Centurion Corporation Limited (CCL) issued S$200mn of 4% senior unsecured sustainability notes due 1 September 2031 on 1 September 2026. The notes were issued at par, paid interest semi-annually and had a minimum denomination of S$250,000. The transaction was oversubscribed and upsized, making it Centurion’s largest and longest-dated bond issuance to date.
Source: Bloomberg
The net proceeds are earmarked to finance or refinance eligible green and social projects under CCL’s Sustainability Financing Framework.
1H26 Credit Performance Highlights
Stronger operating earnings improved debt-servicing capacity.
Revenue rose 31% YoY to S$184.9mn, driven by the consolidation of Westlite Mandai, new beds at Westlite Toh Guan and Westlite Mandai, and contributions from EPIISOD Macquarie Park and the Harum Megah portfolio. Adjusted EBIT (excludes property fair-value movements) increased 28% YoY to S$118.3mn from S$92.6mn, outpacing the increase in finance costs and improving adjusted EBIT/finance cost coverage to 5.2x from 4.7x (company-reported ICR: 5.6x). Occupancy remained healthy at 94% for Singapore PBWA (CCL’s core market), and 98% for UK PBSA, supporting recurring rental earnings.
Near-term liquidity remains adequate, although asset encumbrance is high.
CCL had S$301.7mn of cash against S$37.5mn of borrowings due within one year. Of the Group’s S$1.08bn borrowings, S$657.7mn was held within CAREIT, while non-REIT entities had S$418.2mn of borrowings and S$279.7mn of cash. This suggests that consolidated leverage overstates the debt carried outside CAREIT, although not all non-REIT cash may be readily available to service the parent’s unsecured bonds. Asset encumbrance also remains high, with c.S$2.88bn (92%, of investment properties pledged), limiting the pool of unpledged assets available to unsecured creditors.
Leverage increased with portfolio expansion.
Net gearing rose to 24% from 12% at FY25 as borrowings increased to S$1.08bn, mainly to fund property acquisitions and development. Investment outflows of S$446.9mn exceeded OCF of S$104.7mn, increasing in greater reliance on external funding. Hence, leverage is likely to remain elevated in the near term as earnings from the new capacity have yet to fully ramp up.
Post 1H26 Credit Performance Highlights
Expansion supports future earnings, but keeps funding needs elevated.
CCL secured the c.7,000-bed Kranji Close PBWA site in August and subsequently expanded its Singapore PBWA development pipeline further. Separately, the Group agreed to acquire a 7,974-bed PBWA asset in Pasir Gudang for RM214.5mn (c.S$67.2mn), increasing its Malaysian bed capacity by 22% to c.43,980 beds. While these investments expand CCL’s recurring earnings base, they come at a time when leverage has already increased following significant investment in 1H26. With further development and acquisition spending ahead, we expect leverage and external funding needs to remain elevated until the new capacity ramps up and contributes more meaningfully to cash flow.
Outlook
Outlook remains positive, with earnings expected to strengthen as new capacity ramps up.
Management expects Singapore occupancy to improve in 2H26 as new beds at Westlite Toh Guan and Westlite Mandai filled progressively. This should support further earnings growth, with management guiding for c.22% YoY revenue growth in 2H26 to c.S$190mn. Singapore PBWA demand remains firm, underpinned by S$47–53bn of expected construction demand and a 5.6% increase in CMP work permit holders.
Relative Value
Source: Bloomberg
The Centurion 2031 currently trades at 3.93% YTW and 167bps Z-spread. Compared with Centurion 2029, investors receive only 12bps more yield for around 2.6 additional years of tenor, while the Z-spread is 29bps tighter. We think the tighter spread partly reflects stronger demand and better liquidity for the larger S$200mn 2031 issue. As such, the 2029 offers better spread compensation, although investors may have to accept lower liquidity.
Compared with Wee Hur 2030, the closest operating peer, Centurion 2031 offers 16bps less yield and trades 22bps tighter, suggesting that Centurion’s stronger credit profile is already reflected in its pricing. At the other end, Ho Bee 2031 trades around 64bps tighter, consistent with its stronger credit profile.
Overall, we see Centurion 2031 as fairly valued. It offers a reasonable yield for investors seeking Centurion exposure. Within Centurion’s own curve, the 2029 offers higher credit-spread compensation despite its shorter maturity, although part of the wider spread likely reflects lower liquidity.
Our Credit View
We remain positive on CCL’s credit profile. We think the increase in leverage is currently supported by stronger operating earnings, 5.2x interest coverage and adequate near-term liquidity. Firm Singapore PBWA demand should support the ramp-up of new capacity, with management guiding for c.22% YoY revenue growth in 2H26, further providing further support for debt-servicing capacity.
Company Overview:
Centurion Corporation Limited (CCL) is a Singapore-listed accommodation owner and operator, with a portfolio of 85,528 beds across Singapore, Malaysia, the UK, Australia and China. Its core businesses comprise Purpose-Built Workers Accommodation (PBWA) and Purpose-Built Student Accommodation (PBSA). PBWA is the main earnings contributor, accounting for 77% of 1H26 revenue, with Singapore as CCL’s largest market.
