Centurion has entered into sale and leaseback agreements with Kumpulan Wang Persaraan (Diperbadankan) or KWAP, Malaysia’s public sector pension fund. The agreements involve two of Centurion’s Malaysia assets, Westlite Bukit Minyak and Westlite Tampoi.
On Dec 4, Centurion announced that its indirect wholly-owned subsidiaries, Westlite Dormitory (Bukit Minyak) Sdn. Bhd. and Westlite Dormitory (Tampoi) Sdn. Bhd. entered into sale and purchase agreements (SPAs) with KWAP. The properties will be purchased by KWAP for a cash consideration of RM227.0 million ($65.2 million). The consideration for Westlite Bukit Minyak is RM81 million while the sum for Westlite Tampoi is RM146 million. The market value of the properties is RM227.0 million based on a valuation report by Savills Malaysia. The report was commissioned by Centurion Dormitories Sdn Bhd (CDSB) and is based on the income approach taking into account the 15-year master lease of the properties.
The consideration is higher than the net tangible asset (NTA) value of both properties at RM224.3 million as at June 30.
Following the completion of the disposal, KWAP will leaseback Westlite Bukit Minyak and Westlite Tampoi to Westlite Dormitory (Bukit Minyak) Sdn. Bhd. and Westlite Dormitory (Tampoi) Sdn. Bhd. respectively for 15 years.
Westlite Bukit Minyak is located on freehold land at No. 38, Jalan Perniagaan Seri Tambun, Taman Westlite Dormitory, Bukit Tambun, 14100 Simpang Ampat, Penang. It measures some 16,398 sqm (176,506.60 sq ft) and comes with three 11-storey accommodation blocks. It has a total bed capacity of 3,321 beds and 12 carpark lots along with supporting amenities and commercial shops.
Westlite Tampoi is also located on freehold land at Lot 2051, Jalan Bayu, Kempas Baru, 81200 Johor Bahru Johor Darul Takzim. It measures around 28,328 sqm, which comes with five 5-storey accommodation blocks. The property has a total of 5,790 beds, one 5-storey block with a canteen located at the lower ground floor, 21 carpark lots and 57 motorcycle parking lots along with supporting amenities and commercial shops.
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Both properties have a total capacity of 9,111 beds.
According to Centurion, the divestment is part of its ongoing strategic rationalisation of its portfolio assets in a bid to recycle and redeploy capital to further grow its portfolio of assets under management. The sale and leaseback of the properties is also aligned with the group’s strategy, to grow its business via asset-light means.
It adds that it is actively expanding its Malaysia purpose-built workers accommodation (PBWA) capacity due to the escalating demand for such accommodation.
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As at Sept 30, Centurion’s Malaysian PBWA portfolio has a capacity of 26,603 beds.
“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. We are delighted to collaborate with Malaysia’s public sector pension fund; this transaction validates Centurion’s positive track record in Malaysia, and we remain committed to support Malaysian employers and industry with high quality PBWA for their migrant worker wellbeing,” says Kong Chee Min, CEO of Centurion.
“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,” adds Hazman Hilmi Sallahuddin, KWAP’s CIO.
As at 1.45pm, shares in Centurion are trading flat at 40 cents.
