Singapore’s ARA Sets Up European Real Estate Debt JV in London

ARA Asset Management took another step toward establishing a global footprint this week when the Singapore-based firm announced a European joint venture focused on real estate debt opportunities.

The Warburg Pincus-backed fund manager has reached an agreement with London-based Venn Partners LLP “to capitalise on the real estate credit market in the (European) region,” the company said in a statement to the Singapore stock exchange on 23 December.

ARA is establishing the European debt investment platform five months after it set up an equity fund management partnership in the UK together with London-based Dunedin Property Asset Management.

Adding European Debt to a Fund Battery

ARA, which manages more than $83 billion in assets globally, has dubbed the proposed joint venture ARA Venn, and says that the new entity will create and manage funds and other ownership vehicles to invest in real estate credit strategies in Europe.

To implement the debt strategy, ARA, which directly manages six Asian-listed REITs in addition to its array of private funds, has chosen to work with a European partner that has focused on debt deals for over a decade.

Venn, which is led by managing partners Gary McKenzie-Smith and Paul House, has made its mark as one of a number of non-bank lenders to have entered the mortgage market in the Netherlands, and just last month sold a majority stake in its Dutch mortgage platform Venn Hypotheken to local asset manager NN Investment Partners for an undisclosed amount.

Subject to regulatory approvals, ARA’s deal with Venn is expected to complete by the first quarter of 2020.

A Strategy With Global Potential

ARA Venn is the Singaporean firm’s first major foray into real estate credit strategies, which the firm headed by veteran investor John Lim sees as a globally scalable business, according to sources familiar with ARA’s strategy.

In announcing its decision to buy into Venn’s mortgage platform last month NN Investment Partners praised the company’s ability to originate mortgages as well as its capacity to transform those loans into securities. ARA representatives declined to comment further on the company’s expectations from its partnership with its new UK partner.

ARA in March 2018 set up a European desk under the management of former Standard Chartered executive Mark Ebbinghaus, over one year before the company set up its ARA Dunedin equity fund management platform.

ARA Continues Geographic Expansion

Having been helped out of the blocks by investment from Hong Kong billionaire Li Ka-shing, ARA has traditionally focused on opportunities in Asia, but like is super-investor backer has branched out into new markets in recent years.

In 2013 ARA moved into northern Asia with a buyout of Macquarie Real Estate Korea, which the Singapore firm has since used to set up a set of specialised investment vehicles.

In March 2018, ARA paid $317 million to acquire a 19.5 percent stake in ASX-listed Cromwell Property Group, after making its first investment in Australia in 2015. That Aussie relationship has since frayed, however, with Cromwell in a statement last month lashing out at the Singaporean investor’s attempt to nominate a director to Cromwell’s board after ARA raised its stake in the company to 20.5 percent in early November.

At present, ARA has assets in 100 cities across 23 countries, according to its website, with offices in Hong Kong, Malaysia, mainland China, South Korea and Australia, in addition to its home country.