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04-03-2016, 12:21 PM
(This post was last modified: 04-03-2016, 12:28 PM by CY09.
Edit Reason: Edits
)
As mentioned ARA too has to prepare cash for the following few reasons : Potential purchase of Suntec Stake to defend against blackrock, 2) Paying of 5 cents dividends as current cashflow from REITS dividends is not enough
There are two more reasons for the cash imo. And that is the possibility of a rights issue in Suntec or Cache REIT to shore up their balance sheet and the payment of lease extension and redevelopment for Park Mall.
While the 5 cents dividend may be sustainable now, if an office downturn is to occur, I suspect ARA will cut its dividends as Suntec will be channeling less money upwards and may need equity injections. To me, the current situation seems to be a house of cards. At current price of 1.10+, i find it too expensive to buy these pack of cards
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blackrock just sold to reduce their holding to 5.99 of suntec.
Seems like fears of ARA losing control is reducing..
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AR_2015 is out
http://infopub.sgx.com/FileOpen/ARA_Annu...eID=395827
which has provided some updates on “ADF I”
Page 7 of AR_2015:
the ARA Asia Dragon Fund (“ADF I”) has fully divested its properties within its investment portfolio and is expected to be fully liquidated in 2016.
Page 41 of AR_2015
The fund has fully divested its assets as at end February 2016
________________________________________________________________________________________________________________________________________________________
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.
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11-04-2016, 06:54 AM
(This post was last modified: 14-04-2016, 08:32 PM by FFNow.)
I'm perplexed as to why ARA had to do rights issue to raise seed capital. Wouldn't have the strategic alliance with STC have provided seed capital? When it was established, up to $950 mil in capital commitment was promised via the co‐investment vehicle.
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Chew Ghek Khim paid top $ for 20% of ARA stake at close to $1.75. Straits is deep under-water with ARA shareholding, and they can ill afford a drop in dividend payout :-)
John Lim will probably keep more ADF Fund I payout for the rainy days.
> As mentioned ARA too has to prepare cash for the following few reasons : Potential purchase of Suntec Stake to defend against
> blackrock, 2) Paying of 5 cents dividends as current cashflow from REITS dividends is not enough
> There are two more reasons for the cash imo. And that is the possibility of a rights issue in Suntec or Cache REIT to shore up their
> balance sheet and the payment of lease extension and redevelopment for Park Mall.
> While the 5 cents dividend may be sustainable now, if an office downturn is to occur, I suspect ARA will cut its dividends as Suntec
> will be channeling less money upwards and may need equity injections. To me, the current situation seems to be a house of cards.
> At current price of 1.10+, i find it too expensive to buy these pack of cards
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(11-07-2014, 06:31 PM)specuvestor Wrote: ^^ Agree, but the other way to look at it is ARA is not where it is without CK. For some reason LKS is willing to give John Lim a hand.
Remains to be seen if Straits Trading can give a better hand 
When LKS sells....
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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We attended ARA's AGM on 15 Apr 16. These are some of the interesting pointers observed:
Soaring to new horizon...with 3 prong strategy: REITs, Private Fund and Country Strategy.
- CEO John Lim shared that REITS has always been their ARA’s bread and butter, providing them the constant $2 billion AUM growth along with recurrent fund management fees.
- Earnings from private fund on the other hand, are lumpy in nature. Private funds have lifespan to it, meaning it has a target investment time horizon and returns. ARA derives 2 components of revenue from this segment: Private fund fee (akin to annual management fees) and its Performance fund. Performance fee occurs when the fund achieve certain investment returns over certain internal rate of return. It is this reason that caused
- John shared that the last engine of growth is derived from the country strategy. Due to currency devaluation of countries such as China, Korea, Australia and Japan, ARA’s management are observing investments from these sovereign wealth funds flowing out of those countries. ARA was well positioned to be the gateway to capture such outflows.
On rights issuance...
- John shared that usually rights are issued for two purpose. Is the rights issued to grow the company or repair balance sheets. For ARA’s case, majority was meant for growth and investors should be heartened by this move. He also shared that himself committed approximately $30 million of cash into the rights issue because he believed in the company.
- Why is ARA not leveraging aggressively? For an asset light, service company like ARA, it's hard to borrow money from banks. Being exposed to leverage also runs the risk of bankruptcy, hence John is not in favour of debt-based growth. However, this does not omit the possibility of ARA using debt to grow. Should private fund calls for more capital fund progressively, it is possible for ARA to gear up.
Strategic Partners...
- Apart from Cache and Suntec, where ARA will continue to increase their holdings, as they wants to be the sponsors of these REITS, for the rest of the REITS, ARA will leverage on their strategic partners to anchor their stakes.
Dividend Policy will likely be maintained...
- Major shareholders (look internal, already mentioned before by Contrarian) are keen to have the dividend continued the deployed it elsewhere for buybacks or Scrip.
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Financial Freedom can be achieved through prudence and patience capital.
http://www.bytesizedinvestments.com/
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Thank you, Bytesizedinvestments, For sharing the AGM updates.
Sincerely appreciated.
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ARA reported total revenue of S$41.4 million and net profit of S$19.4 million for 1Q16, net profit margin down to 46.8%, from 50% (FY2015).
Recurrent management fees for 1Q16 grew strongly by 14% to S$34.3 million.
[Image: ARA-Income.jpg]
REIT management fees grew 5% year-on-year to S$22.0 million for 1Q16, mainly attributable to better asset performance from the existing properties after the successful asset enhancement initiatives (AEI) undertaken, resulted in higher property valuations. Suntec REIT’s acquisition of three floors of strata office space at Suntec Tower Two and Cache’s acquisition of three Australian properties in the last quarter of 2015 also contributed to the higher REIT management fees.
As at 31 Mar 16, the Group’s total AUM decreased to S$28.9 billion (approximately US$21.5 billion) from S$29.1 billion (Dec 15), moderated by a strengthened Singapore dollar against foreign currencies (in particular the US dollar) and the effect of divestments.
[Image: AUM.jpg]
ARA has a strong and robust balance sheet with gearing ratio at 3%, current ratio at 4.9 and cash ratio at 4.2. This was mainly attributed by the rights issuance.
News Release:
http://ara.listedcompany.com/newsroom/20...27IC.1.pdf
http://www.bytesizedinvestments.com/ara-...4-million/
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Financial Freedom can be achieved through prudence and patience capital.
http://www.bytesizedinvestments.com/
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http://m.scmp.com/property/hong-kong-chi...i-ka-shing
Aborted property acquisition points to power shift at Li Ka-shing controlled companies
Prosperity Reit has abandoned plans to buy a Kwung Tong office building for HK$1.87 billion after CK Property Holdings voted against the proposal, revealing friction between Li Ka-shing affiliated companies
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