Centurion Accommodation REIT IPO-Preliminary Thoughts and Highlights (Part 1).

Centurion Corporation Holdings will be launching the IPO of its workers' dormitories and UK student accommodations soon. It will be known as the Centurion Accommodation REIT ("CAREIT"). CAREIT will be paying out a very attractive 7.66% distribution yield for FY2026 and 8.57% for FY2027 based on S$0.88 per unit. The targeted listing date that its management are eyeing on seems to be early October 2025. I will do up another post after looking through its prospectus filed with the MAS- it is a jaw- dropping 1240 pages thick- before sharing my final thoughts in subsequent part 2 post of whether to get into this IPO. Preliminary highlights as follow:   

1. The enigmatic "Mandai Expanded Capacity" Terminology-Poorly Crafted and Misleading Propsectus.

In the prospectus, one will keep seeing this strange term appearing (first appeared on page 100) and talking about the impact of "expanded" capacity but then the definition appears quite the opposite as it is loosely worded as a contradictory reduction of bed capacity. So what the heck is this term talking about? 

Definition of  "Mandai Expanded Capacity"

It was further mentioned in the prospectus that the Mandai Expanded Capacity Consideration” means the consideration of S$34.0 million payable in relation to the Mandai Expanded Capacity. Such consideration is payable when the Mandai Expanded Capacity (i.e. the additional 1,980 beds) is operational for immediate occupation (Please see Page 288 of the Prospectus for details)

Unless otherwise stated, all information in this Prospectus relating to the Properties, such as Agreed Property Value, Appraised Value, aggregate purchase consideration, number of beds and portfolio information, excludes the Mandai Expanded Capacity and the Mandai Expanded Capacity Consideration.

2.  So what the heck is "Mandai Expanded Capacity" then?

<Quote>

"Mandai Expanded Capacity" refers to the 1,980 beds in Westlite Mandai which were supposed to be removed upon completion of an additional block. 

</Quote>

Now, this becomes a real test of one's English language. My initial understanding is that the essence and emphasis is on the 1,980 beds that will be eventually removed.

3. Nope, my initial understanding is totally wrong!

After looking through the financial projection on page 200 and also number of beds including and excluding comparative in Mandai property on page 291, the essence as aforesaid mentioned in point 2 above totally does not align with the financial information.

 

Personally, I thought that the investment banker or staff crafting the definition of the Mandai Expanded Capacity ought to be shot. They are actually referring to 2 points here:

(i) it includes in the 1,980 beds in Westlit Mandai that was supposed to be removed but still taken in as revenue generating since the new government regulation only come into effect after 31 December 2030.

(ii) on top of (i) above, the term also includes in an additional 3,696 beds from the 4th block that is still in development and expected temporary occupation ("TOP") in January 2026.

The original definition is totally misleading and contradictory to different parts of the prospectus and not transparent at all.  

So the point is that the financial projection on page 200 on Distributable Income actually includes in the assumption of the successful leasing out of beds in phases in the newly built 4th block of Westlit Mandai. The risk here of course then is whether the projection is overly optimistic.   

3. Management Fees.
The base management fees and incentive structure is quite similar to the Mapletree Pan Asia Commercial Trust. Other REITs are on the AUM model. So think still in line and a fair model.

4. The Enlarged Portfolio.
This is the other strange part that keep popping out on "enlarged" and normal portfolio that forms the REIT. Basically, this is referring to the Epissod Macquire Park Student Accommodation that is currently still being built. But it will be added into CAREIT after it is listed as it is about 6 months away from completion.

Parting Thoughts.

Personally, I am actually annoyed at the poorly and loosely crafted "Mandai Expanded Capacity" that leads to a lot of mental acrobatics which gives a rather poor impression of the entire IPO. I will do a part 2 post of my personal thoughts on whether I am jumping into this upcoming IPO after diving through the prospectus.