Its CEO (ARA private funds) and director (corporate office) Ng Beng Tiong said its second Asia Dragon Fund has a fund size of US$1bil to buy Asian assets. Its first Asia Dragon Fund has a fund size of US$1.1bil. ADF is the flagship private real estate fund of ARA.
ARA Asset Management is an affiliate of Hong Kong's Cheung Kong Group, which is controlled by Li.
ARA was set up in 2002 when Li and its other founder, John Lim of Singapore, came together at a time when Cheung Kong was primarily a conglomerate focusing on buying and selling land for development. From a zero base, ARA currently has assets in Singapore, Hong Kong and China exceeding RM44bil in value.
“We don't want to set a limit but we do have a country limit. Nevertheless, that is a lot of firepower given the size of the fund,” said Ng yesterday, adding that they were at different stages of negotiations.
He was in Malaysia to launch 1 Mont'Kiara Mall (1MK), which was purchased by the Cheung Kong Group last year for about RM333mil.
This will be ARA's third property, the other two being the AEON Mall in Malacca and Summit in Subang Jaya.
Ng said they liked well-located community malls which serves the upper middle-class group, with single ownership and management.
“We like community malls because they serve a local need. In that sense, they are stable and defensive. We are also prepared to buy older malls and refurbish them,” he said.
Ng said ARA was looking for economies of scale and they had not limited themselves to just the Klang Valley. Instead, they are considering having assets throughout Malaysia as there is always the possibility of tenants following them. He said there were looking at a risk-return profile with an upper limit of an internal rate of return of about 20%.
“This is an opportunistic fund, meaning we are looking at buying assets at a higher risk, which brings with it a higher return,” Ng said.
In the case of 1MK, it was under construction when the Cheung Kong Group bought it. “We saw the potential and we liked the location. We put in a lot of hard work, brought in the tenants, did the advertising and promotion, and today it is about 60% tenanted. By the end of the year, it will be about 90% tenanted. In three to five years, this mall will be stable and we will have achieved our rate of returns.
ARA has 25 malls throughout Asia 14 in Hong Kong, four each in China and Singapore and three in Malaysia.
Its primary business includes real estate investments trusts, private funds and real estate management services.
By The Star
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