Singapore-headquartered Centurion Corporation Limited, which owns, develops and manages specialised accommodation assets, on Monday announced that it has entered into sale and leaseback agreements with Malaysian pension fund Kumpulan Wang Persaraan (KWAP) for two properties.
KWAP will acquire the properties — Westlite Bukit Minyak and Westlite Tampoi — for a consideration of 227 million ringgit (approximately $48.7 million), Centurion said in a statement.
“Upon completion of the sale and purchase agreements, Centurion through its subsidiaries will enter into lease agreements with KWAP to lease back the properties for a period of 15 years,” said the company.
‘The disposal value was arrived at a negotiated arm’s length basis taking into consideration an independent valuation conducted in relation to the sale of the properties,” it added.
Both properties are “purpose-built workers’ accommodation” (PBWA) situated on freehold land in Penang and Johor, respectively — both states with strong manufacturing sectors.
The company said that the divestment of the properties is part of its ongoing strategic rationalisation of its portfolio assets to recycle and redeploy capital to further grow its assets under management and to grow its business via asset-light means.
Centurion added that it is actively expanding its PBWA capacity in Malaysia — with several projects set in Johor — in response to the country’s demand for more “thoughtfully designed and professionally managed PBWAs”.
To note, Malaysia has a big demand for foreign labour, and the Malaysian government has been pushing employers in the country to provide better worker accommodation, especially after the COVID-19 pandemic.
KWAP chief investment officer Hazman Hilmi Sallahuddin said: “KWAP is investing in PBWA to generate attractive risk-adjusted returns, foster social impact, and support industrial investments in Malaysia.”
“By investing in PBWA, 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, which is expected to elevate the standards of industrial investments in the country and propel Malaysia into higher value-add industries,” he added.
As of September 30, 2023, Centurion’s Malaysia PBWA portfolio capacity was 26,603 beds. Average financial occupancy for the Malaysia PBWA portfolio was 93% in Q3 2023 as compared to 86% in the corresponding period a year ago.
Aside from PBWA’s in Singapore and Malaysia, Centurion also owns, develops and manages student accommodation assets in Australia, the UK, and the US.
The group owns and manages a portfolio of 34 operational accommodation assets totalling approximately 66,607 beds as of 30 September 2023.