Centurion confirms accommodation Reit listing with S$1.8 billion portfolio value

[SINGAPORE] Centurion Corp announced on Monday (Jul 14) that it has entered into agreements for the proposed listing of its new real estate investment trust (Reit) – named Centurion Accommodation Reit – which is slated for the mainboard of the Singapore Exchange.

The Reit will cover income-generating assets in the purpose-built worker accommodation (PBWA), purpose-built student accommodation (PBSA), and other long-stay lodging segments globally, excluding Malaysia.

The manager of the Reit will be Centurion Asset Management, a wholly owned unit of Centurion Corp, while Perpetual (Asia) will serve as trustee.

The proposed initial public offering (IPO) will include 14 assets at launch, consisting of five PBWA properties in Singapore, eight PBSA properties in the UK and one PBSA property in Australia. Following the completion of a deferred acquisition of the Epiisod Macquarie Park development in Sydney, the enlarged portfolio will comprise 15 assets with a total of 27,602 beds.

The agreed property value for the initial portfolio stands at over S$1.8 billion, rising to around S$2.1 billion upon the completion of the Sydney asset, said the company in a statement.

The PBWA assets have 21,282 beds and the PBSA assets have 2,772 beds as at Mar 31.

Centurion Corp expects to divest about S$1.2 billion worth of its stake in the initial portfolio to the Reit. This comprises around S$497 million in cash and about S$687 million in the form of sponsor units issued by the Reit.

Of the estimated cash proceeds, the group intends to use around S$1.2 million to cover professional fees and other expenses incurred by Centurion due to the IPO of Centurion Accommodation Reit – excluding fees incurred by the Reit itself. 

Furthermore, S$10 million will be used to compensate Lian Beng Group for foregone asset management fees, which would have been shared among Westlite Mandai and Westlite Ubi. Both will now be managed solely by Centurion Asset Management. 

Nearly £5 million (S$8.8 million) will be allocated to fund asset enhancement activities and certain additional works on the PBSA assets in the UK, which will be in Centurion Accommodation Reit’s portfolio. 

A sum of S$7.7 million will be used to pay capital gains tax arising from the asset sales, and the remaining balance will be deployed for debt repayment and funding of future acquisitions and development of new PBWA or PBSA assets, or assets for other accommodation purposes.

Divestments

The group will divest its 100 per cent interest in Westlite Toh Guan, its 100 per cent interest in Westlite Woodlands and its 51 per cent interest in Westlite Ubi to Centurion Accommodation Reit.

Meanwhile, Lian Beng Group will divest the remaining 49 per cent interest in Westlite Ubi to Centurion Accommodation Reit.

In relation to Westlite Mandai, Lian Beng-Centurion (Dormitory) will surrender its existing lease to Lian Beng-Centurion (Mandai). The Mandai vendor, in which the group owns a 45 per cent interest, will grant a leasehold estate for a term of 32 years, with an option to renew for 30 years, to Centurion Accommodation Reit. In addition, the existing tenancy agreements entered into by the Mandai master tenant will be assigned to the Reit.

Through the UK vendor, the group will divest its roughly 99.9 per cent interest in the eight PBSA assets located in the UK to Centurion Accommodation Reit.

A third party vendor will, through the UK vendor, divest the remaining 0.1 per cent interest in the eight PBSA assets to the Reit. The UK vendor will receive the purchase consideration for the divestment of these PBSA assets in the form of consideration units.

The group will divest its 100 per cent interest in dwell East End Adelaide in Australia to the Reit, too.

Following the IPO of the Reit and upon the practical completion of Epiisod Macquarie Park which is under development, the group will divest its 25 per cent interest in the park. Centurion Properties, a controlling shareholder of the company, will then divest the remaining 75 per cent interest in Epiisod Macquarie Park to the Reit.

Centurion Corp called for a trading halt on Monday morning. Its shares closed flat at S$1.76 on Friday.