ARA Asset Management's profit dives 23% to S$19.6m

Plus a 26% decline in topline.

According to DBS, strong earnings quality in 3Q12 results. ARA’s reported 3Q12 PATMI of S$19.6m (-23% y-o-y) on top of a 26% decline in topline to S$33.1m.

Here's more from DBS:

While 3Q12 performance was lower y-o-y, it was largely due to one off performance fees from ARA Harmony Fund that was booked a year ago.

A positive note is that ARA’s recurring revenue streams (Management Fee income) continue to grow and was up 14% y-o-y, largely due to increased REIT AUM with the completion of Fortune REIT’s acquisition of Belvedere Square and Provident Square, and Suntec REIT acquisition of the additional interest in Harmony Investors Group Limited.

Dynasty REIT’s delayed listing a short term setback; plans to realise initial investments in Asia Dragon Fund 1 is on track.

While the delayed listing of ARA-backed Dynasty REIT could put a dent on the group plans of listing the first Rmb platform in Singapore and at the same time locking in the performance fees for Asia Dragon Fund 1, the group continues to re-look plans for potential exit options for the remaining assets in the fund.

This could be through potential asset sales and even a REIT listing in the near future. If needed, ARA could extend the life of ADF1 by 1 year (till 2015) but management is not looking at this option as a base case scenario.

REIT acquisition to be near term catalyst. ARA’s managed REITs remain on the lookout for acquisitions, which will translate to increasing the recurring fee base for the group if executed upon.

Potential deals that could be concluded include the landmark MBFC phase 2 transaction (by Suntec REIT), Cache’s acquisition from sponsor CWT’s pipeline, while both Fortune REIT and Prosperity REIT are understood to be reviewing potential targets.