ARA Asset Management: Tentacles of Gowth:
Tentacles of Gowth
• Acquisition of real estate platform in Korea ;
immediate foothold into a new market
• Private Funds business continue to grow steadily
• BUY with SOTP target price of S$2.08
Acquisition of a fund management platform in Korea,
with a potential to grow further. ARA recently entered
into a conditional sale and purchase agreement for the
acquisition of Macquarie Real Estate Korea Limited (“MREK”)
for an undisclosed sum. MREK manages two privately held
REITs with an AUM of KRW588.4bn (US$554.1m). We view
this M&A transaction positively as it will enable ARA to gain
an immediate foothold into Korea, a new market for the
group. Through MREK, an established real estate platform,
ARA will gain valuable experienced personnel and new
partnerships with investors. In addition, we see potential
synergies and growth through the launch of new products,
tapping a larger investor base going forward.
Growing private fund business. The private fund arm
continues to grow steadily with the launch of a new platform,
Morningside Investment Partners, LLC (MIP) and a US-based,
public pension fund has committed US$240m as seed capital.
MIP, which has an initial term of eight years, will pursue a
core-plus strategy of investing in real estate assets in
Singapore/ Malaysia/Hong Kong. This complements ARA’s
suite of different fund products that focuses in other
geographic regions. Together with MREK, fees from MIP will
contribute positively to a higher recurring base in 2014.
BUY, TP S$2.08 maintained. We believe that the group
remains on track to meet its targeted S$2bn growth in AUM
for 2014, supported by new private funds, while its REITs
continue to acquire (Suntec, Fortune and Prosperity) and grow
its recurring income fee base. Maintain our BUY Call, SOTP
target price of S$2.08. This is based on 20x PE of its REIT/fund
'via Blog this'
Tentacles of Gowth
• Acquisition of real estate platform in Korea ;
immediate foothold into a new market
• Private Funds business continue to grow steadily
• BUY with SOTP target price of S$2.08
Acquisition of a fund management platform in Korea,
with a potential to grow further. ARA recently entered
into a conditional sale and purchase agreement for the
acquisition of Macquarie Real Estate Korea Limited (“MREK”)
for an undisclosed sum. MREK manages two privately held
REITs with an AUM of KRW588.4bn (US$554.1m). We view
this M&A transaction positively as it will enable ARA to gain
an immediate foothold into Korea, a new market for the
group. Through MREK, an established real estate platform,
ARA will gain valuable experienced personnel and new
partnerships with investors. In addition, we see potential
synergies and growth through the launch of new products,
tapping a larger investor base going forward.
Growing private fund business. The private fund arm
continues to grow steadily with the launch of a new platform,
Morningside Investment Partners, LLC (MIP) and a US-based,
public pension fund has committed US$240m as seed capital.
MIP, which has an initial term of eight years, will pursue a
core-plus strategy of investing in real estate assets in
Singapore/ Malaysia/Hong Kong. This complements ARA’s
suite of different fund products that focuses in other
geographic regions. Together with MREK, fees from MIP will
contribute positively to a higher recurring base in 2014.
BUY, TP S$2.08 maintained. We believe that the group
remains on track to meet its targeted S$2bn growth in AUM
for 2014, supported by new private funds, while its REITs
continue to acquire (Suntec, Fortune and Prosperity) and grow
its recurring income fee base. Maintain our BUY Call, SOTP
target price of S$2.08. This is based on 20x PE of its REIT/fund
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