Singapore’s ARA eyes Australia, Korea investments

06 August 2014   Category: News, Asia, Australia, Global, Hong Kong, Korea, Malaysia, Singapore   By Derek Au

ARA Asset Management, a Singapore-listed manager of REITs and private real estate funds backed by Hong Kong tycoon Li Ka-shing, is looking to increase investments in Australia and Korea in a move to diversify its business from the Chinese market.

ARA Private Funds chief executive Ng Beng Tiong told Singapore’s The Business Times that investing into the two countries became feasible after the real estate fund manager built its respective physical presence through recent acquisitions.

Last November, ARA-managed Suntec REIT acquired land and property in North Sydney CBD to be developed into a Grade-A commercial tower, expected for completion in early 2016. ARA also strengthened its foothold in South Korea by acquiring Macquarie Real Estate Korea Limited in April, which manages two privately-held Korean REITs investing in office properties.

According to the report, ARA Asia Dragon Fund (ADF) III, an opportunistic fund that hopes to raise up to US$1 billion in the fourth quarter, could pour some of its money into South Korea, extending from the primary markets of Singapore, Hong Kong, China and Malaysia which are under the preceding ADF I and ADF II. These funds target an internal rate of return of above 20% over a holding period of three to five years.

The report cited Mr. Ng as saying that ARA could buy into development assets in Australia through its Summit Development Fund (SDF), which has a committed capital of $80 million and a mandate for projects in South East Asia and Australia.

"We are looking at riding on development profits, which is a build-and-sell strategy," Mr. Ng was quoted as saying.

The report said ARA is also targeting to raise Chinese capital through RMB funds to invest in Grade-A assets either within or outside China. Mr. Ng was quoted as saying ARA could launch an onshore REIT when China puts in place its framework for real estate trusts. Despite the listing of the first-ever Chinese REIT in May, it does not behave like counterparts in developed markets, with its structure more closely resembling a fixed income instrument.

ARA currently manages six REITs, which are listed in Hong Kong, Singapore and Malaysia, and seven private funds which invest in real estate and real estate-related securities in Asia.