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19-10-2012, 12:07 PM
listing of Dynasty Reit, subscribing S$ 100 million worth of units in Dynasty Reit and waiver of sponsor distribution, what does it mean for ARA?
1. How much of management fee can ARA collect from Dynasty Reit?
around S$ 8 million annually(for 5 months in 2012, property management fee + manager's manage fee of around RMB 20 million in page 46 of final prospectus).
2. How much is S$100 million to ARA?
by end of 2Q 2012, ARA has less than 100 million in cash(also need minus dividend payment for 1H 2012). total equity of a little above 200 million as 2Q 2012. so 100 million is more than all cash in ARA. 100 million is half of its total equity.
It does not make much sense if ARA is to just list Dynasty Reit to have more asset under management(It manages them already) and more fees to collect as ARA waivers its distribution, merely, the management fee collected can cover its share of distribution. Essentially, it would be like that ARA is risking itself a great deal to gain almost nothing.
My conclusion would be that ARA shall receive a big bonus from ADF's divestment of the properties to Dynasty Reit. possible that the units ARA subscribes is as part of its payment of performance fee. cash from its stake in ADF and maybe part of its performance fee in cash should come in to help it fund the subscription of S$ 100 million worth of units or ARA need some debt to cover it. Hope that ARA will not risk its shareholders for its private fund investors.
1. How much of management fee can ARA collect from Dynasty Reit?
around S$ 8 million annually(for 5 months in 2012, property management fee + manager's manage fee of around RMB 20 million in page 46 of final prospectus).
2. How much is S$100 million to ARA?
by end of 2Q 2012, ARA has less than 100 million in cash(also need minus dividend payment for 1H 2012). total equity of a little above 200 million as 2Q 2012. so 100 million is more than all cash in ARA. 100 million is half of its total equity.
It does not make much sense if ARA is to just list Dynasty Reit to have more asset under management(It manages them already) and more fees to collect as ARA waivers its distribution, merely, the management fee collected can cover its share of distribution. Essentially, it would be like that ARA is risking itself a great deal to gain almost nothing.
My conclusion would be that ARA shall receive a big bonus from ADF's divestment of the properties to Dynasty Reit. possible that the units ARA subscribes is as part of its payment of performance fee. cash from its stake in ADF and maybe part of its performance fee in cash should come in to help it fund the subscription of S$ 100 million worth of units or ARA need some debt to cover it. Hope that ARA will not risk its shareholders for its private fund investors.