ARA Asset Management

[Contrarian]

So ARA has a good chance to manage Forterra?

ARA needs a partner with pipeline of assets. The partner must be an organisation with insufficient assets to set up a REIT, and yet want to sell the assets at higher than market rate.

This is how STC and ARA team up...

John Lim will not want to partner with a big big fry and be a servant

[orangesundayyy]

Indeed, this is a business of relationship. If I remembered correctly, during one of his AGM, John Lim mentioned that he raised 200+ mil during a golf game from the HNWs. You can only do this if you know people and people know you.

The Straits Trading relationship will be a new door.

In an interview early this year (http://www.bloomberg.com/news/2013-03-11...-asia.html) , ARA mentioned that in addition to the US funds, they are also looking at Japan and Korea as potential source of capital. And they plan to expand into new markets like Japan, Australia and India, as well as Southeast Asian countries including Indonesia, Vietnam and Thailand.

I believe all these mean we will see a much higher AUM going forward. At current AUM of $23.5 bil, share price is $1.80+; at AUM of $40+ bil, share price will be .......

Now we understand why Moses K. Song, Chief Investment Officer of ARA bought 200,000 shares in a married deal from John Lim at $1.88 in Feb this year.

Exciting times ahead.
(Vested)

Yes, I agree with you actually. With ARA's presence only in Singapore, Hong Kong, China and Malaysia, there are still many countries they have not even set foot on, ie Australia and Korea.

ARA has given out bonus shares on 3 different occasions. And each time after they give out, share price recovered almost immediately. If based on $1.82 and taking into account of the 3 bonus issue, the share price will probably be $2.64 if my calculations are correct. That's not bad at all, at least to me.

And actually based on my observations, by their normal standards, this seems to be quite a quiet year other than the recent ARA-STC announcement. There probably might be some things brewing before Dec 31. Just today, share price hits a high of $1.94 from $1.82 opening. Probably someone knows something we don't. lol

In a nutshell, I am very bullish and this is a counter I will continue to hold and add more when it dips.

[orangesundayyy]

So ARA has a good chance to manage Forterra?

ARA needs a partner with pipeline of assets. The partner must be an organisation with insufficient assets to set up a REIT, and yet want to sell the assets at higher than market rate.

This is how STC and ARA team up...

John Lim will not want to partner with a big big fry and be a servant

Oh one point I note, not all STC's assets can be spinned off into a REIT. Their GCBs definitely can't. So at least for their current assets, seems not possible. So market talk of ARA's REIT buying over their STC building is probably higher.

[Contrarian]

The Straits Trading Building... It's prime Grade A Raffles Place office... $381M... for 160,000 SQ FT.

Valued $381M at end Dec by Knight Frank.

http://straitstrading.listedcompany.com/.../id/341775

[zerobeta]

agree that Lim's strong connection is the main selling point for ARA...

but if we assume the current valuation has priced in the AUM to reach SGD 35 bln by 2016 (say 5 bln is a discount for uncertainty), this means the market expects AUM to expand at least by SGD 4 bln annually (5.5 bln without the discount). However if we look at ARA's track record over the past 10 years, the highest annual increase in AUM was in 2007 (+4.2 bln) and 2010 (+3.5 bln), during which the market was very bullish pre-crises and post crises, but other than those 2 hot years, average annual increase was only SGD 2.4 bln...

we are playing with many assumptions here but with property price is expected to cool off in the coming 3 years in China, HK, Singapore and to a limited extent in Southeast Asia, I am not too sure AUM of SGD 40 bln can be reached by 2016, my calculation is by 2019... or maybe I am too conservative...

[orangesundayyy]

agree that Lim's strong connection is the main selling point for ARA...

but if we assume the current valuation has priced in the AUM to reach SGD 35 bln by 2016 (say 5 bln is a discount for uncertainty), this means the market expects AUM to expand at least by SGD 4 bln annually (5.5 bln without the discount). However if we look at ARA's track record over the past 10 years, the highest annual increase in AUM was in 2007 (+4.2 bln) and 2010 (+3.5 bln), during which the market was very bullish pre-crises and post crises, but other than those 2 hot years, average annual increase was only SGD 2.4 bln...

we are playing with many assumptions here but with property price is expected to cool off in the coming 3 years in China, HK, Singapore and to a limited extent in Southeast Asia, I am not too sure AUM of SGD 40 bln can be reached by 2016, my calculation is by 2019... or maybe I am too conservative...

Actually what you say does have a point. Maybe that's why John Lim call it a vision. If easy to reach, won't be call a vision anymore. Lol. However, if he does not deliver, can expect the share price to reflect it too. Let's see how it pans out in the next few months. If I see a hive of announcements coming out, then hopefully it is a sign of things to come.

Their 3Q results are out soon also. I think $2 by year end should not be a problem.

[Nick]

I think what constrained AUM growth previously was its ability to finance the seed capital in the private funds. Generally, it had to fork out 10% of the Fund invested capital as seed money as the Fund progressively deploys it - Management must eat its own cooking ! The previous 2 private funds - ADF 2 and ARA CIP - required ARA to commit up to US$120 million as seed capital. This means that for every $1 billion AUM raised, ARA had to fork out $100 million as seed capital or 'capex'. So I think there are 2 elements of constraint here - existence of capital and capex financing. The latter would require ARA to either cut dividends or raise capital via placements / rights issue or take on more debt. With this deal, ARA gets its second constaint ie seed capital financing settled since STC and JL will be funding it. So I think the rate of AUM growth could be a lot higher post transaction in the private fund business. This will come without any sacrifice in the ROE. Again, this is just my fallible interpretation of this deal.

(Vested in Odd lots)

[Boon]

AUM is ticking up.

ARA RAISES US$240 MILLION FOR ITS PRIVATE REAL ESTATE FUNDS PLATFORM VIA A NEW SEPARATE ACCOUNT

http://infopub.sgx.com/FileOpen/PressRel...eID=264865

(vested)

[gutman]

AUM is ticking up.

ARA RAISES US$240 MILLION FOR ITS PRIVATE REAL ESTATE FUNDS PLATFORM VIA A NEW SEPARATE ACCOUNT

http://infopub.sgx.com/FileOpen/PressRel...eID=264865

(vested)

AUM is going up.

Fees is also going up from Fortunes Reit's HK 5849 mil Kingswood Ginza acquisition (completed in Oct '13) and Suntec Reit's A$413 mil acquisition in Sydney, Australia.

These two deals alone are likely to contribute to a fee of $14 mil for ARA's 4Q result (based on 1% acquisition fees), assuming Suntec Reit's acquisition can be completed by end this year.

[freedom]

Its cost are running up faster than its revenue, plus its revenue instability due to volatile price of units issued for fee income.

It spells trouble.