Centurion-Lian Beng JV wins 7,900-bed worker’s dormitory tender

It will be completed in 2017.

Centurion has revealed that its joint venture company with Lian Beng has won a land tender by the
Association of Process Industry (ASPRI) to develop a 7,900-bed workers’ dormitory and training centre for workers in the process industry.

The deal has a total development cost of $200m, and will be funded by a combination of bank loans
and internal resources.

According to DBS, the dormitory is expected to be completed in 2017, and this will coincide with the expiry of the 8,600-bed Tuas dormitory, thereby mitigating the expected drop in earnings.

“We are positive on this deal, as it bolsters Centurion’s core business segment in Singapore amid a highly
competitive bidding landscape. Given the long land lease of 23 years, we estimate a breakeven cost of c.S$170 per bed per month, which is in line with Centurion’s Woodlands dormitory, and c.10% lower than similar tenders that were won in 2014 (i.e. 20-year leases). We estimate that this development will boost FY17 revenue and net profit by c.25% and 4% respectively, as higher earnings are offset by higher interest costs, assuming that the remaining development costs are funded by an MTN issue,” stated DBS.