Huge performance fees boost ARA's Q3 profit

SINGAPORE - Huge performance fees for real estate investment trust (Reit) manager ARA Asset Management bumped up its third-quarter net profit by 53 per cent from the previous year.

The company said in a statement on Monday that it earned a performance fee of about $16.1 million from the ARA Harmony Fund, which owns Suntec Singapore Convention and Exhibition Centre. City Harvest Church owns an indirect 39.2 per cent stake in this fund.

That bumper fee propelled its net profit up 53 per cent to $30.7 million for the three months to Sept 30 from the preceding year.

Total revenue for the quarter also shot up 60 per cent from the previous year to $52.8 million.

Group chief executive John Lim said that the Harmony Fund's strong performance "underscores our core competence in driving better asset performance". The fund's internal rate of return, after deducting about $16.1 million in performance fees, worked out to 26.3 per cent over the first five years of the fund's existence.

ARA's management fees in the third quarter went up 15 per cent to $32 million from last year, mainly due to Reit base and performance fees.

The asset manager said that the higher Reit management fees were partly because the its Reits' properties have performed better after renovation and have therefore gained in value.

The group's earnings per share came in at 3.63 cents for the third quarter, up from 2.37 cents the previous year. Net asset value per share was 36.33 cents as at Sept 30, up from 32.84 cents as at Dec 31.

ARA shares fell half a cent to $1.705 on Monday.