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Just compiled the sale of suntec reit units for management fee and acquisition fee.
It seems that ARA made loss regarding to its acquisition fee paid in units in 2011. acquisition fee units were issued @1.45, but the units were sold in early 2012 around 1.23.
It is so weird that ARA did not sell any units when Suntec Reit ran almost into $2. The sale of Suntec units has stopped since mid 2012 and Suntec Reit had a great run.
It only started to sell the units again recently around 1.5 - 1.6.
What was the management thinking of when Suntec Reit was around $2 early 2013?
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It is not easy to time the market, so perhaps they had the impression that the stock would go higher than $2, then they will start selling
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18-09-2013, 08:43 AM
(This post was last modified: 18-09-2013, 08:44 AM by gutman.)
CEO John Lim bought 2 mil shares last week at average price of $1.599.
CEO John Lim bought 2 mil shares last week at average price of $1.599.
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18-09-2013, 11:55 AM
(This post was last modified: 18-09-2013, 11:56 AM by Nick.)
ARA revenue and earnings consist of 2 parts - the recurring base management fees from its REITs and private funds + dividend income from its underlying investments and the lumpy performance / acquisition fees component which correlates to changes in AUM. Its earnings are also impacted by changes in fair value of its underlying investments.
In recent times, ARA has been kind to separate out the earnings from the 2 segments to ease investors understanding of the recurring aspect of the business. In 1H 2013, ARA reported recurring net profit of $27.0 million (vs net profit of $32.1 million). They defined recurring net profit as "Net Profit excluding acquisition, divestment and performance fees, finance income and finance costs, adjusted for the effects of tax". It must be noted that finance income do include dividend income so it isn't accounted for in this metric.
Annualizing the 1H 13 recurring EPS gives a figure of 6.40 SG cents. Assuming we value this recurring business at PER of 25, this translates to $1.60 (incidentally close to the price John Lim purchased last week). If we use a PER of 20, we get $1.28. The PER is a variable here - but note that this excludes contributions from acquisition fees and historically, ARA has generated substantial acquisition fees (including Fortune REIT recent M&A). Another issue, as pointed by Freedom, is that a portion of the fees are paid in REIT units which may be sold at lower price than its issued price.
(Odd Lots Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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