Centurion Accommodation Reit prices mainboard IPO at 88 cents, locks in 16 cornerstone investors
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There was overwhelming support from Centurion Corp shareholders for the planned listing of its upcoming real estate investment trust.
PHOTO: CENTURION
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SINGAPORE - Student and workers’ accommodation provider Centurion Corp will spin off several choice properties into a real estate investment trust (Reit) to be listed on the Singapore Exchange mainboard.
It will be the second Reit listing on the local exchange in 2025 when it goes public on Sept 25, according to Bloomberg.
Japan’s NTT DC Reit, which holds data centres in its portfolio, listed in Singapore in July. It was the largest initial public offering (IPO) here in four years.
Centurion will offer a total of 262.2 million units – comprising an international placement tranche of 248.96 million units and a public offering of 13.2 million units – at 88 cents a unit, according to its preliminary prospectus lodged on Sept 11.
The IPO aims to raise gross proceeds of approximately $1.5 billion.
The initial Reit portfolio will hold 14 Centurion properties worth $1.8 billion, comprising five purpose-built worker accommodation assets in Singapore, eight purpose-built student accommodation assets in Britain and one in Australia.
Another student accommodation property will be added to the portfolio once its acquisition is completed, bringing the portfolio’s value to around $2.1 billion.
Following the offering, Centurion Accommodation Reit will have 1.7 billion issued units, of which 787.4 million units will be held by Centurion Holdings, the Reit’s sponsor, and 614 million units held by 16 cornerstone investors. These include Amova Asset Management, DBS Bank, Eastspring Investments and Lion Global Investors.
This comes after Centurion Corp won overwhelming support at an extraordinary general meeting (EGM) on Sept 10 for its planned listing of Centurion Accommodation Reit and related transactions.
These include the divestment of selected assets into the new Reit
Approval was also sought for the payment of expenses tied to the transaction.
Nearly 100 per cent of the votes cast by shareholders in person or by proxy gave their nod of approval. The shares represented by these votes accounted for 420.7 million shares, while shareholders holding 7,200 shares voted against.
Speaking to the media after the EGM, Centurion chief executive Kong Chee Min said shareholders were “very positive” about the upcoming Reit.
While Centurion has had a “phenomenal” two years, especially when compared with the performance of other asset classes, Mr Kong said the group has a limit to how much further it can grow.
The upcoming Reit will enable Centurion to expand its assets under management (AUM) even further and hopefully accelerate its growth, he said.
“We’ve been growing (our portfolio) since 2011... up $2.6 billion over a span of 14 years. With the Reit, we hope to shorten that.”
Capital recycling from the Reit will also support a more sustainable growth model, said Mr Kong.
The chief executive acknowledged shareholder concerns raised at the EGM, that divesting Centurion’s top assets to the Reit could leave the group with less attractive ones.
In response to that, Mr Kong said: “We have 37 operating assets and are putting only 14 (suitable ones) into the Reit.”
Centurion will still be “heavily invested” in the Reit, while retaining the remaining assets, he said.
“I would say in the short and medium term, yes, there will be a reduction in profitability. But in the longer term, (growth) will be much better and more sustainable, and it will be faster as well.”
The Reit will also not feature Centurion’s Malaysian properties, given emerging market risk, said Mr Kong.
Nonetheless, the country remains a key market with long-term growth potential, he said.
The listco also intends to double its bed capacity in Malaysia over the next five years, which would significantly enlarge its AUM.
When asked about the rise in share prices following the Reit announcement, and whether such levels were sustainable, Mr Kong said the rally reflects recognition of the company’s true value, from previously undervalued levels to one that was closer to its fair value.
“For shareholders, staying with Centurion is something positive,” he added, “because then they will be exposed to stable recurring income from the Reit and also Centurion’s growth story (from its expanding portfolio), plus those fees that we’ll be able to derive from managing the Reit.”
To align Centurion with shareholders, Mr Kong said management fees will be taken as a percentage of the Reit’s distributable income, instead of its AUM.
Shares of Centurion closed at $1.80 on Sept 11, up 2.3 per cent. THE BUSINESS TIMES
