ARA Asset Mgt: Citi initiates at Buy with $1.90 TP. House like ARA for its scalable, asset-light business model which generates a steady and defensive stream of income from mgt fees and offers a high ROE of over 30%. Positive on ARA’s ability to continuously grow its AUM and forecast a 3-year CAGR of 13% for AUM to reach $24.4b by end-2013.
Add that ARA is a beneficiary of the continued economic growth in Asia as investors remain positive on the prospects for Asian real estate. Another milestone would be the exit of ARA’s flagship fund – ADF I – in 2013. Pending market conditions, performance fees will be paid and investors could potentially be rewarded with a special div/bonus issue.
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