28-11-2015, 10:18 AM
I think it is quite clear now that the "asset light" good times where ARA can roll out REITs easily have ended.
REIT launches are still possible. They lack a presence in major REIT markets such as Japan, Australia. Given their current expertise in office, shopping and logistics REITs, it is possible to roll-out a number of REITs in each market. The problem is in sourcing for properties to inject into their REITs, as Greengiraffe pointed out. Finding a right platform to enter the market is also difficult, unless they encounter opportunities such as Macquarie Korea.
The REIT business growth going forward should be slow and incremental, by building networks and connections, rather than fast and furious by launching mega REITs.
As for private funds, it is a very common practice for General Partners (ARA) to be required to invest alongside their Limited Partners (e.g. Calpers). This should be the norm rather than exception. Many private funds have long life-spans of 7-10 years or more. While the capital can be recycled from old funds to new, it will take a while for this to happen. In the meantime ARA has to fund ways to fund growth. Even if they can find capital, they are also constrained by restrictions, such as being unable to launch another ADF until the latest incarnation is 75% invested.
I am not saying this is a bad business, just that the company is entering a phase of slower growth.
Happy to be corrected
(vested)
REIT launches are still possible. They lack a presence in major REIT markets such as Japan, Australia. Given their current expertise in office, shopping and logistics REITs, it is possible to roll-out a number of REITs in each market. The problem is in sourcing for properties to inject into their REITs, as Greengiraffe pointed out. Finding a right platform to enter the market is also difficult, unless they encounter opportunities such as Macquarie Korea.
The REIT business growth going forward should be slow and incremental, by building networks and connections, rather than fast and furious by launching mega REITs.
As for private funds, it is a very common practice for General Partners (ARA) to be required to invest alongside their Limited Partners (e.g. Calpers). This should be the norm rather than exception. Many private funds have long life-spans of 7-10 years or more. While the capital can be recycled from old funds to new, it will take a while for this to happen. In the meantime ARA has to fund ways to fund growth. Even if they can find capital, they are also constrained by restrictions, such as being unable to launch another ADF until the latest incarnation is 75% invested.
I am not saying this is a bad business, just that the company is entering a phase of slower growth.
Happy to be corrected
(vested)