Centurion Accommodation REIT IPO- 3 Reasons To Stay Away (Part 2).

Honestly speaking, I think that it is too pre-mature for Centurion to launch their Centurion Accommodation REIT ("CAREIT"). A REIT is supposed to hold investment properties that are stable and has a good historical track record of generating an amount of rental income, so I was very surprised that some of its assets that just came online from development or redevelopment are being pushed directly into CAREIT for a lightning pace listing. For example, there is a student accommodation that is still being developed in UK but will be injected into CAREIT within 6 months after its anticipated IPO date (estimated to be Oct 1, 2025). The management should have waited at least 1 year till end 2026 to allow such newly developed property to be pumped into CAREIT so that it can prove its worth. Then there is also the enigmatic variable called the "Mandai Expanded Capacity" (please see my previous post) that makes the entire prospectus hard to understand due to it being loosely crafted. Seriously, it makes me wonder whether the Centurion management team is facing a dire cash crunch crisis as they seemed desperately in need of cash for working capital and trying so hard to get CAREIT listed on SGX as soon as possible.

1. Investment Property With No Proven Track Record Being Pushed into CAREIT + Weaker Rental Rates across some properties. 

(i) Unstable and concerning lower rental rates for student accommodation?

For dwell Princess Street, dwell Cathedral Campus, dwell Archer House and dwell Hotwells House, there is a reduction in NPI for projected FY2026 and FY2027 relative to FY2024 due to reductions in rental rates. Does this mean that there is a correction in student accommodation rental market or are there issues with the properties? Will this lead to a fall in its other UK properties going forward?

(ii)  Epiisod Macquire Park property in UK still being built but to be pushed into CAREIT upon TOP.

Epiisod Macquarie Park is one of the newer premium student accommodation (PBSA) assets under development by Centurion, and slated to be included in the CAREIT after completion. The problem here is that Centurion should have held on to this property while awaiting it to be more stabilised before injecting it into CAREIT. Instead, it is pushing CAREIT unit-holders to take on the risk of a new property that may not perform as well as expected. 

(iii) 4th block of worker dormitory with 3,696 beds still being developed at Mandai

While this can be termed as an asset enhancement, the fact remains that this is a significant new development in its Mandai property portfolio, and it will need to be filled to match financial projection.

2. Weakness in Financial Strength of CAREIT's Sponsor Centurion.

Unfortunately, despite the fantastic performance in its share price, Centurion Corporation Holdings is still relatively tiny in scale relative to the Big REIT Sponsors in Singapore. Centurion is much smaller compared to heavyweights like Mapletree, CapitaLand, Keppel or Frasers.

Market cap (as of mid-2025) is approximately S$1.1–1.2 billion, versus tens of billions for the mega sponsors.

So in relative terms, Centurion is a mid-cap niche operator and not a “mega-sponsor”. During times of financial crisis of CAREIT, there will always be lingering doubts on the mind of investors on whether Centurion will be able to save its own REIT. There is no free lunch, hence the high distribution yield on offer of around 7.66% to 8.57% in projected FY2026 and FY2027 respectively (based on S$0.88 per share) to entice investors for subscription into CAREIT which reflects the substantial market risk premium. 

3. Workers accommodation is significantly more than student accommodation

This is a huge bugbear for me. Personally, my own view is that student accommodation supporting the education industry is probably the most resilient business out there while worker accommodation industry I thought is rather cyclical in nature that follows the boom and bust of the construction industry. If construction demand slowed down, there is no point in business owner keeping too many workers in the dormitory. I am utterly disappointed that the student accommodation component (even if the sponsor throws in Epiisod Macquire Park) is such a tiny proportion of the entire CAREIT. It is not even 50% of the entire portfolio. My preference would be to wait for a REIT that has 100% holdings in student accommodation.

Only a small fraction is Student Accommodation

Accommodation Industry Is NOT weatherproof

One final thoughts on this point is that since we have just been through COVID, the hard truth is that not even student accommodation industry resilience can save it during times of pandemic but nonetheless, the probability of another pandemic occurring in our lifetime is on the low side based on history.

Parting Thoughts

I am actually lukewarm with regard to my overall feel for this IPO and not particularly excited. With the projected cuts in interest rate and recovery of the REIT market, I think that CAREIT should do fairly well in its IPO given its low leverage ratio of 30% even after targeted acquisition of the newly developed Epiisod student accommodation into its enlarged portfolio- It does gives it additional room for further yield accretive acquisition. Nevertheless, I am still troubled by the weaker financial strength and capabilities of the sponsor during crisis relative to the Singapore government linked sponsors.  

Put it this way, if Mapletree Investments were to list their student accommodation business for IPO, I will definitely be subscribing for it. Summarising, I am going to give this IPO a miss while waiting for a more suitable investment opportunity. 

[P.S: For those interested in CAREIT IPO, note that it opened at 10pm on September 18, 2025 (Thursday) and will close by 12pm on September 23, 2025 (Tuesday). It will commence trading at 2pm on September 25 , 2025 (Thursday).]