10 l COMPANIES THE BUSINESS TIMES WEEKEND SATURDAY/SUNDAY, NOVEMBER 23-24,2013


Straits Trading aims to set up

Blackstone-style property fuiids

Asia's ageing population seen giving a boost

to Reits, which offer a steady form of income

gion. Blackstone, which has been among the biggest buyers of property in Australia and India, is seeking more investment in Chi­
The creation of new Reits comes as the number of retirees increases in the region, boosting demand for investments that of­

Singapore

STRAITS Trading Co, an investor in Singapore's biggest publicly traded property trust manager, is planning "Blackstone-like" funds as Asia's appetite for real estate investments increases.
Straits Trading last month in­ vested in ARAAsset Management Ltd, the property trust manager partly owned by billionaire Li Ka-shing, and set up a joint ven­ ture with ARA's chief executive officer John Lim to invest in prop­ ertyfunds.

· The funds, with an eight-to-

10-year time-frame, will seek to
follow the model of Blackstone Group LP, the world's biggest manager of alternative assets in­ cluding real estate, according to Chew Gek Khim, executive chair­ man of Straits Trading.
"Why can't we have the equiv­
alent of a Blackstone in Asia? You have the money, you buy the real estate, you Reit it, you exit," she said in a recent interview. "We have not seen this done in Asia before. There's a market for it."
Plans for the funds come as cross-border property transac­ tions in the Asia-Pacific region climbed 5.5 per cent in the third quarter to US$5.2 billion, accord­ ing to CBRE Research.
Commerciai real estate trans­ actions in the region rose 11 per cent to US$21.6 billion from the June quarter, the property broker- age said. .
Reits have raised US$2.7 bil­ lion through initial public offer­ ings in Singapore, about a third of ali Reit IPOs in the Asia-Pacific this year, according to data com­ piled by Bloomberg.
Mapletree Greater China Com­ merciai Trust, which raised US$1.4 billion in its February IPO, was the second-biggest fund­ raiser in the Asia-Pacific this year after the Nomura Reit in Japan.
Meanwhile, Blackstone CEO Stephen Schwarzman is stepping up real estate investment in Asia, tapping the market for US$4 bil­ lion for Blackstone's maiden property fund focused on the re-
na as rising incarne and urbanisa­
tion drive demand.
Under the agreement with ARA, Singapore-based Straits Trading will buy a 20.1 per cent stake in the trust manager for
$294.4 million in cash and shares
from Mr Li's Cheung Kong Invest­
ment Co and Mr Lim. The trans­ action will make Straits Trading the biggest shareholder of ARA.
The Blackstone-style funds will be created through the new company formed with Mr Lim, and the venture wiil have capitai commitment of as much as $950 million, according to the an­ nouncement last month.
Straits Trading, a landlord in Singapore's financial district, has real estate assets worth $830 mil­ lion, Ms Chew said.
"The key will be on execu­ tion," Terence Khi at UOB Kay Hi­ an Pte said. "ARA's focus is shift­ ing away from launching new Re­ its towards private funds due to the impact of tapering and in­ creased competition."
fer a stable dividend.
The number of people who will exceed 60 years old will reach 463.1 million_by 2017, up from 391.3 million last year,ac­ cording to data compiled by Age­ ing Asia Pte.
"Logically, there should be a demand for Reits in Asia," Ms Chew said. 'We have an ageing population and Reits are a very steady form of income."
The joint venture is stili decid­ ing on where the new properties will be located. Other than Singa­ pore, the funds may seek invest­ ments in properties in Europe, Malaysia and Australia, Ms Chew said.
Under the agreement with ARA, Straits Trading's invest­ ment property portfolio will be managed as a separate account, according to the statement.
Straits Trading shares have fallen 2.7 per cent this year, com­ pared with the 8 per cent slump in the measure tracking propetty stocks in Singapore.

MSCHEW

'What we're trying to do is create a ... platform for monetizing

real estate. The environment is in

our favour.'

The company had cash pro­ ceeds of $508.8 million after ac­ cepting United Engineers Ltd's higher offer for its 44.58 per cent stake in WBL Corp, giving Straits Trading more access to capitai for its property funds.
"What we're trying to do is cre­ ate a whole ecosystem and a plat­ form for monetizing real estate," Ms Chew said. "The environ­ ment is in our favour." Bloom­
berg

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