ARA Asset Management

[gutman]

Seems like so.
The announcement on sgx also shown that Cheung Kong has sold below the 15% holdings mark.

JL sold 4.08% or 31.36 mil shares for a total of $44.53 mil
CKH sold 1.75% or 13.44 mil shares for a total of $19.08 mil

Together, JL + CKH sold 5.83% or 44.8 mil shares for a total of $63.61 mil

[mysterion]

One important competitive edge of ARA's business model over other asset management businesses is their management of sticky real estate assets. This results in ARA having smooth and consistent earnings even in an economic downturn, plus a rapid recovery when assets re-value after the rebound. The more prominent example would be the management fees derived from the REITs. But what about their private real estate funds, which also constitute a significant portion of recurring earnings?

Does anybody have an idea of the "asset stickiness" of the Private Real Estate funds managed by ARA such as the ARA Asia Dragon Fund, Asia Dragon Fund II, ARA Harmony Fund etc. Can investors in these funds redeem/withdraw their stake of contributed/committed capital during the course of the entire lifespan of the fund? Or can investors only redeem/withdraw only after the specified investment period (e.g. first four years of the 7-year ADF or first five years of the 10-year ADF II)?

Google hasn't been helping in my search for the terms and conditions of these private funds =/

[Contrarian]

Cannot withdraw commitment. Have to come up with total sum. Withdrawal means get back $1 only.

So the investors must be VERY SURE of the fund manager and the company with whom they entrust the $.

John Lim personally put up $20M before CALPERS put in US$1bn for ADF I.

Lately, the investors are asking for 10% capital commitment, so for a $1bn fund, ARA has to put up $100Million. It is a good move for all parties in the long term, it distinguishes the fly by night operators from the big boys.

[mysterion]

Wow, thanks for the clarification Contrarian, but where did you get the details of withdrawal getting back $1 only?

Just to probe more, is this only during the so-called investment period of the fund (first four and five years for ADF and ADF II respectively) or throughout the entire lifespan? Regardless, how does ARA command so much trust from these institutional investors?

[Contrarian]

Wow, thanks for the clarification Contrarian, but where did you get the details of withdrawal getting back $1 only?

Just to probe more, is this only during the so-called investment period of the fund (first four and five years for ADF and ADF II respectively) or throughout the entire lifespan? Regardless, how does ARA command so much trust from these institutional investors?

ARA is quite a big part of my portfolio, over last 4 years, of course I got to know. If u go to the AGM and ask, u will know.

The investors will get back the $$$ based on the actual returns. i.e. ADF has a total vesting period of 7 years, so the investors in ADF will see $ returned to them when the fund is fully divested at 7 years.

Trust and capability is the most important KEY in an asset management firm. CEO John Lim has been in the property fund biz for a long time, I suppose he will have to show them what he achieved.

[Salty]

Asia Dragon fund II closed wtih AUM of USD 441 million, missing the target of USD1 Billion.
However ARA made up the difference with a new USD500 million called CIP Fund.

I suppose next quarter we will see recurring income increase.

Also, it seems the market has forgotten about the RMB Reit.

[Contrarian]

> Asia Dragon fund II closed wtih AUM of USD 441 million, missing the target of USD1 Billion.
> However ARA made up the difference with a new USD500 million called CIP Fund.

> I suppose next quarter we will see recurring income increase.

Private funds, the maximum gain comes from closure of the fund. The performance fee can be as high as 10% of net return.

> Also, it seems the market has forgotten about the RMB Reit.

I think the mgt estimated S$80M on ADF I closure. This is about 9cts... close to 1 whole year's earnings!!!

[Salty]

Yup. i forgot about those!

I really like this business.

Reits + Reits + Reits + Reits + Reits + Reits + Fund + Fund + Fund
Convert fund to Reits = More reits = More AUM
Expanded Reits acquisition = more + more AUM.

It felt like compounding effect where it will self sustain in the future.

[Nick]

http://info.sgx.com/webcoranncatth.nsf/V...10034B1FE/$file/ARA-PressRelease-210812.pdf?openelement [Press Release]

I find today's announcement pretty informative as it states that ARA is committed in investing up to US$120 million in their 2 private funds. I am guessing this can be easily financed by the current cash position and operating cash-flow over the next few years. I am not entirely familiar with how private real estate funds operate - do they pay dividends based on rental income to the fund unit holders annually or is it retained for AUM growth ? Thanks.

(Vested)

[thleong]

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