Centurion Accommodation REIT - DPU above forecast with stronger rental rates and occupancy

Achieved distribution per unit above forecast 

Centurion Accommodation REIT reported distribution per unit at 1.739 cents for the financial period from 12 August 2025 to 31 December 2025 (FP 2025). This represents an annualised distribution yield of 5.64%, based on the closing price of S$1.15 per unit on 23 February 2026. 

Centurion Accommodation REIT’s financial period 2025 DPU of 1.739 cents outperformed forecast by 6.7%. This was attributed to higher rental rates and higher occupancy rates across the portfolio assets. It  achieved rental growth of 5% year-over-year, higher than the forecast of 3% year-over-year. 

Purpose-built worker accommodation (PBWA) achieved 97.6% occupancy rate, 1.8 percentage point above the forecast at 95.8%. Purpose-built student accommodation (PBSA) achieved 99.1% occupancy rate, 1.8 percentage point above the forecast of 97.3%.

Including the contribution from newly acquired 732-bed Epiisod Macquarie Park, we estimate the distribution per unit to grow steadily in FY2026 and FY2027 to 6.66 cents and 6.95 cents, respectively.

Achieved better than expected financial performance  

Centurion Accommodation REIT reported revenue at  S$50.7 million, for the financial period 12 August 2025 to 31 December 2025, 3.4% ahead of forecast. The better-than-expected financial performance was supported by stronger rental rates and better occupancy across the portfolio. 

Property operating expenses were broadly in line, rising 1.4% versus forecast, which allowed net property income to reach S$36.1 million, 4.1% above expectations. The outperformance at the operating level reflects steady leasing momentum and resilient demand across both PBWA and PBSA assets.

Finance costs were 17.6% below forecast at S$3.9 million, due to lower loan drawdowns and more favourable benchmark rates. As a result, the trust recorded a profit of S$9.7 million compared to the projected loss. 

Amount available for distribution rose 6.8% above forecast to S$30.0 million, translating into a distribution per unit of 1.739 cents, 6.7% higher than expected. Based on the closing price on 23 February 2026 at S$1.15, this represents an annualised distribution yield of 5.64%.

Portfolio performance remains resilient with positive outlook

For the Financial period 2025, the portfolio demonstrated steady operating performance, maintaining high occupancy rates across both worker and student accommodation segments. It is operating in markets where structural drivers remain supportive. Asset under management was at S$$1.88 billion as at 31 December 2025, representing  2.3% ahead of forecast. 

Occupancy of its Singapore PBWA portfolio occupancy was at 97.6%, representing 1.8 percentage point ahead of forecast. In Singapore, sustained foreign labour demand and tight supply conditions continue to underpin the PBWA segment. 

Australia PBSA portfolio occupancy was 99.1%, representing 1.8 percentage point ahead of forecast. In the United Kingdom and Australia, steady international student flows and the global appeal of established education hubs support durable demand for PBSA assets. Together, these trends provide a solid base for occupancy and rental stability across the portfolio.

In Singapore, it will continue asset enhancement initiatives within the PBWA portfolio, while keeping a close watch on regulatory developments such as the Dormitory Transition Scheme and New Dormitory Standards. Across the PBSA portfolio, selective AEIs including bed reconfiguration and refurbishment works are being evaluated to optimise space utilisation and returns 

Updates on PBWA portfolio and acquisition of PBSA Epiisod 

Within PBWA, it has secured the Temporary Occupation Permits for the newly completed blocks at Westlite Toh Guan and Westlite Mandai, adding about 1,764 and 3,696 beds, respectively. Regulatory approvals were also obtained to retain approximately 664 beds at Westlite Toh Guan through end 2028 and about 1,980 beds at Westlite Mandai through end 2030. 

Applications for licences under the Foreign Employee Dormitories Act are in progress. The approval will confirm the long-term operating status of these assets. 

On the PBSA front, it has completed the acquisition of Epiisod Macquarie Park in Sydney on 13 January 2026. The newly developed 732 bed asset was acquired for A$345.0 million and fully debt-funded, preserving liquidity flexibility. 

A two-year master lease has been put in place with Centurion Properties Pte. Ltd. and the Sponsor through 31 December 2027. This allows time to stabilise and optimise the asset within the broader Australian student accommodation market.

Prudent capital management

Management adopts a proactive and disciplined capital management approach, to achieve a strong balance sheet. It is supported by a diversified funding sources and an undrawn committed credit facilities of S$233.2 million. As at 31 December 2025, it does not have any debt maturing till FY2028. 

Gross borrowings of S$376.1 million are supported by a weighted average debt maturity of 4.3 years, which lowers refinancing risk.

Weighted average cost of debt at 3.46% is lower than the earlier forecast, reflecting disciplined treasury execution and favourable funding conditions.

Risk management is equally evident in the capital structure. With 55.8% of debt on fixed rates, interest rate exposure is moderated, while the interest coverage ratio of 6.6 times signals strong debt-servicing capacity. 

Aggregate leverage at 22.1% as at 31 December 2025 was lower than forecast too. Including the completed acquisition of Epiisod Macquarie Park on 13 January 2026, the aggregate leverage increased to 30.7%. Based on a 40% leverage threshold, it will have a debt headroom of S$348.0 million. This provides substantial flexibility to pursue acquisitions or asset enhancements without stretching the balance sheet. 

We think having the debt headroom to fund organic growth and inorganic pipeline is significantly positive because the industry structural growth remains favourable. It is also considering expansion into other geographic region.

Revise to Neutral and target price at S$1.20 

As we roll forward the target price to FY2027E, we adjust our target price to S$1.20. At the closing price on 23 February 2026 of S$1.15, the target price represents a potential upside of 4.4%. Considering the valuation, we revise our recommendation to Neutral. 

Based on our estimate on FY2026E distribution per unit of 6.66 cents, it is trading at FY2026E distribution yield of 5.8%. 

In terms of PB ratio, it is trading at price-to-book ratio 1.32x.  In comparison, the industry average is at PB 0.86x.   

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