Centurion Selling Malaysia Worker Dorms to Local Pension Fund for $47M

Singapore rental housing specialist Centurion Corp is selling two worker dormitories in Malaysia to the country’s largest public sector pension fund, Kumpulan Wang Persaraan (KWAP), for MYR 227 million ($47 million).

Centurion entered into a sale-and-leaseback deal with KWAP on Monday to sell a pair of purpose-built worker accommodation facilities in Johor and Penang with a total of 9,111 beds, with the deal stipulating that the SGX-listed firm will lease the properties from KWAP for a period of 15 years.

“This divestment presents an opportunity for the group to unlock value, drive further portfolio enhancements in an asset-light manner, and at the same time allows the group to remain invested in Malaysia’s growing need for quality worker accommodations going forward,” Centurion chief executive Kong Chee Min said in a statement that same day.

The Malaysian deal is the latest in a string of divestments by Centurion this year as rental accommodation specialist rejigs its overseas portfolio, including exiting the South Korea market with its sale of the Dwell Dongdaemun student housing facility in April.

Homes for Industry

The larger of the two properties in the deal is the Westlite Tampoi dormitory in Johor Bahru’s Tampoi suburb, with that facility having 5,790 beds across six 11-storey buildings. The 469,307 square foot (43,600 square metre) dorm, which is located near major manufacturing facilities, is being sold for MYR 146 million.

The second property, valued at MYR 81 million, is the three-block Westlite Bukit Minyak dorm in Penang , with a capacity of 3,321 beds across 426,272 square feet of floor space. It is located near expressways connecting it to the Batu Kawan Industrial Park and other major commercial hubs.

The total consideration for the properties works out to MYR 24,915 per bed, which represents a 1.2 percent markup from the combined valuation of the two properties worth MYR 224.3 million as of 30 June.

For KWAP, which has MYR 140.8 billion in assets under management on behalf of the country’s public employees, investing in staff accommodations is expected to generate attractive risk-adjusted returns while supporting the country’s workforce in the industrial sector.

“KWAP aims to not only drive domestic economic growth but also position itself as a catalyst for international investments in the Malaysian industrial sector by owning quality accommodation with better living conditions for industrial companies’ workforce,” said Hazman Hilmi Sallahuddin, chief investment officer of the fund manager.

Centurion said the latest disposal aligns with its mission to recycle and redeploy capital to opportunities that will further grow its assets under management, while expanding revenue streams.

“The group will pursue this model and similar asset-light strategies for synergistic, scalable growth of its specialized accommodation business across all global markets moving forward,” the company said in the statement.

Regional Reach

The Malaysian sale comes after the Singapore firm’s controlling shareholder, Centurion Properties, in January proposed a 732-unit student housing project in Sydney worth A$132.17 million ($87 million).

The project is expected to be operated under its student housing brand, dwell Living, through which the company already manages 10 assets in the UK, five in the US and two in Australia.

In October the firm formed a partnership with KEZAD Communities, the largest staff accommodation provider in Abu Dhabi, to explore potential partnerships in building and operating housing projects for workers and students in the Middle East.

Back home, Centurion announced earlier that month that it is investing a total of S$250 million to redevelop parts of its existing Westlite Toh Guan and Westlite Mandai worker dormitories in Singapore.

The company owned and managed 34 existing worker and student accommodations encompassing 66,607 beds as of 30 September. Its worker dormitory portfolio, managed under the Westlite Accommodation brand, comprises nine assets in Singapore and eight in Malaysia.