The performance fee is expected to contribute approximately 1.90 Singapore cents to ARA’s earnings per share for the financial quarter ended 30 September 2014.
ARA HARMONY FUND CROSSES INITIAL FIVE-YEAR MARK
Outperforming Fund IRR of approximately 27%1
21 October 2014 – ARA Asset Management Limited (“ARA” or the “Group”) wishes to announce that the ARA Harmony Fund, a single-asset fund established on 30 September 2009 owning the award-winning Suntec Singapore Convention & Exhibition Centre, has crossed the initial five-year term in its fund cycle.
The Fund is managed by ARA Managers (Harmony) Pte. Ltd. (the “Asset Manager”) and operated by Suntec Singapore International Convention & Exhibition Services Pte. Ltd.. Since the inception of the Fund, the Asset Manager had conceptualised and delivered a successful asset enhancement initiative in transforming and enhancing the yield of the property. The rebranding and modernisation programme was completed in the second half of 2013,
underpinning the significant uplift in the property value from S$235 million at fund inception to an average valuation2 of S$663.25 million as at 30 September 2014. Thus, over the initial five year term, the ARA Harmony Fund achieved an internal rate of return (“IRR”) of 27.4% with an equity multiple of 3.15 times1 for its investors. Net of the performance fee of approximately S$16.06 million, the IRR achieved was 26.3% with an equity multiple of over 3.0 times.
ARA Group CEO Mr. John Lim commented: “I’m delighted and proud of our achievements for the Fund, which underscores our core competence in driving better asset performance in the properties we manage and further augments our strong track record.”
This performance fee is expected to contribute approximately 1.90 Singapore cents to ARA’s earnings per share for the financial quarter ended 30 September 2014.
For sure John Lim is happy since he and Superman has been waiting for someone to come buy from them. They cannot sell as that will be taken negatively by the market.
Anyway, Chew Gek Khim's track record IMHO is patchy. Afterall, her grandfather's track record may have been overwhelming. i have been vested in S Trading since Oct 87 crash and the performance has been terribly disappointing. Anyway, for their ambition, to gear up S$8bn in fund size is never a problem. However, how to accumulate S$8bn worth of assets is the main problem - unless you do a Charoen, S$8bn is never going to happen without taking huge risks.
Just look at Charoen - after his trail blazing acquisitions, most analysts are wondering if he has the muscle, has he made the right call and IMO I think there are many that wants to see him fail. While he is still evaluating UE, he invited more skeptics. Here we have someone shouting on top of the roof - S$8bn and there are many who believe in his salesman pitch - I m loss for words since sales pitch can only carry on for only a limited mileage.
John Lim has done really well in getting S Trading to pay 5 times book value for an asset light fun manager business. I salute him for pulling off that rabbit. Now he even has his lawyer trained son to run his family office... that is where the next pot for John Lim lies... ARA will be his recurrent income for as long as he can sustain...
For my own strategy: I will buy the asset manager with rich quality assets armed with a suite of quality REITs for asset light strategies. Seriously right now on SGX, I seriously cannot think of many such companies.
No Vested Interests
GG
Extracts
But Straits Trading, owned by the family of the late banker and philanthropist Tan Chin Tuan (granddaughter Chew Gek Khim makes the list this year), drove a hard bargain. It put up 90% of the seed capital, and it demanded the largest share of ARA–20.1%. As a result Lim reduced his stake from 33% to 19.5% and the share held by Li’s Cheung Kong (Holdings) Ltd. fell to 7.8%. “I am happy to take a smaller stake in a much bigger pie–a much, much bigger pie,” he says. The new venture hasn’t announced any real estate purchases yet.
Lim’s elder son, Andy, who trained as a lawyer, lives across the street from his father and runs the family office next door to ARA’s offices. He and his professional managers help Lim invest his wealth, putting money into fixed income and equities and also Chinese and Singaporean startups in e-commerce, energy and health care. Lim’s younger son is still in school.
> Anyway, Chew Gek Khim's track record IMHO is patchy
I agree with you Chew results is mediocre. Some of you may say Chew sold the family heirloom building is destructive. But in aligning with ARA, I believe Straits has made the right bet. Of course John Lim is the biggest winner to get a new pipeline of assets and a new funding source (without cutting dividends in ARA). And when the private fund matures and get sold to ARA's REITs, John and Straits as the private fund investor will be the biggest winner.
Fund Management Business - The Valuation is based on % of Assets Under Management. There is no hard assets in such biz. So the ability to deliver and continue to attract funds is crucial.
> I will buy the asset manager with rich quality assets armed with a suite of quality REITs for asset light strategies. Seriously right
> now on SGX, I seriously cannot think of many such companies.
An asset manager with many assets will want to throw it to the REIT and make the recurring income. Even for FCL, they do they keep the best building for themselves? I wonder what keppel land will do with the FH land in Tanjong Pagar, will they keep for rental or will they sell to the REIT?
One thing I like to hear opinion of the rest in the forum: When new REIT rules are passed, will the practice of slicing a 99 yr tenure off a 999yr lease (Ocean Financial Ctr) or a FH building (SPH Paragon) be acceptable? Is this practice seen as taking advantage of the REIT shareholders? The new REIT rules does not explicitly address this point. And the REIT managers can just take valuations of comparable buildings in the area to justify a sale.
ARA expects boost from Straits Trading alliance; Q3 profit up
By
y Lee Meixianleemx@sph.com.sg@LeeMeixianBT
arajohnlim1111.jpg Group CEO John Lim expects the firming up of the strategic alliance with The Straits Trading Company (STC) to contribute another leg of growth for ARA, in particular for its private funds platform. PHOTO: SPH
11 Nov5:50 AM
Singapore
ARA Asset Management, a major real estate fund manager in the region, on Monday reported a 60 per cent increase in third-quarter total revenue to S$52.8 million.
Net profit rose 53 per cent in tandem to S$30.7 million.
ARA ESTABLISHES AUSTRALIAN PLATFORM APPOINTS DAVID BLIGHT AS CHIEF EXECUTIVE OFFICER
The Board of Directors of ARA Asset Management Limited (“ARA”) is pleased to announce the establishment of its Australian platform and the appointment of Mr. David Blight as its Chief Executive Officer (“CEO”).
Mr. Blight is a highly regarded real estate investment manager in Australia, with more than 30 years of experience in real estate and global funds management. Having spent close to 20 years with ING Real Estate, he was managing director, then global chairman and CEO of ING Real Estate Investment Management and subsequently vice chairman of ING Real Estate. His last role was group managing director and CEO of the APN Property Group. His present directorships include that of Woodcliff Capital Pty Ltd and Japara Healthcare Ltd, in addition to being the founding chairman and non-executive director at Asia Pacific Real Estate Association (Australia).
ARA Group CEO Mr. John Lim said: “Australia is a target market that offers investment and capital raising opportunities that would support the future growth in our funds platform. The establishment of our Australian platform will strengthen our presence in the Asia Pacific region, as we expand our reach to 15 cities across Singapore, Hong Kong, China, South Korea, Malaysia and Australia.”
Mr. Lim added: “We are glad to have David drive our business expansion initiatives in Australia, a key focus for ARA as we continue to grow our assets under management through our existing funds and with new fund products.”
“ARA has a strong reputation and a proven track record as Asia’s premier real estate fund manager. It is a great honour to work with them and I believe we will be able to create significant synergies to benefit investors both within and outside of Australia,” said Mr. Blight.
Comments:
1) Both NPAT and EPS each increased 18% y-o-y.
2) Total AUM grew only 1.7% - the Group had achieved a AUM growth of approximately SGD 2 billion for the year, which was partially offset by the divestment of assets within the ADF I portfolio - Approximately SGD 4.8 billion of ADF- I assets divested to date.
3) Acquisition, divestment and performance fees ( up 68% y-o-y) and Finance Income ( up 76%)
4 AUM of new Private Funds does not seem to be growing fast enough to offset AUM decline due to maturity of old funds – at least not at this stage.
5) The disadvantage of private funds compare to Reits is that portfolio management fees are lost once the assets are divested at maturity of the fund life. That said, but in private funds there is more frequent “end of fund-life divestment and performance fees” which never or hardly happens in Reits.
6) No doubt, the irregular ADPF and/or FI could potentially boost up or drag down the headline NPAT in a particular year – but putting these factors aside - it is reassuring to note that the Reits business segment is still growing at 10% pace - both in AUM and recurring management fees.
7) AE increased 25% y-o-y - ahead of NPAT growth - which remains a concern.
8) Moving forward, the Group will maintain its focus on the pursuit of further growth.
9) Overall, a good set of results, I reckon.
(vested) -.
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
1. The Closure of Private Funds, IF roll-over to new fund, should maintain the AUM. No reason not to rollover the capital esp if the fund is performing well.
2. ADF 1 closing and return capital will complete 2015, so there will be big return this year.
3. With low interest rates in Australia to persist, the market will still be good for property managers there.
The new country teams, hopefully, will give them ability to source funds and find deals. Only short of Japan presence. I wonder if Jakarta is a major property market for international investors.
Hopefully they can really become Asia's second blackrock.
In the notes, it was mentioned that the higher admin expense is due to business expansion so let's see if there are able to attract new business in the coming year.
Homepage
PR Newswire
