KUALA LUMPUR: Singapore-listed Centurion Corporation Ltd is selling two lodging assets in Malaysia to Kumpulan Wang Persaraan (Diperbadankan) (KWAP) for a total of RM227 million under a leaseback agreement.
The company, which develops, owns, and operates specialised accommodation assets, and the public sector pension fund have entered into sale and leaseback agreements for Westlite Tampoi and Westlite Bukit Minyak.
Westlite Bukit Minyak in Penang is a purpose-built workers' accommodation (PBWA) consisting of three housing blocks that can accommodate 3,321 beds in total.
Westlite Tampoi is a PBWA in Johor comprising six accommodation blocks with a total bed capacity of 5,790 beds.
According to a statement from Centurion, the disposal value was determined through a negotiated arm's length basis, accounting for an independent valuation that was carried out in connection with the sale of the properties.
The company will enter into lease agreements with KWAP through its subsidiaries to leaseback the properties for a period of 15 years after the SPA is completed, it said.
It added that this sale and leaseback transaction exemplifies the strategy by which Centurion intends to optimise its capital, enlarge its portfolio and expand revenue streams.
Kong Chee Min, the chief executive officer of Centurion said that this divestment presents an opportunity for the company to unlock value and drive further portfolio enhancements in an asset-light manner.
At the same time, it allows the company to remain invested in Malaysia's growing need for quality worker accommodations going forward.
"This transaction validates Centurion's positive track record in Malaysia, and we remain committed to supporting Malaysian employers and industry with high-quality PBWA for their migrant worker wellbeing," he said.
Centurion is expanding its Malaysian PBWA capacity in response to the escalating demand for PBWAs, popularly recognised as centralised living quarters (CLQs) in Malaysia.
As as Sept 30, 2023, the company's Malaysian PBWA portfolio bed capacity was 26,603 beds. Average financial occupancy for the Malaysia PBWA portfolio was 93 per cent in the third quarter of 2023 (3Q23), as compared to 86 per cent in the corresponding period a year ago.
Expanding its portfolio further in Malaysia, an asset enhancement initiative (AEI) at Westlite Senai in Johor is ongoing and expected to be completed in 4Q23, adding about 770 beds.
The company has also secured a management contract for a new PBWA, Westlite Cemerlang, with about 2,196 beds in Johor, which is expected to be operational in 4Q23.
Two other AEIs are earmarked for Westlite Johor Tech Park and Westlite Senai II, to add roughly 2,720 beds on progressive completion in 2024 and 2025.
Hazman Hilmi Sallahuddin, chief investment officer of KWAP, said that it is investing in PBWA to generate attractive risk-adjusted returns, foster social impact, and support industrial investments in Malaysia.
