ARA Asset Management

ARA Asset Management: (The Edge) Wins CalPers over as investor in new fund. Plans more funds and REITS. Citing that its first investment in ADF I earned a 19.2% return for FY12 and an 8.4% return over the last 3 yrs. Recall that CalPERS, the biggest US pension fund has recently chosen to invest US$530m in 2 of ARA’s real estate funds that will be allocated mainly to China. The fund will invest in office buildings and malls in China and HK via ARA China Investment Partners (CIP Fund) and also in ARA’s Asia Dragon Fund II (ADF II) which focuses on retail, office and residential properties in China, SG and HK. Note that since the CIP can run a potential 22 yrs , it is no longer a close-end fund that needs to be divested, but rather more like a private REIT with a single investor, which will grow over time. Grp believes CIP will be one of the largest private funds that it will manage over time. CIMB maintains Buy with $1.75 TP, noting that house continue to like ARA’s recurrent cash flows and strong balance sheet. Key catalysts are promotion fees from ADF1 and further AUM Growth.