Centurion to substantially lower gearing upon injecting Singapore dorms in proposed REIT

Shareholders to be rewarded a special dividend if listing goes through.

Investors are waiting for Centurion’s next move after the announcement of a proposed dorm REIT.

According to a report by OSK-DMG, injecting Singapore dormitories into the REIT could greatly lower the company’s gearing and unlock its value for these Singapore dormitories.

OSK-DMG says that with the expected rise in interest rates, Centurion could lower its gearing substantially if it injects its Singapore dormitories into the proposed REIT, which would be positive for the company. Centurion’s gearing stood at about 120% as of December 2014.

Here’s more from OSK-DMG:

Most of its Singapore dormitories are tendered at much lower prices as well as lower construction costs in the past. Over the years, they have booked a sizeable amount of revaluation gains, which will likely allow Centurion to fully unlock the value of its Singapore dormitories, depending on the price it injects the dormitories at.

The Centurion management team has built up a good track record investing in accommodation assets over the past few years. The cash from the sale of its assets can be used for further potential strategic acquisitions.

By establishing a REIT, Centurion aims to provide an additional option to investors who are seeking stable dividend gains, while at the same time allowing those who are more focused on growth to continue to be invested in Centurion.