ARA Asset Management

(18-12-2013, 01:56 PM)Contrarian Wrote: > Salary as a manager is different from dividends from being shareholders. If u are working for company, should be paid a fair price.

ARA has increased dividend payout almost every year. Now payout ratio is about 60%... no mean feat...

ARA mentioned before that they intend to fix their dividend at 4.8c per year, so I suppose their way of growing the dividend is to issue more bonus shares whenever they can.

(18-12-2013, 11:45 AM)opmi Wrote:

(18-12-2013, 10:04 AM)Nick Wrote: Prosperity REIT proposed to acquire 9 Chong Yip Street in Kwun Tong for HK$1,010 million
2013-12-15

http://www.prosperityreit.com/en-US/Pres.../detail/30 [Article]

More AUM and performance fees for ARA.

Kwun tong got grade A property? I don't know what is considered grade A in HK?
Kwun tong has a lot of old industrial buildings. And gov allow them to refurbish and rezone without paying land premium. Can rent out but cannot sell.

I guess this building may be a refurbished one.

ARA funds got nothing to sell meh? Keep buying third party and use up debt capacity.

What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees. You can hardly lose as a REIT Manager.

(18-12-2013, 05:15 PM)Nick Wrote:

(18-12-2013, 11:45 AM)opmi Wrote:

(18-12-2013, 10:04 AM)Nick Wrote: Prosperity REIT proposed to acquire 9 Chong Yip Street in Kwun Tong for HK$1,010 million
2013-12-15

http://www.prosperityreit.com/en-US/Pres.../detail/30 [Article]

More AUM and performance fees for ARA.

Kwun tong got grade A property? I don't know what is considered grade A in HK?
Kwun tong has a lot of old industrial buildings. And gov allow them to refurbish and rezone without paying land premium. Can rent out but cannot sell.

I guess this building may be a refurbished one.

ARA funds got nothing to sell meh? Keep buying third party and use up debt capacity.

What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees. You can hardly lose as a REIT Manager.

Which is better?

Mgt fees based on AUM or Capital gains from co-investment and performance incentives from ARA fund mgt business??

Usually, Mgt fees pay for bread and butter. The meat in the performance fees. And fund has limited life. ARA need to divest them and return capital
upon expiry.

> What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees.

If I remember correctly, the reits managed by ARA tends to go to the external investors to market the placement shares at premium prices. Thus far, they have never done rights at huge discounts.

They tend to guard their bases better than the other REITs.

(18-12-2013, 05:42 PM)Contrarian Wrote: > What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees.

If I remember correctly, the reits managed by ARA tends to go to the external investors to market the placement shares at premium prices. Thus far, they have never done rights at huge discounts.

They tend to guard their bases better than the other REITs.

IIRC, Fortune REIT did a 1-1 rights issue at 44% discount to its last traded price in 2009.

http://infopub.sgx.com/FileOpen/STCCorpo...eID=268216 - Slide 16 - 21 of STC slides gives a good summary of the new ARA business model. I cannot rule out an increase in dividend payout ratio since capex (ie seed capital) will no longer come from ARA. Let's see whether they can execute it well in the coming quarters.

(18-12-2013, 05:56 PM)Nick Wrote:

(18-12-2013, 05:42 PM)Contrarian Wrote: > What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees.

If I remember correctly, the reits managed by ARA tends to go to the external investors to market the placement shares at premium prices. Thus far, they have never done rights at huge discounts.

They tend to guard their bases better than the other REITs.

IIRC, Fortune REIT did a 1-1 rights issue at 44% discount to its last traded price in 2009.

This was one of the very few rights issue, if not the only one so far, that was done by reits managed by ARA.

The Fortune reit was done at HK 2.29. I subscribed to the rights and I am still happily holding on to it, which is now trading at HK 6+.

As we are still discussing on their STC strategic alliance, and the various acquisitions by Suntec REIT, Fortune REIT and Prosperity REIT, ARA is going into South Korea.

http://infopub.sgx.com/Apps?A=COW_Corpor...reB9az4LIY

The last three months has indeed been very exciting for ARA. AUM 20bil by 2016 seems very much alive.

(19-12-2013, 08:59 AM)gutman Wrote:

(18-12-2013, 05:56 PM)Nick Wrote:

(18-12-2013, 05:42 PM)Contrarian Wrote: > What's the problem here ? At worst case, get the underlying REIT to do a rights issue or placement and happily collect the AUM fees.

If I remember correctly, the reits managed by ARA tends to go to the external investors to market the placement shares at premium prices. Thus far, they have never done rights at huge discounts.

They tend to guard their bases better than the other REITs.

IIRC, Fortune REIT did a 1-1 rights issue at 44% discount to its last traded price in 2009.

This was one of the very few rights issue, if not the only one so far, that was done by reits managed by ARA.

The Fortune reit was done at HK 2.29. I subscribed to the rights and I am still happily holding on to it, which is now trading at HK 6+.

I was there at the EGM. In fact, it was quite a fiery meeting during then with many unhappy shareholders with the rights issue. But it turns out pretty well looking at the share price after that in just a matter of months.

Macquarie Real Estate in Korea

Macquarie Real Estate Korea Limited (MREK) is a Korean subsidiary of Macquarie Bank Limited. MREK is a licensed real estate investment trust (REIT) asset management company registered with the Ministry of Land, Transport and Maritime Affairs. MREK provides various real estate investment solutions including acquisition, financial structuring, securitisation, equity /debt fund raising, development management, advisory, divestment, funds management and asset management services.

In January 2004, MREK became the first wholly-owned foreign asset manager to list a real estate investment trust (REIT) on the Korea Exchange. The MCO CR-REIT acquired the 22-storey Kukdong Building in the Seoul CBD for KRW158 billion. After over 5 years of operation, in August 2009, the REIT disposed of the asset with significant capital gain and operating income far exceeding the original underwriting plan. MCO CR-REIT is currently undergoing liquidation process.

Some of Macquarie Real Estate's recent investment highlights in Korea include:

In March 2007, Macquarie Real Estate acquired a 50 per cent investment in an office building in CBD Seoul for KRW117 billion together with Global Fund II, a fund managed by MGPA.

MREK launched its second Korean REIT in September 2007, the Macquarie NPS REIT, an unlisted REIT investing in commercial and retail property sectors in Korea. The Macquarie NPS REIT has to date acquired two office properties in Seoul for KRW210 billion and plans to grow assets during its 10 year life. For more information on Macquarie NPS REIT, click here.

In December 2007, MREK entered into a forward purchase agreement for an office building to be developed in Seoul. Upon completion, in December 2010, MREK acquired the asset for KRW331bn via Macquarie NPS REIT No. 2 with 100 per cent equity funding from NPS.

http://www.macquarie.kr/mgl/kr/local-act...e-business