Dasin Retail Trust up 2.8% on news of ARA's potential stake purchase in trustee-manager

UNITS of Dasin Retail Trust rose two Singapore cents or 2.8 per cent to 74.5 cents as at 11.41am on Thursday, on news that ARA Asset Management could acquire a 5 per cent stake in the Chinese mall landlord, and a 50 per cent stake in its trustee-manager.

The Business Times (BT) understands that this is a move to bring international partners to the underloved Chinese-sponsored Reit sector. ARA Asset Management would bring to the table its network of institutional investors, banking relationships, and best practices such as in corporate governance, so that the trust sponsor, Zhongshan Dasin Real Estate, can focus on operating and improving the assets.

The board of Dasin Retail Trust on Wednesday evening said that it has been informed by Zhang Zhencheng, chairman and controlling shareholder of the trustee-manager, that he had inked a non-binding memorandum of understanding with ARA Capital on April 21 to pursue a strategic partnership.

ARA Asset Management, the parent company of ARA Capital, is an Asia-Pacific real assets fund manager which operates a diversified platform across assets, strategies and geographies.

It has about S$116 billion in gross assets under management globally. It also manages three Reits in Singapore - Suntec Reit, ARA Logos Logistics Trust and ARA Hospitality Trust.

According to Mr Zhang, the strategic partnership will involve an acquisition by ARA Asset Management, through its affiliates, of about 5 per cent of the total issued units in the trust, and a 50 per cent stake of the total issued share capital in the trustee-manager.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

"By bringing on board ARA Asset Management as a shareholder of the trustee-manager, the parties plan to work seamlessly to take the trust into the next stage of growth and also explore in good faith other partnership opportunities," the board said.

In a recent interview with BT, Dasin Retail Trust's chief executive officer Wang Qiu had said that she targets to double the market capitalisation of the business trust to S$1 billion in three to five years' time. One way she plans to do so is through inorganic acquisitions of its sponsor Zhongshan Dasin Real Estate's assets, to which it has the right of first refusal.

The business trust's units are down 2.5 per cent year to date, and have generated negative total returns of 5.1 per cent over the same period.

The terms of the partnership remain subject to legally binding definitive agreements being signed, which is in turn subject to relevant approvals or waivers being obtained.

DBS is the financial adviser to Mr Zhang and the Zhang Family Trust in relation to the partnership.