ARA makes $413m Nanjing exit

Singapore real estate firm ARA Asset Management has completed the sale of one of its large China assets from its $1.13 billion Dragon Fund I (ADF I), its first private real estate fund.

The firm has sold the Nanjing International Finance Center for RMB2.5 billion ($413 million; €300 million).

ARA declined to comment on the details of the sale, but PERE understands the firm sold to a local buyer. Further, when the transaction reaches financial close, it is understood that ADF I will be approximately halfway divested.

ARA originally acquired the 51-story, 1.17 million square foot property in 2009, just after the building was completed, for SGD340 million ($230 million; €172 million). Assuming no leverage, this recent exit would give ARA an approximately 1.8x equity multiple.

Early last year, ARA also divested another of ADF I’s office assets in Dabian to China Investment Partners (CIP), the firm’s separate account with the California Public Employees’ Retirement System (CalPERS). An ARA spokesman said ARA still holds an office asset in Shanghai among other assets.

ARA’s separate accounts business has grown substantially in the past year. CalPERS committed an additional $300 million to the CIP account for investing in China, and an unnamed US state pension, new to ARA, also gave the fund manager $240 million for investing in Singapore and Kuala Lumper.

Despite the capital available to ARA for investing through separate accounts, the spokesman insisted that ARA has no intention of dropping the Dragon Fund franchise. The separate accounts for CalPERS and the other pension fund were formed for core-plus and value-added strategies whereas the Dragon funds are opportunistic in nature.

It is also understood that ARA is in the process of finalizing the launch of the third fund in the Dragon series. The $441 million ADF II is now about 60 percent invested, and the firm expects to start fundraising for ADF III around the end of Q1 or a little later, it is understood.