They highlighted that the REIT’s PBWAs are well-located near construction workplaces in Singapore while its PBSA properties are situated within proximity to university campuses.
“According to our estimates, 73% and 27% of FY2026 revenue is generated from PBWA and PBSA segments respectively. Multi-year sector tailwinds, such as the construction upcycle in Singapore and robust demand for PBSA in UK and Australia, are likely to underpin the REIT’s robust earnings outlook,” comments the CGS International team.
To them, Centurion Accommodation REIT offers one of the strongest DPU growth out there in the S-REITs universe for FY2026 and FY2027, at 27.4% and 10.1% y-o-y respectively.
“This brings our projected DPU to 7% and 2% above prospectus and forecasts respectively as we see lower-than-projected debt cost and quicker ramp-up of 1,980 operational bed capacity at Westlite Mandai (MEC) from April onwards, versus the prospectus forecast of 2HFY2026, given that the property was completed in January and pending final regulatory approval,” both Lock and Li explains.
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The REIT also announced in December 2025 that it received regulatory approval to retain the 664 beds at Westlite Toh Guan till end of FY2028.
The team says that this was not factored into prospectus forecasts as the beds were expected to be taken out of circulation in FY2029 and FY2030 to comply with the new standards. In all, this has added around $3 million to $5.1 million to her FY2026 to FY2028’s NPI forecast.
Despite concerns over the potential in the REIT’s bed capacity and revenue by FY2030 as it complies with the new dormitory standards (IDS), the team believes that acquisition growth prospects and AEI possibility within the current assets could offset negative revenue impact.
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“We think Westlite Ubi, which has higher GFA per IDS-compliant bed versus the reconfigured Westlite Mandai and Westlite Toh Guan, could benefit from relaxation of PBWA restrictions for the Ubi planning area, through an expanded bed count,” they states.
According to their estimates, 400 new beds, if added at Westlite Ubi by FY2029 and FY2030, could contribute around $2.1 million of NPI per annum and offset the projected $2 million y-o-y dip in FY2030’s NPI from permit expiries.
“We note that GFA per bed for Westlite Juniper and Westlite Woodlands is larger and could allow for increased utilisation in the longer run, subject to regulatory approval. These accretions have not been factored into our current estimates,” they says.
The team's target price of $1.38, which translates to a potential total return of 32%, is derived using a dividend discount model methodology with cost of equity at 7.59%.
“We like the REIT for its strong and visible DPU growth and potential for inorganic and organic opportunities. Centurion Accommodation REIT is trading at a projected FY2026’s DPU yield of 6.5%,” concludes the team.
As at 11.25am, units in Centurion Accommodation REIT are trading 3 cents higher, or 2.72% up at $1.13.
