Saturday, August 11, 2012

ARA sets up US$500m China-focused fund

Business Times: Sat, Aug 11

ARA Asset Management has established a new US$500 million fund to target high-quality, income-producing office and retail properties in key cities in China, including Hong Kong.

The fund, ARA China Investment Partners, LLC, is a long-term core-plus separate-account vehicle. It will have an initial term of 10 years, with two additional extension options of six years each. Additional capital commitments will be made available upon deployment of the initial commitment at the discretion of the key investor, California Public Employees' Retirement System.

Separately, the group is toying with the idea of divesting itself of a part of its private fund, the ARA Asia Dragon Fund (ADF), into a yuan-denominated Reit of commercial assets in the coming quarter.

"If the market is right, this is one of our options," said ARA Group chief executive John Lim.

The group had gross investor commitments of US$941 million via its two vehicles, the CIP Fund and the ADF II.

Said Mr Lim: "We are very happy to report that we've raised close to US$1 billion. In today's market, this is a remarkable achievement for the team. . . We have close to US$2 billion in the war chest to invest in China, Hong Kong, Singapore and Malaysia."

Net profit for the second quarter ended June for the affiliate of Cheung Kong Group rose 4 per cent to $15.4 million, on the back of a 15 per cent jump in revenue to $29.1 million.

For the half year ended June, net profit jumped 20 per cent to $35.4 million while revenue rose 21 per cent to $63.4 million, thanks to improved management fees and higher acquisition and performance fees.

Specifically, recurrent management fees rose 7 per cent to $47.8 million in H1 2012, following an increase in valuation of the property portfolio of real estate investment trusts (Reits) under the group's management and higher asset valuation of the ARA Harmony Fund. The group also began to accrue portfolio management fees receivable from ADF II, with the commencement of its investment period in March.

Acquisition and performance fees for the half year grew 87 per cent year on year to $4.7 million while other income rose 104 per cent to $11 million, due mainly to a higher net gain on disposal of certain Reit units.

Earnings per share for the first six months were 4.61 cents, up 20 per cent from 3.85 cents a year ago. Total assets under management jumped 16 per cent to a record $21.8 billion as at end-June.

ARA has declared a tax-exempt (one-tier) interim dividend of 2.30 Singapore cents per ordinary share.

The counter ended unchanged at $1.425 yesterday.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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