Centurion Accommodation REIT (CAREIT) will be the first pure-play living accommodation REIT to list on the Singapore Exchange.

The Singapore IPO opens at 10 pm on Thursday, and closes at 12 pm on Tuesday

 

[SINGAPORE] Centurion Accommodation Real Estate Investment Trust (Reit) will launch its initial public offering (IPO) on Thursday (Sep 18) evening, set to be the Singapore Exchange&rsquo s (SGX) second-biggest mainboard listing this year. 

 

It is offering 262.2 million new units, made up of an international placement tranche of 249 million units and a public offering of 13.2 million units, at S$0.88 apiece. 

 

The IPO aims to raise about S$771.1 million from the public offer and also 614 million units issued to 16 cornerstone investors. Sponsor Centurion Holdings will hold 787.4 million units.  

 

Its initial portfolio will include 14 assets, with five purpose-built workers&rsquo accommodation (PBWAs) in Singapore, eight purpose-built student accommodation (PBSA) in the UK, and one PBSA in Australia totalling S$1.8 billion. This will go up to S$2.1 billion when the Reit acquires a second Australia student housing asset, which is currently under development, following the listing.

 

Centurion Accommodation Reit will have 1.7 billion issued units, of which 787.4 million units will be held by Centurion Holdings, the Reit&rsquo s sponsor, and 614 million units will be held by the 16 cornerstone investors. 

 

Chief executive of Centurion Accommodation Reit&rsquo s manager Tony Bin believes there are strong growth prospects for the Reit, driven by resilient demand for PBWA in Singapore, and a rising need for student housing in the UK and Australia. 

Its occupancy rates remain &ldquo relatively strong&rdquo , and the manager foresees this will persist in the medium term, said Bin. Between FY2022 and FY2024, the trust&rsquo s PBWA assets recorded an average occupancy rate of more than 97 per cent, and average compound annual rental growth rate of 26.3 per cent. 

 

In the student housing market, occupancy rates in the past three financial years averaged at around 94 per cent and average rent compound annual growth rate was 11.3 per cent. 

 

The manager also projected that distributable income will come in at S$114.8 million in 2026, and rise 6.6 per cent to S$122.4 million in 2027.

 

Bin added that the Reit&rsquo s Singapore-centric portfolio provides a strong base on stable income. Currently, Singapore assets account for around 73 per cent of its portfolio in net property income, and about 64 per cent of its property value. 

 

&ldquo We see this as a tremendous advantage compared to some recent listings that were in US dollars,&rdquo he said, noting that Centurion Accommodation Reit will be denominated in Singapore dollars. 

 

While the Reit will initially focus on PBWA and PBSA, its investment mandate covers the broader living sector. This could include exposure to other markets, in terms of geography (excluding Malaysia) or sectors such as build-to-rent, senior housing and co-living, said Bin. 

 

The plan is to let the sponsor explore these opportunities first, he said. &ldquo If it works out well for them, and they find that they can invest into a building or buy land and develop, then it&rsquo s something we (can consider). 

 

&ldquo For us, we need stable income (and) stable cash flow, so we can&rsquo t take the development risk and uncertainty,&rdquo said Bin. 

 

The manager&rsquo s main priority is to optimise its initial portfolio, potentially acquiring assets with stabilised cash flows, good growth opportunities, and those with asset enhancement opportunities to increase investors&rsquo yield, he added.

 

It will also prioritise prudent capital management, including diversifying beyond bank debt and hedging foreign currency cash flows, said Bin. &ldquo A multi-prong (approach) &ndash so for the next two years, we&rsquo ll be kept relatively busy.&rdquo  

 

Centurion Accommodation Reit&rsquo s Singapore public offer opens at 10 pm on Thursday, and closes at 12 pm on Tuesday. The counter is expected to start trading at 2 pm on Sep 25. 

 

It follows the debut of Japan&rsquo s NTT DC Reit in July, with gross proceeds of US$773 million raised &ndash marking the Republic&rsquo s largest IPO in four years.