Avery Lodge was built in 2009. (Image: Google Maps)
Blackstone is marketing a portfolio of foreign worker dormitories in Singapore after holding the properties for more than a decade, Mingtiandi has learned.
The private equity giant has appointed Barclays to market the Avery Lodge portfolio, a set of four purpose-built worker compounds spanning 1,709 units, according to sources who spoke with Mingtiandi this past week.
The guide price for the portfolio is said to represent a premium to the S$380 million Blackstone paid to acquire the assets from Morgan Stanley in 2010, based on records seen by Mingtiandi, with sources expecting an expression of interest campaign to run from mid-June through September.
With worker housing which was emptied during the pandemic now overflowing as Singapore brings in labourers from India, Myanmar and other nearby countries for construction and production, worker housing can deliver high yields for investors looking for rental residential opportunities.
20,000-Bed Portfolio
Industry sources see Blackstone’s decision to sell as a typical exit strategy to recycle capital after holding onto the portfolio for more than a decade, with the timing of the sale seen as taking advantage of the strong demand for accommodation in the city-state.
Stephen Schwarzman’s Blackstone is ready to sell off its Singapore worker housing (Getty Images)
Morgan Stanley had invested roughly S$260 million assembling the portfolio, having purchased three of the properties from Singapore industrial land regulator, JTC Corp in 2007, and developed the fourth and largest asset, Avery Lodge, two years later, according to media reports at the time.
Located at 2D Jalan Papan in Jurong in western Singapore, Avery Lodge has 486 units across five buildings and was built in 2009 as an “upmarket” worker housing compound with each unit having its own living, dining and kitchen areas.
About five kilometres (3.1 miles) further west is the Kian Teck Dormitory in Pioneer neighbourhood, which has 411 units across 11 buildings. The basket of properties also includes the 404-unit Tampines Dormitory in northeastern Singapore, as well as the 408-unit Woodlands Dormitory in the northern fringes of the island. All four are situated near industrial clusters.
The portfolio, which can accommodate over 20,000 beds or more than 10 beds per unit, provides a scalable worker housing platform, which can be improved further through asset enhancement initiatives, according to analysts.
Blackstone declined to comment on the news while Barclays had not responded to inquiries from Mingtiandi by the time of publication.
Dormitories on the Rise
Data from Singapore’s labour ministry shows the country’s foreign workforce climbed 8 percent over the past five years, growing from 1.39 million in 2018 to over 1.5 million last year. Those workers are brought in for infrastructure projects, factory production and other labour-intensive requirements, with worker housing generating high yields for owners as the rising number of imported labourers outstripping the limited supply of dormitories.
To deal with the tight supply, Singapore authorities In September of last year began asking companies to build their own accommodation for their foreign employees.
Some 25 new purpose-built dormitories yielding 145,800 beds have been built in the past ten years, with at least 47,000 more beds scheduled to be completed across seven projects over the next four years, based on the data from the Ministry of Manpower as of August 2023.
Among the major investors in the sector is Centurion Corp with the SGX-listed developer and operator holding nine worker accommodation assets with a total capacity of over 34,700 beds.
In February of this year, co-living investor and operator The Assembly Place announced that it had a government contract to renovate and manage three hostels for overseas healthcare workers.
Ageing Singapore Assets
Should Blackstone succeed in finding a buyer for the Avery Lodge portfolio, it would mark the fund manager’s second major exit from a long-term Singapore investment this year, after the
Blackstone sold its interest in the upscale Quayside Collection apartment complex in Sentosa Cove to BlackRock around a decade after investing in the project through the first edition of its Tactical Opportunities Fund, which closed fundraising in 2012.
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