ARA Asset Management

[gutman]

There are plans to list Yuan denominated IPO around October 2012.

http://online.wsj.com/article/SB10000872...80916.html

[mrEngineer]

I am really surprised with the Calpers investment. This really boost the confidence for ARA despite the extremely high PE ratio.

[Nick]

ARA’s Dynasty Said to Plan Dual-Currency IPO in Singapore

http://www.businessweek.com/news/2012-09...-singapore [Article]

If all goes well, the next 2 months will be exciting times.

(Vested)

[freedom]

it seems that the assets come from Asia Dragon Fund. will there be any performance fee from divestment?

[Nick]

RECEIPT OF ELIGIBILITY-TO-LIST FOR THE PROPOSED LISTING OF A REAL ESTATE INVESTMENT TRUST

http://info.sgx.com/webcoranncatth.nsf/V...90033D4BD/$file/Receipt-ETL-140912.pdf?openelement [SGX Announcement]

Note that ARA is both the sponsor and manager of Dynasty REIT. Guess we can expect some performance fees to be recognized from ADF 1 disposal of 3 properties ?

(Vested)

[freedom]

ADF bought Nanjing International Finance Center from China Merchant Property Development in 2009 at a price of RMB 1.6 billion

ADF bought Shanghai International Capital Plaza from CSI Properties in 2011 at a price of RMB 1.16 billion.

ADF bought Dalian Tianxing Roosevelt Center from Mogan Stanley in 2009 for US$ 300 million.

[gutman]

PUBLISHED SEPTEMBER 20, 2012 Business Times
TIES THAT THRIVE
Thriving in difficult conditions
Since the global financial crisis in 2008, ARA Asset Management has doubled its assets under management, reports TEH HOOI LING

HOW's this for value creation? From a paid-up capital of $1 million, John Lim - with the backing of Hong Kong property giant Cheung Kong - has built ARA Asset Management into a company worth $1.2 billion in just 10 years.

His initial investment of $700,000, for his 70 per cent stake in the company, is now worth around $407 million. This made him the 38th richest Singaporean, according to the Forbes list in 2012. (Since the company's initial public offering in 2007, Mr Lim's shareholding has been diluted to about 33 per cent.)

With a market capitalisation of about $1.2 billion, ARA is worth as much as companies such as Wing Tai and Parkway Life Reit. But it is valued more than UOB-Kay Hian, Hyflux, Hong Leong Finance, OSIM and STATS ChipPAC.

Investors who bought into the company when it first offered its shares to the public in November 2007 have been rewarded with an annual compounded return of close to 20 per cent if dividends are reinvested back in the stock. Putting the dividends in the bank to earn an average 0.3 per cent a year would yield investors a compounded return of 16 per cent a year.

That's what a sound business model and a dedicated and savvy management can do for a company. Luck, of course, plays a part too.

Back in 2002, after 20 years in the real estate business with experience in the then DBS Land and GRA (Singapore), a wholly owned subsidiary of Prudential (US) Real Estate Investors, among other places, Mr Lim decided to strike out on his own. He roped in Cheung Kong as his partner.

The concept was to be a real estate fund management company, raising capital from the West to invest in Asia.

Sars strikes
But he couldn't have picked a worse time to take the plunge. In 2002, the global economy was still recovering from the shock of the Sept 11 attacks in the US. And before the economy could find its footing, a flu-like disease called Severe Acute Respiratory Syndrome (Sars) broke out in China. It threatened to be a global pandemic. Asia was the worst-hit. Tourist arrivals plunged and the locals were gripped by fear and panic. Doomsday scenarios abounded.

"I told my wife at that time that maybe I should go and look for a job," Mr Lim tells BT in ARA's office at Suntec Tower Four. "We'd only got a paid-up capital of $1 million. We had to pay rental, staff salary. There was no income. No funds. No future.

"But when the chips are down, there is no turning back. We put in our savings. We've just got to carry on and make it work."

When CapitaLand relaunched CapitaMall Trust in 2002, and then Ascendas Reit followed later that year, Mr Lim saw an opportunity. "I managed to convince Cheung Kong to take a few malls for us to try."

Fortune Reit was born. It was listed in Singapore in 2003.

The rest, as they say, is history. Today, ARA manages six Reits in the Singapore, Hong Kong and Malaysia stock exchanges. They are Fortune, Suntec, Prosperity, AmFirst, Cache and Hui Xian Reits.
The total assets in these six Reits, which include suburban malls in Hong Kong, prime office and retail properties in Singapore, commercial properties in Malaysia and China and logistics properties in the Asia-Pacific, are valued at roughly $16 billion. In addition, ARA also has private real estate funds with assets worth another $6 billion.

The curious thing is, ARA seems to thrive in difficult market conditions. Since the global financial crisis in 2008, it has doubled its assets under management (AUM).

This year alone, even as investors are still shying away from risk amid a cloudy global economic outlook, the company managed to raise $1 billion in new funds. Last month, the biggest US public pension fund California Public Employees' Retirement System (CalPERS) decided to put US$530 million with ARA - US$480 million in the ARA China Investment Partners fund, and US$50 million in the Asia Dragon Fund II (ADF II).

"In 2008, when the market collapsed, analysts asked: 'Are you affected?' We have to be," explains Mr Lim. "We charge a percentage of the value of assets under our management. But I told them not to worry. You need the creativity of the management to look for new areas."

As a pure fund management company, Mr Lim says, ARA can do business at any point of the real estate cycle. When property prices are high, it can go and buy land (through the funds) and develop it. If the property market comes down, it can set up funds to buy the properties. If the market is right at the bottom, it can set up vulture funds to clean up the market.

"There are always people in the market who are prepared to put money in all these different products because of their different risk appetite. Now people believe what I'm talking about."

The next phase of growth for ARA, which has established a track record (for example, CalPERS' investment in ADF earned it an annual 8.4 per cent return over the last three years to March 31, 2012), will be easier, says Mr Lim. First, it has established itself as a quality manager with proper corporate governance and risk management in place, even though it is not a government-linked company.

Second, since the global financial crisis, a number of players have disappeared from the market. The likes of Lehman Brothers which in the boom years of 2007 were scooping up buildings as financial investors are gone.

Third, funds' and institutions' selection criteria for fund managers have gone up a few notches.

"It used to be, they were prepared to try out new managers, new markets. Now, after the crisis, everybody is focused on track record, corporate governance, risk management, performance of the fund," says Mr Lim.

It is very difficult for a start-up to raise funds.

Fourth, ARA is now in a different league, which makes it easier to attract talent and business partners. "Using the analogy in football, we are now in the EPL championship league. We used to be in Division One. Then, no football stars wanted to join us. Now, we can afford to pay people like Rooney and Torres to join us and grow the organisation. People (potential business partners) are willing to talk to you, too."

Doubling its AUM in the next five years isn't a problem. "There is no limit to growth," he says. Blackstone, he notes, has an AUM of US$200 billion. "Capital is always there. The market is always there. We haven't even covered Japan, India, Australia. Opportunity is plentiful. It's a matter of how you organise and retain talent within the organisation so that they can help you grow it to the next level."

The biggest challenge in ARA now is how to gel its diverse top management team together with a core set of values. "We are running in 13 cities. We have 18 nationalities in our 1,000-strong team. We have CEOs from America, Malaysia, Hong Kong, Singapore. How to gel them all together is actually a challenge," says the 56-year old.

Key challenge
Not only must they share the vision, they must also share the core values of the organisation, known in short as REIT - Respect, Excellence, Integrity and Teamwork.

Says Mr Lim: "My famous phrase is - investors first, shareholders second, and then the staff.

"My point is, if you do the right thing, investors will always reward you. And the company will do OK. If the company does OK, staff will get rewarded. That must be the sequence. If you do it the other way round, then this organisation is going down a slippery path."

That working principle has won it both investors and shareholders. Shareholders also like the fact that ARA's business model is transparent and that it does not risk its own capital. Thus, they reward the company with a higher valuation than real estate players, such as CapitaLand and Keppel Land.

Mr Lim does not claim all the credit for ARA's success. He puts it down to three Ps. Passion - his and his team's; People - "I have very good people who have stayed with me for a long time to grow the business: See Kiat, CEO of Suntec Reit has been with me for eight years; Cheryl our senior director of group finance nine years,"; and Partners - "I'm blessed with very good partners right from Cheung Kong to people like CWT and AmBank who joined up with us for Cache Logistics and AmFIRST Reits respectively."

Now that he has created a homegrown fund management company, what else keeps him going?

"I want to create a platform that can continue to grow even beyond John Lim. That's my passion. On top of that, the fund management business is relationship business. People invest in you because they believe in your ability and integrity.

"I have obligations to the investors, responsibility to the 1,000 people here. I have responsibility to my partners to make sure that the business is well looked after and continues to grow, and that I have succession planning.

"It's not something that I can say: 'I have enough, thank you very much.'

"That's where the Chinese culture comes in. Being an Asian gentleman, I believe in responsibility."

[Contrarian]

> Doubling its AUM in the next five years isn't a problem.

5 years ago, target now met. The next target, even more aggressive...

[Share Investor]

> Doubling its AUM in the next five years isn't a problem.

5 years ago, target now met. The next target, even more aggressive...

ARA is one of my fav counter. Growth stock with some dividend along the way.

[Share Investor]

Just announced. Means more management fee and divestment fee coming!

The Board of Directors of ARA Asset Management Limited the “Company” or “ARA”) wishes to announce the incorporation of the following wholly-owned subsidiary:

Name: ARA Trust Management (Dynasty) Pte. Ltd.
Principal Activity: REIT Manager
Paid up Capital: S$1,000,000
Country of Incorporation : Singapore