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ARA Enters South Korea

Ser Jing - ARA Asset Management First Quarter Results, Managing Some Losses (pic) Real estate fund management company, ARA Asset Management (SGX: D1R) announced this morning that it will be acquiring Macquarie Real Estate Korea Limited (MREK).

ARA is an Asian real estate fund management company that focuses on managing public-listed real estate investment trusts listed in Singapore, Hong Kong and Malaysia with a diversified portfolio spanning the retail, office, industrial/office and logistics sectors and private real estate funds investing in real estate. It also provides real estate management services.

MREK is a real estate management company based in Seoul, South Korea and it manages two privately held Korean Real Estate Investment Trusts (K-REITs). The market value of the K-REITs being managed by MREK is KRW 588.4 billion (around S$701.7 million).

As part of the transaction, ARA will also acquire a 10.02% equity interest in one of the K-REITs and will co-invest alongside one of Korea’s largest pension funds. This pension fund is also the sole investor in the second K-REIT.

Mr. John Lim, ARA Group Chief Executive Officer, said, “As we expand our geographical footprint, the acquisition of this platform adds to ARA’s current REITs platform and bolsters ARA’s REIT management presence in the Asia Pacific region. In addition to Singapore, Hong Kong, Malaysia and China, this acquisition has allowed ARA to gain a foothold in South Korea, enabling the Group to capitalize on the tremendous real estate opportunities in Asia’s fourth largest economy by GDP.”

The last corporate move by ARA was at the end of October 2013, when it formed a strategic alliance with Straits Trading Company (SGX: S20). In the middle of last month, it announced in its third quarter results that profits increased up 2% to S$20 million.

As of 30th September 2013, ARA is managing S$23.4 billion worth of assets. Just 10 years ago, it was managing a mere S$500 million of assets. This is a compounded annual growth rate of 53.3% per annum.

At the time of writing, the shares of ARA is trading at $1.85, tagging it at a historical PE of 22.4.

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