Singapore’s ARA AM launches $1bn fund

ARA Asset Management has launched the second in its pan-Asia ARA Dragon Fund series. The fund is expected to have similar investment targets as its predecessor but with a greater weighting towards China.

ARA Asset Management (ARA AM), the Singapore-based real estate fund manager, has launched its second pan-Asia real estate opportunity fund with a fundraising target of $1 billion.

The firm, which has S$16.9 billion (€9.3 billion; $13.6 billion) of assets under management across its public REIT and private funds platforms, launched the vehicle at the start of the year and is expecting a first closing before the summer, PERE has learned. A final closing is anticipated before the end of the year.

The ARA Asia Dragon Fund II (ARA ADF II) will be used for a similar strategy to its predecessor vehicle, ARA Asia Dragon Fund (ARA ADF), targeting investments in key cities of China, Singapore, Hong Kong, Malaysia as well as cities elsewhere in southeast Asia. The new fund will have a proportionately higher exposure to China than the previous vehicle, sources said, with a higher upper exposure limit to the country of 70 percent from 50 percent previously. The fund would be used to invest in both development and completed properties across a range of real estate sectors including offices, retail and residential.

In a further nuance from the first fund, ARA ADF II will run for ten years instead of seven years.

ARA Dragon Fund closed on $1.13 billion three years ago but is already approximately 80 percent invested enabling ARA AM to market its second fund.  The fund has invested in 10 properties and is said to be on track to delivering its targeted return of 20 percent IRR before fees and 1.92x equity. ARA ADF II is expected to target similar returns.

Formed in 2002, ARA Asset Management is best known for its longer-established, five-strong Singapore and Hong Kong REIT series, which accounted for S$11.4 billion of its assets under management, as at 31 December last year. Its private funds division, led by chief executive officer Ng Beng Tiong, had S$4.8 billion of assets under management as at that time. The firm, which has 810 staff in total, also runs a real estate management services division.

ARA corporate finance manager Vincent Yeo confirmed the existence of the incoming fund but would not be drawn on the firm’s plans for raising capital. See the forthcoming issue of PERE for a more detailed look at ARA Asset Management.