ARA Asset Management

[crosscalibre]

You have to exercise your rights by subscribing to them. They are considered as rights, not shares.

Thanks, how do I do that? Did they send a document? I am overseas right now.

Based on the OIS, the final date to accept and pay for the rights shares was 8 Dec 2015. The rights issue has already been completed and the results released in the announcement below.

http://infopub.sgx.com/FileOpen/ARA%20-%...eID=379094 [OIS]

http://infopub.sgx.com/FileOpen/ARA%20As...eID=381963 [Results of Rights Issue]

(Not Vested)

I afraid crosscalibre has waived a costly renounce-able right.

(not vested)

indeed, it is

[Boon]

http://money.163.com/15/1209/20/BADVTLII002534NU.html

From Chinese news: On 9 Dec, ARA bought the BEA Financial Tower in Shanghai for 2.7 billion RMB.

Looks like they're on a buying spree?

It could well be an acquisition by one of the three private funds with mandate to invest in China - namely ADF II, CIP and PIP – all of which are in active investment/acquisition mode. 
__________________________________________________________________________________________

The BEA Finance Tower in Shanghai was indeed acquired by ARA - CIP private fund. Seen photo of the building on ARA's website:

http://www.ara-asia.com/businesses/priva...t-partners

______________________________________________________________________________________________________________________

[cyclone]

ARA establishes ARA HARMONY FUND V

ARA Asset Management Limited is pleased to announce that the Group has successfully established ARA Harmony Fund V ("Harmony V" or the "Fund"), a
private real estate fund for the redevelopment of Park Mall (the "Property"), a commercial and retail property located within Singapore's prime shopping belt, Orchard Road.

The investors of Harmony V include SingHaiyi Group of companies, Haiyi Holdings Pte Ltd and Suntec Real Estate Investment Trust. The Fund has been set up to redevelop Park Mall into a commercial development comprising two office blocks and an ancillary retail component. The redevelopment will unlock the underlying value of the Property by further enhancing the gross floor area of the site.

ARA Managers (Harmony V) Pte Ltd, a wholly owned subsidiary of ARA, will manage the Fund.

[Bytesizedinvestments]

ARA Asset Management Limited (ARA) announced their financial results for the year ended 31 Dec 15 on 4 Feb 16, after trading hours.

Key pointers:

1. Full year revenue dropped 10% from S$173 million in FY14 to S$156 million in FY15. However full year adjusted net profit increased 16%, from S$62 million to S$72 million.

2. Due to the rights issuance, they cleared a huge chunk of their debt and strengthened their balance sheet. Current cash and current ratio to 2.05 and 4.22.

3. FY15 was a very busy year of acquisition and divestment. Suntec REIT had successfully acquired 3 floors of strata office space at Suntec Tower Two at a purchase consideration of S$101.6 million. Suntec also divested Park Mall for $411.8 million in conjunction with its 30% interest in the joint venture with SingHaiyi Group and Haiyi Holdings to develop Park Mall. Cache Logistics Trust acquired a total of 6 Australian properties worth approximately A$163.8 million. Cache also recycled their capital by divesting Kim Heng Warehouse for S$9.7 million at 9% premium over the original acquisition price. Fortune REIT divested Nob Hill Sqaure for HK$648 million at 2.9% yield.

4. ARA’s Asset Under Management (AUM) increased 11.6% from S$26.7 billion in FY14 to S$29.8 billion in FY15.

You can find more info at the following SGX website. I also did a deeper analysis in my blog: http://www.bytesizedinvestments.com/6-po...ar-report/

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388640 (news release)

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388641 (PPT)

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388639 (statement)
____


Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com/

[Hayden]

ARA Asset Management Limited (ARA) announced their financial results for the year ended 31 Dec 15 on 4 Feb 16, after trading hours.

Key pointers:

1. Full year revenue dropped 10% from S$173 million in FY14 to S$156 million in FY15. However full year adjusted net profit increased 16%, from S$62 million to S$72 million.

2. Due to the rights issuance, they cleared a huge chunk of their debt and strengthened their balance sheet. Current cash and current ratio to 2.05 and 4.22.

3. FY15 was a very busy year of acquisition and divestment. Suntec REIT had successfully acquired 3 floors of strata office space at Suntec Tower Two at a purchase consideration of S$101.6 million. Suntec also divested Park Mall for $411.8 million in conjunction with its 30% interest in the joint venture with SingHaiyi Group and Haiyi Holdings to develop Park Mall. Cache Logistics Trust acquired a total of 6 Australian properties worth approximately A$163.8 million. Cache also recycled their capital by divesting Kim Heng Warehouse for S$9.7 million at 9% premium over the original acquisition price. Fortune REIT divested Nob Hill Sqaure for HK$648 million at 2.9% yield.

4. ARA’s Asset Under Management (AUM) increased 11.6% from S$26.7 billion in FY14 to S$29.8 billion in FY15.

You can find more info at the following SGX website. I also did a deeper analysis in my blog: http://www.bytesizedinvestments.com/6-po...ar-report/

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388640 (news release)

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388641 (PPT)

http://infopub.sgx.com/FileOpen/ARA%204Q...eID=388639 (statement)
____


Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com/

Hi BSI, thanks for sharing your analysis. Glad to see that they are growing their AUM consistently and returning back to strong financial health in net cash position.

There is only one area that puzzle me and that is the rationale for raising cash through rights issue but subsequently returning a portion of cash back to us with dividends. The amount of final dividends declared is equivalent to 35% of their existing cash holding (approximately S$76.7m) or 16% of the cash raised in Dec’15 rights issue (S$150.7m after deducting rights expense). It opposes their plan to utilise the net proceeds for strategic investments and seed capital. Was thinking that share repurchase instead of cash dividends would be better since treasury shares can be sold off later to raise cash.

On positive note, the lower priced REITs received as management fee can be interpreted as getting more unit shares, while increasing strategic stake in those managed REITs is equivalent to buying low (now) and selling high (those disposed off in previous years).

Vested since 2012. Not vested in any of their REITs.

[weijian]

[quote pid='125629' dateline='1454768562']
On positive note, the lower priced REITs received as management fee can be interpreted as getting more unit shares, while increasing strategic stake in those managed REITs is equivalent to buying low (now) and selling high (those disposed off in previous years).

Vested since 2012. Not vested in any of their REITs.

This logic seems to be twisted to suit your HALO effect onto John and his team. I can easily choose another timeframe to say the higher priced REITs received as management fee can be interpreted as getting less unit shares...' It seems like John and CO are short sellers as well? (sell first, buy later).

Our human mind never fails to amaze me in the way we twist and fit facts into our argument.

[Bytesizedinvestments]

Hi BSI, thanks for sharing your analysis. Glad to see that they are growing their AUM consistently and returning back to strong financial health in net cash position.

There is only one area that puzzle me and that is the rationale for raising cash through rights issue but subsequently returning a portion of cash back to us with dividends. The amount of final dividends declared is equivalent to 35% of their existing cash holding (approximately S$76.7m) or 16% of the cash raised in Dec’15 rights issue (S$150.7m after deducting rights expense). It opposes their plan to utilise the net proceeds for strategic investments and seed capital. Was thinking that share repurchase instead of cash dividends would be better since treasury shares can be sold off later to raise cash.

On positive note, the lower priced REITs received as management fee can be interpreted as getting more unit shares, while increasing strategic stake in those managed REITs is equivalent to buying low (now) and selling high (those disposed off in previous years).

Vested since 2012. Not vested in any of their REITs.

Hi Hayden,

We do not profess to know the logic of raising rights and then giving 16% of the rights issuance as dividend.

We could only guess that they want to achieve some stable dividend per unit to allow income investors some predictable cashflow.

On your comment on its utilisation of proceeds from rights issuance. They shared 2 purposes for the rights issuance. What we can observe from the latest report is that they have acted on one of their reasons for rights issuance, which is to repay their loans to STC. The other purpose, which you had correctly pointed out, was to seed capital or fund (both existing or new) strategic investments. However, as good deals are not easy to come by, and as much as we like to see it happening sooner then later, perhaps ARA has yet to find any good deals to utilise the proceed.

Previously, we did an analysis for ARA and on their rights issuance too: http://www.bytesizedinvestments.com/what...ns-to-you/

Of course, it would be best to meet the management to hear from them on their logic for their actions, for the moment, these are our 2 cents worth.

Would definitely like to hear more views from the other forumers in this thread.

____


Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com/

[CY09]

Interesting views. With blackrock increasing their stake in Suntec REIT, it means ARA and its group of companies will find it difficult to sell off the shares they receive as mgmt fees/have bought in 2015.

And if ARA intends to maintain its dividends of 5 cents, it has to generate 50 Mil of cash. Unfortunately, dividends from its REIT holdings yield only about 13 mil and the rest of the non REITS business provides approx 20mil (to my estimates). It leaves an annual shortfall of 17 mil (before cashflow spent due to investing activities), which has to be either funded by cash reserves or from the sale of units in REITS (which is now difficult due to black rock)

[Boon]

FY2015 results (all in SGD) :
 
AUM : Total (billion) :
FY2011 = 19.8
FY2012 = 22.6
FY2013 = 25.9
FY2014 = 26.7
FY2015 = 29.8  (=> UP 11.9%)
 
AUM : Reits (billion):
FY2011 = 14.6
FY2012 = 16.2
FY2013 = 18.7
FY2014 = 21.0
FY2015 = 22.2  (=> 6%)
 
AUM : Private Real Estate Funds – Real Estate (billion)
FY2011 = 4.7
FY2012 = 4.7
FY2013 = 5.4
FY2014 = 4.0
FY2015 = 5.5    (=> UP 39.6%)
 
AUM : Private Real Estate Funds - Capital (billion)
FY2011 = 0.2
FY2012 = 1.2
FY2013 = 1.3
FY2014 = 0.8
FY2015 = 1.1  (=> UP 32%)
 
Total Revenue (million):
FY2011 = 122.761
FY2012 = 133.530
FY2013 = 140.369
FY2014 = 173.058
FY2015 = 156.027  (=> DOWN 10%)
 
NPAT (million)
FY2011 = 68.202
FY2012 = 72.704
FY2013 = 74.250
FY2014 = 87.510
FY2015 = 78.058   (=> DOWN 11% )
 
EPS (Cents)
FY2013 =   8.79
FY2014 =  10.35
FY2015=     8.96   (=> DOWN 13%,)
 
Cash and Cash Equivalents (million):
FY2011 =   57.291 (borrowing =   0.388)
FY2012 = 100.258 (borrowing =   5.067)
FY2013 =   39.060 (borrowing = 30.470)
FY2014 =   64.430 (borrowing = 34.357)
FY2015 =   76.742 (borrowing = 14.163)
 
Management Fees: Revenue (million):
FY2011 =   90.860
FY2012 = 102.615
FY2013 = 114.003
FY2014 = 125.517
FY2015 = 129.597  (=> UP 3% )
 
Acquisition, divestment and performance fees(ADPF) : Revenue (million):
FY2011 = 21.228
FY2012 =   8.223
FY2013 = 14.671
FY2014 = 24.593
FY2015 = 13.453   (=> DOWN 45% )
 
Finance Income (FI): Revenue (million):
FY2011 = 10.566
FY2012 = 21.997
FY2013 = 11.583
FY2014 = 20.393
FY2015 = 12.367   (=> DOWN 39% )
 
Administrative Expenses (AE) - (million):
FY2011 = 33.789
FY2012 = 39.172
FY2013 = 41.468
FY2014 = 51.903
FY2015 = 46.346  (=> DOWN 11% )
 
Comments:
1)  FY2015 revenue, NPAT, EPS were DOWN 10%, 11% and 13% respectively mainly due to decrease in ADPF (DOWN 45%) and FI (DOWN 39%).
2)  Irregular ADPF and FI could potentially boost up or drag down the headline NPAT in a particular year – So FY2015 was a “drag down” year.
3)  Total AUM had grown more than 10% in FY2015 which is not bad. Private Fund AUM seemed to have bounced back to FY2013 level.   
4)  AE was down 11% - long term trend not clearly visible  ?
5)  Final DPS of 2.7 cents has been recommended => FY2015 DPS = 5 cents. Consistency in its dividend policy.
6) Overall, in FY2015, AUM had grown but not revenue; recurring management fee had grown but not NPAT.
7) Question remains:
a) Was the drop in FY2015 NPAT a temporary blip?
b) Is ARA’s positions as Reit-Managers safe? Would more capital be required to defend these positions?
c) Would more seed capital be required to grow its private fund businesses?
d) Without growth, would its recurring income enough to sustain a DPS of 5 cents?
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[Dividend Knight]

Interesting views. With blackrock increasing their stake in Suntec REIT, it means ARA and its group of companies will find it difficult to sell off the shares they receive as mgmt fees/have bought in 2015.

And if ARA intends to maintain its dividends of 5 cents, it has to generate 50 Mil of cash. Unfortunately, dividends from its REIT holdings yield only about 13 mil and the rest of the non REITS business provides approx 20mil (to my estimates). It leaves an annual shortfall of 17 mil (before cashflow spent due to investing activities), which has to be either funded by cash reserves or from the sale of units in REITS (which is now difficult due to black rock)

Why would it be difficult to sell units due to Blackrock?