ARA Asset Management Announces $500 Million Equity Financing from SMBC

ARA Asset Management Limited (ARA), Asia-Pacific’s largest real estate asset manager, has entered into a strategic partnership with Sumitomo Mitsui Banking Corporation (SMBC) with a seed round of $500 million. SMBC, the largest entity of Sumitomo Mitsui Financial Group, is among the world’s leading financial institutions with $2.25 trillion in assets as of December 31, 2020 and a global presence in 40 countries.

Justin Chiu, President of ARA, said, “The ARA Group should benefit from long-term market trends in the APAC region, such as the surge in demand for real estate assets from the new economy. We are very excited to work with our new shareholders and look forward to rapidly developing our new partnership with SMBC. »

Since its privatization in 2017, ARA has transformed its business from a dedicated Asian real estate fund manager with approximately $36 billion in gross assets under management1 led by its REITs, private funds and property management businesses, to become the largest real estate asset manager in Asia-Pacific with $116 billion in gross assets under management2 as of December 31, 2020.

Today, ARA’s business model is robust, scalable and well diversified. Beyond expanding into new alternative asset classes, it has established new operating platforms, such as LOGOS Property Group, one of Asia’s leading logistics property development managers. Pacific, with assets under management of over A$14 billion.

LOGOS operates as ARA’s exclusive platform for logistics assets, in an industry well supported by secular macro trends in Asia such as the outsized growth of e-commerce. LOGOS is also characterized by a growing presence in data centers, in partnership with major data center operators and investors in the region and the world.

With the new support from SMBC, ARA, together with its existing shareholders, will further strengthen its core asset management business and strengthen its expansion plans in new economy sectors, such as logistics, data centers, infrastructure and private credit, and in key markets.

Going forward, ARA’s growth potential should be supported by two powerful secular trends such as the financialization of real estate in Asia, where listed REITs are set to rapidly proliferate into new markets such as the India, China and Korea, and the dazzling growth of alternative markets. asset classes as a key investment portfolio for institutional and private investors.

In the Asia-Pacific region, the current market capitalization of public REITs is only $320 billion, representing only 1% of GDP, compared to the market capitalization of US public REITs of over $1.3 trillion. dollars, or more than 5% of GDP. As a result, the REIT market in the Asia-Pacific region is expected to grow rapidly and, at comparable levels in the United States, represent a market opportunity of over $1 trillion for investors and market participants.

As one of the largest REIT managers and sponsors in Asia Pacific and a pioneer in the Singapore REIT market, ARA is extremely well positioned to seize this emerging opportunity.

According to Preqin, alternative assets in this region are expected to grow at a CAGR of 25.2% over the next five years. ARA’s continued push into logistics, data centers, infrastructure and real estate lending through its private equity business further positions it to capture significant capital inflows as institutional investors look to Asia for growth. growth.

SMBC said, “We look forward to working with ARA to support their lean business model and expansion plans, which align very well with SMBC Group’s own growth strategies in Asia. ARA’s diversified business, wide range of investment offerings and AUM’s scale are unmatched in Asia, so we are delighted to enter into this mutually beneficial strategic partnership, which we hope will help further strengthen ARA’s competitive position and market leadership.

With the cash injection from this latest funding round, ARA will continue to execute on its “Raise, Invest, Manage and Build” strategy. Group-wide, he has raised more than $16 billion in equity capital since 2016, which has supported a gross transaction volume of acquisitions, divestitures and development activities of nearly $20 billion. during the same period. ARA uses an investor-operator model to manage its investments and add value at every stage of an asset’s life cycle. Its real estate asset management capabilities span the entire real estate value chain and reflect its competitive advantage. Over time, ARA has built a demonstrable track record in growing its business and ultimately creating value for all of its stakeholders.

A focus on sustainability is also an integral part of ARA’s growth strategy, which takes a holistic approach by integrating ESG considerations into its business operations. ARA’s initiatives on the sustainability front include joining as a signatory of the Net Zero Carbon Buildings Pledge under the World Green Building Council and adopting the United Nations Principles for Responsible Investment ( UNPRI). To date, ARA Group has secured green loans exceeding $1 billion and is looking to do more in the area of ​​green finance. ARA is also an active participant in GRESB, and many of its listed REITs and private real estate funds have achieved 5 green star ratings.

Carol M. Barragan