capital to restart its development operations.
In March, Union Properties said that revenue from contracts with customers was AED 398.70 million in 2021 up 6.1 percent compared to the previous year largely driven by the recovery in the UAE’s real estate market. Gross profit for the period increased to AED 67.83 million compared to AED 14.17 million in the previous year, supported by an 8.5 percent reduction in direct costs as the new management team focused on optimising its cost base and restructuring certain operations to deliver efficiencies across the business.