Earnings Report
Union Properties
1. Company Overview & Earnings Context
Union Properties PJSC is a UAE-based real estate development and property services company incorporated in 1993.
The Group's principal activities include:
Investment in and development of properties.
Management and maintenance of owned properties.
Property-related services for third parties.
Facilities management and other service activities.
Contracting, sales of goods and services, and investments.
The Group is developing the Takaya and Mirdad projects at Motor City, Dubai. It also operates through subsidiaries involved in property services, facilities management and contracting.
Overall earnings context
Union Properties recorded substantial revenue growth in 9M 2026, with revenue increasing by approximately 57.8%. Gross profit also improved significantly.
However, reported net profit declined sharply compared with 9M 2025. The main reason was the previous year's AED 152.04 million gain from the sale of an investment property held for sale, which did not recur in 2026.
Therefore, the year-on-year decline in reported profit does not by itself indicate deterioration in the underlying operating business. Operating profit excluding that prior-year disposal gain actually improved.
2. Financial Performance Snapshot
Key financial metrics
Revenue: AED 809.52 million, up 57.8% from AED 512.87 million.
Direct costs: AED 652.81 million, compared with AED 415.37 million.
Gross profit: AED 156.70 million, up 60.7% from AED 97.49 million.
Gross profit margin: Approximately 19.4%, compared with 19.0%.
Administrative and general expenses: AED 137.86 million, up 27.6% from AED 108.04 million.
Other operating income: AED 18.03 million, down from AED 27.10 million.
Gain on sale of investment property held for sale: Nil, compared with AED 152.04 million in 9M 2025.
Operating profit: AED 36.88 million, compared with AED 168.60 million.
Share of losses from associate: AED 4.40 million, compared with AED 4.93 million.
Other income: AED 7.13 million, compared with AED 12.84 million.
Finance income: AED 6.87 million, compared with AED 1.00 million.
Finance costs: AED 15.62 million, compared with AED 23.97 million.
Profit before tax: AED 30.85 million, down from AED 153.54 million.
Corporate tax expense: AED 2.80 million, compared with AED 14.31 million.
Profit after tax: AED 28.06 million, down from AED 139.23 million.
EPS: AED 0.0065, compared with AED 0.0325.
Underlying performance
The most important adjustment for understanding the results is the AED 152.04 million investment-property disposal gain recognised in 9M 2025.
Excluding that one-off gain, prior-year operating profit would have been approximately AED 16.56 million. Compared with this adjusted base, 9M 2026 operating profit of AED 36.88 million represents a considerable improvement.
The Group also achieved higher gross profit and a slightly improved gross margin. Administrative expenses grew more slowly than revenue, which is encouraging.
Nevertheless, net profit remains considerably below the previous year's reported figure because of the non-recurrence of the disposal gain and lower other operating income.
3. Operational Highlights & Key Metrics
A. Real estate and development activities
The Group's development portfolio includes:
Takaya: A residential development at Motor City, Dubai.
Mirdad: Another development project at Motor City, Dubai.
Development properties increased to AED 649.20 million from AED 551.05 million at December 2025.
Movement during the period:
Opening development properties: AED 551.05 million.
Development costs incurred: AED 149.82 million.
Cost transferred to revenue: AED 51.67 million.
Closing development properties: AED 649.20 million.
The Group stated that it assessed the projects for impairment and considered their carrying values appropriate.
B. Investment property portfolio
Investment properties increased to AED 2.18 billion from AED 2.00 billion.
Key movements included:
Additions during the period: AED 178.18 million.
Closing investment properties: AED 2.18 billion.
The Group acquired a building valued at approximately AED 164.4 million, including AED 9.4 million of capitalised acquisition costs.
The Group applies the fair value model under IAS 40. The latest independent valuation was conducted at 31 December 2025. Management reported that its assessment at 30 September 2026 did not identify a material change in fair value.
C. Segment performance
The Group reports four business segments: real estate and others, contracting, goods and services, and investments.
The segment disclosure indicates that the goods and services business generated the largest revenue contribution, followed by real estate and others. Contracting remained loss-making.
The following segment revenue figures are identifiable from the segment disclosure:
The contracting segment recorded a gross loss, while real estate and goods and services generated positive gross profit.
D. Acquisition and business expansion
The Group's subsidiary structure includes Tetra Edge Industries LLC, which became a wholly owned subsidiary effective 1 January 2026. Its activities include electromechanical, electrical power lines and building contracting.
The Group also previously acquired the House Keeping Group in August 2025 for AED 100.6 million. The acquisition resulted in:
Goodwill of AED 66.8 million.
Identifiable intangible assets of AED 41.5 million.
The intangible asset balance declined to AED 31.17 million at September 2026 following amortisation. Management reported no impairment indicators for goodwill or acquired intangible assets.
4. Key Performance Drivers
Positive drivers
Revenue expansion: Revenue increased by 57.8%, reflecting stronger business activity.
Higher gross profit: Gross profit rose by 60.7%, with gross margin improving slightly.
Improved underlying operating profit: Excluding the prior-year AED 152.04 million property disposal gain, operating profit increased from approximately AED 16.56 million to AED 36.88 million.
Lower finance costs: Finance costs declined to AED 15.62 million from AED 23.97 million.
Higher finance income: Finance income increased to AED 6.87 million from AED 1.00 million.
Growth in development assets: Development properties increased to AED 649.20 million, indicating continued investment in the project pipeline.
Negative drivers and risks
Non-recurrence of disposal gain: The absence of the previous year's AED 152.04 million gain substantially reduced reported profit.
Contracting losses: The contracting segment continued to report negative gross profit and operating results.
Lower other operating income: Other operating income declined to AED 18.03 million from AED 27.10 million.
Negative operating cash flow: The Group used cash in operations despite reporting positive accounting profit.
Receivables and credit exposure: The Group continues to carry significant expected credit loss provisions, including against contractor advances.
Project execution and collections: Management identified geopolitical developments, customer collections, project progress and contractor performance as areas requiring monitoring.
Important receivables and impairment observations
Trade and other receivables declined to AED 471.23 million from AED 1.10 billion at December 2025, mainly reflecting the reduction in property sales receivables.
However, the Group reported:
Total expected credit loss allowance: AED 195.60 million.
Provision against trade and retention receivables: AED 105.89 million.
Provision against advances to contractors: AED 89.70 million.
The contractor advance balance is particularly important. The financial statements explain that approximately AED 90.6 million was paid to a third-party vendor between May and October 2021 for design and project-management contracts, although management identified that no or negligible services had been received. The balance remains substantially provided for.
5. Outlook & Forward Guidance
The interim financial statements do not provide quantified revenue or profit guidance for FY2026.
Balance sheet position
The balance sheet remains equity-heavy, with total equity of approximately AED 3.55 billion. The decrease in total assets was primarily associated with lower receivables, while investment properties and development properties increased.
Debt and liquidity
Total bank loans: AED 265.27 million, compared with AED 297.73 million.
Current portion of bank loans: AED 61.85 million.
Non-current portion of bank loans: AED 203.42 million.
Bank overdrafts: AED 25.71 million.
Lease liabilities: approximately AED 13.88 million.
Bank balances and cash: AED 493.44 million.
Bank loans declined during the period as repayments of AED 93.34 million exceeded new borrowing of AED 60.88 million.
The bank loans are secured through mortgages over land and investment properties, assignment of insurance policies and lease proceeds, and corporate guarantees.
Important cash distinction: Reported bank balances include AED 91.33 million in escrow accounts and AED 2.29 million in deposits held under lien. Escrow balances are restricted to the relevant development projects. The Group's cash and cash equivalents for cash-flow purposes, after excluding escrow and lien deposits and deducting bank overdrafts, amounted to AED 374.12 million.
Cash-flow performance
Net cash used in operating activities: AED 183.48 million, compared with cash generated of AED 346.87 million.
Net cash generated from investing activities: AED 404.14 million, compared with AED 147.18 million.
Net cash used in financing activities: AED 178.21 million, compared with AED 298.32 million.
Net increase in bank balances and cash: AED 42.46 million.
Closing bank balances and cash in the cash-flow statement: AED 374.12 million.
The operating cash outflow reflects working-capital movements, including higher contract assets, changes in contract liabilities and trade and other payables, corporate tax payments and development expenditure.
Investing cash flow was positive, supported by proceeds from property disposals. This is an important distinction: the increase in cash was not generated by operating activities.
Contract assets and liabilities
Contract assets: AED 74.95 million, compared with AED 28.51 million.
Contract liabilities: AED 165.62 million, compared with AED 209.12 million.
Contract assets mainly represent unbilled revenue on projects where performance obligations have been met but billing milestones have not yet been achieved.
Contract liabilities largely relate to deferred income from property sales. Management expects to recognise these unsatisfied obligations as revenue over the next three to five years.
Capital commitments and contingent liabilities
Capital commitments: AED 19.03 million, compared with AED 146.23 million.
Letters of guarantee: AED 390.37 million, compared with AED 392.89 million.
Letters of guarantee are contingent exposures and should not be treated as equivalent to recognised borrowings.
Management's outlook and risk assessment
Management stated that geopolitical tensions have created uncertainty in the regional economic environment, including possible indirect effects on business sentiment, project timelines and market liquidity.
The Group is monitoring:
Customer collections.
Development project progress.
Contractor performance.
Construction cost fluctuations.
Market demand and liquidity conditions.
Management also reported that service-oriented businesses, including facilities management, maid services and fit-out operations, had not experienced material adverse effects. Fit-out activity increased, supported by renovation work in the hospitality sector.
The Group applied a prudent overlay to its expected credit loss assessment to reflect emerging risks.
6. Investor Takeaway
Union Properties delivered strong revenue growth in 9M 2026, with revenue increasing by 57.8% and gross profit rising by 60.7%. The operating business also improved when the previous year's one-off property disposal gain is excluded.
However, the reported net profit decline, negative operating cash flow and continued contracting losses are important considerations.
Positive investment factors
Strong revenue and gross profit growth.
Improved underlying operating profit.
Lower bank loans and finance costs.
Significant investment-property portfolio.
Growing development-property balance.
Positive cash inflow from investing activities.
Three-to-five-year revenue recognition visibility from existing property-related contract liabilities.
Key concerns
Reported profit is substantially lower because the previous year's property disposal gain did not recur.
Operating cash flow turned negative.
Contracting operations remain loss-making.
Receivables include substantial historical contractor advances that are almost fully provided for.
Contract assets increased significantly.
Property development and collections remain exposed to market conditions and geopolitical uncertainty.
Overall assessment
Union Properties' 9M 2026 performance shows an improving underlying operating business, supported by revenue growth, higher gross profit and lower finance costs. Its large investment-property base and ongoing development projects provide a foundation for future business activity.
The key issue for investors is cash-flow conversion. Despite the improvement in operating profitability, the Group used AED 183.48 million in operating cash during the period. The ability to collect receivables, complete development projects, convert contract assets into billable revenue and maintain discipline in contracting activities will be important indicators to monitor.
