Centurion Accommodation REIT (8C8U.SI) was recently listed on the Singapore Exchange, making it Singapore’s second largest IPO this year. Previously, I wrote Singapore’s largest IPO here.
It raised ~S$771 million, with a ~S$1.5 billion net asset value (NAV) and currently has a market cap of S$1.5 billion. This is the first “pure-play” Singapore REIT in the accommodation purpose space to go public on the Singapore Exchange.
And most of its proceeds will be used to acquire assets with accommodation purposes.
These include both purpose-built worker accommodation (PBWA) and purpose-built student accommodation (PBSA).
Here’s five things you need to know about CAREIT’s recent IPO before you buy.
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1. CAREIT’s unique focus on Accommodation Assets
CAREIT’s initial portfolio comprises 14 assets with five PBWA’s located in Singapore, eight PBSA’s located in the UK, and two PBSA’s located in Australia.
It’s also planning to expand its portfolio in the near future. So far, it has agreed to acquire a PBSA asset, called Epiisod@Macquarie Park in Australia.
This will be fully debt financed and the deal will be completed by February 2026. And the property will be master leased with its sponsor until end-2027 to maintain a stable cash flow.
Furthermore, CAREIT will add another block to one of its Singapore properties, Westlite Mandai. When construction is complete, capacity will increase from 6,290 beds to 9,986 beds.
Post expansion, CAREIT will own 15 properties worth ~S$2.1 billion, housing up to 27,000 residents.
Out of the S$2.1 billion, 64% of its assets are PBWA properties, with the remaining 36% comprising PBSA properties.
2. CAREIT’s strong growth potential
CAREIT isn’t in a trendy sector. It’s a defensive one. What’s more, its growth outlook is appealing.
Over the last two years, the UK and Australia purpose-built student accommodation market has been growing at a steady 6% compounded annual growth rate.
This is driven by strong demand for higher education, with a limited supply in these accommodation assets.
Meanwhile in Singapore, the purpose-built worker accommodation market has grown at least 9% annually, driven by a strong demand for foreign workers.
In fact, CAREIT’s assets have a relatively high occupancy rate, with potential positive rental reversions in the future.
3. CAREIT’s healthy performance
This accommodation asset player is expected to have gross borrowings of ~S$401 million.
This is an aggregate leverage ratio of 20.9%, as well as an interest coverage ratio of 4.6x. This is a healthy interest coverage ratio.
After the acquisition of Epiisod@Macquarie Park, aggregate leverage is set to be at ~31% – it is considered safe, in my opinion.
With a relatively healthy gearing ratio, this leaves CAREIT plenty of room to grow its property portfolio through debt financing.
4. CAREIT’s attractive yield projections
Based on IPO projections, CAREIT’s will have a 7.47% distribution yield in 2026. And 8.11% distribution yield in 2027. These are healthy numbers for income seekers and backed by a steady net property income.
As with any REIT, these are projections, not promises.
Still, with conservative leverage, CAREIT has plenty of room to borrow and grow.
5. CAREIT’s attractive yield projections
An aggregate of 614 million units have been subscribed by 16 cornerstone investors, which is more than double the number of units offered to retail investors in this IPO.
Among the 16 cornerstone investors named, some of them include DBS Bank, Eastspring Investments, FIL Investment Management (Hong Kong), Value Partners, and UBS.
These cornerstone investors will own 35.7% of all issued units. Except for DBS, these cornerstone investors are not subject to any lockup periods.
Lockup periods refer to the period at which investors are not allowed to sell the stock on the stock exchange. This guarantees demand and provides support to the stock price, at least for a certain period.
It may not seem like a big deal to have cornerstone investors. But this shows strong institutional demand, stabilizes the listing and provides confidence to all investors.
While these investors aren’t subject to lockup periods, it’s implicit they shouldn’t contribute to any selling pressure of the stock.
My final thoughts
Today, Centurion Accommodation REIT trades ~S$0.96 per unit. At a P/B ratio of ~1.0x and an expected distribution yield of ~7.4%, this is a unique “pure-play” Singapore REIT in the accommodation asset space.
What makes CAREIT compelling is its dual focus on both workers and students. These are two different markets. Foreign workers will continue to support Singapore’s economy.
Universities across the UK and Australia will keep attracting students — domestic and international — who need housing.
Here’s the other thing: Unlike shopping malls or Grade-A offices, this demand doesn’t rely on consumer spending trends or corporate expansion cycles.
It’s tied to a need for people to have a space to live. In other words, there will be demand for student accommodations as long as higher education exists. What’s more, Singapore’s growing economy also requires demand for foreign workers.
