ARA Asset Management

[Nick]

ARA will subscribe between 108 - 116 million units in Dynasty REIT. The prospectus can be found in the Dynasty REIT thread. In the short term, this will boost its 2H performance tremendously. In the long run, substantial amount of cash will be locked up in the REIT and it will not be generating income return. Much will depend on ARA ability to capitalize on the base fee of 0.3% and performance fee of 4.5% of NPI to generate returns.

(Vested)

[Share Investor]

ARA will subscribe between 108 - 116 million units in Dynasty REIT. The prospectus can be found in the Dynasty REIT thread. In the short term, this will boost its 2H performance tremendously. In the long run, substantial amount of cash will be locked up in the REIT and it will not be generating income return. Much will depend on ARA ability to capitalize on the base fee of 0.3% and performance fee of 4.5% of NPI to generate returns.

(Vested)

Hi Nick, why do you say there will be a boost to 2H performance? Also you mentioned the cash will be locked up and not generate any cash. I thought as unit-holders, ARA will be entitled to distribution as well?

[Nick]

ARA will subscribe between 108 - 116 million units in Dynasty REIT. The prospectus can be found in the Dynasty REIT thread. In the short term, this will boost its 2H performance tremendously. In the long run, substantial amount of cash will be locked up in the REIT and it will not be generating income return. Much will depend on ARA ability to capitalize on the base fee of 0.3% and performance fee of 4.5% of NPI to generate returns.

(Vested)

Hi Nick, why do you say there will be a boost to 2H performance? Also you mentioned the cash will be locked up and not generate any cash. I thought as unit-holders, ARA will be entitled to distribution as well?

1) There will be an increase in AUM for the listing of Dynasty REIT. ARA, as Manager, will be entitled to recurring base and performance fee income. Moreover, as sponsor, the disposal from ADF may lead to one off performance bonus from its private funds. I am not too certain of the latter - have to wait and see the 3Q report for some guidance.

2) Dynasty REIT Preliminary Prospectus pg 24:

The Sponsor has provided the Manager with an undertaking that it shall waive (or shall procure the waiver of) the entitlement to distributions on the Sponsor Units (the “Waived Distribution”) of between RMB[7.2 million] (based on the Minimum Offering Price) and RMB[6.9 million] (based on the Maximum Offering Price) for the Forecast Period 2012 (as defined herein) and thereafter between RMB[17.2 million] (based on the Minimum Offering Price) and RMB[16.6 million] (based on the Maximum Offering Price) for every financial year until the financial year ending 31 December 2017 (collectively, the “Waiver Period”).

The Manager will distribute the Waived Distribution to the Unitholders (excluding the Sponsor Units which are held by the Sponsor and/or its subsidiaries but including the Units which may be subsequently issued to, subscribed by or acquired by the Sponsor and/or its subsidiaries (including the Manager) after the Listing Date).

[freedom]

Will be sponsor units be shared by other investors from ADF?

It seems unfair that ARA is not big investor of ADF, but is the one who is going to hold the babies while others are getting out.

100 million is not a small number for ARA alone.

[Nick]

Will be sponsor units be shared by other investors from ADF?

It seems unfair that ARA is not big investor of ADF, but is the one who is going to hold the babies while others are getting out.

100 million is not a small number for ARA alone.

ARA is the sponsor of Dynasty REIT. ARA is an Asian real estate fund management group listed on the SGX-ST with a market capitalisation of S$1.2 billion as at the Latest Practicable Date.

Not sure how ARA ended up as sole owner. Probably purchased it from ADF first ?

[Nick]

Cheung Kong Seeking Separate Listing for Long-Stay Hotels

http://www.bloomberg.com/news/2012-10-11...otels.html [Article]

I wonder will ARA have a stake in this business trust manager ?

(Vested)

[Share Investor]

Cheung Kong Seeking Separate Listing for Long-Stay Hotels

http://www.bloomberg.com/news/2012-10-11...otels.html [Article]

I wonder will ARA have a stake in this business trust manager ?

(Vested)

If ARA has a stake, it will have to make an annoucement.

[freedom]

Will be sponsor units be shared by other investors from ADF?

It seems unfair that ARA is not big investor of ADF, but is the one who is going to hold the babies while others are getting out.

100 million is not a small number for ARA alone.

ARA is the sponsor of Dynasty REIT. ARA is an Asian real estate fund management group listed on the SGX-ST with a market capitalisation of S$1.2 billion as at the Latest Practicable Date.

Not sure how ARA ended up as sole owner. Probably purchased it from ADF first ?

100 million is around half of its equity and 10% of its market capitalization. It is not a small number. Unless somehow ADF is paying ARA a huge amount for it to be able to do it.

[freedom]

listing of Dynasty Reit, subscribing S$ 100 million worth of units in Dynasty Reit and waiver of sponsor distribution, what does it mean for ARA?

1. How much of management fee can ARA collect from Dynasty Reit?
around S$ 8 million annually(for 5 months in 2012, property management fee + manager's manage fee of around RMB 20 million in page 46 of final prospectus).

2. How much is S$100 million to ARA?
by end of 2Q 2012, ARA has less than 100 million in cash(also need minus dividend payment for 1H 2012). total equity of a little above 200 million as 2Q 2012. so 100 million is more than all cash in ARA. 100 million is half of its total equity.

It does not make much sense if ARA is to just list Dynasty Reit to have more asset under management(It manages them already) and more fees to collect as ARA waivers its distribution, merely, the management fee collected can cover its share of distribution. Essentially, it would be like that ARA is risking itself a great deal to gain almost nothing.

My conclusion would be that ARA shall receive a big bonus from ADF's divestment of the properties to Dynasty Reit. possible that the units ARA subscribes is as part of its payment of performance fee. cash from its stake in ADF and maybe part of its performance fee in cash should come in to help it fund the subscription of S$ 100 million worth of units or ARA need some debt to cover it. Hope that ARA will not risk its shareholders for its private fund investors.

[wee]

There was talk from John Lim previously that the investors of the new Dragon fund require 10% co-investment from ARA. If that is true, ARA will have $200m tied up in the two funds (Dragon + Dynasty) over time. Not small amount given their book value currently.

listing of Dynasty Reit, subscribing S$ 100 million worth of units in Dynasty Reit and waiver of sponsor distribution, what does it mean for ARA?

1. How much of management fee can ARA collect from Dynasty Reit?
around S$ 8 million annually(for 5 months in 2012, property management fee + manager's manage fee of around RMB 20 million in page 46 of final prospectus).

2. How much is S$100 million to ARA?
by end of 2Q 2012, ARA has less than 100 million in cash(also need minus dividend payment for 1H 2012). total equity of a little above 200 million as 2Q 2012. so 100 million is more than all cash in ARA. 100 million is half of its total equity.

It does not make much sense if ARA is to just list Dynasty Reit to have more asset under management(It manages them already) and more fees to collect as ARA waivers its distribution, merely, the management fee collected can cover its share of distribution. Essentially, it would be like that ARA is risking itself a great deal to gain almost nothing.

My conclusion would be that ARA shall receive a big bonus from ADF's divestment of the properties to Dynasty Reit. possible that the units ARA subscribes is as part of its payment of performance fee. cash from its stake in ADF and maybe part of its performance fee in cash should come in to help it fund the subscription of S$ 100 million worth of units or ARA need some debt to cover it. Hope that ARA will not risk its shareholders for its private fund investors.