If Gerald Wong of finance platform Beansprout is right, there’s more room to go. “CAREIT offers a differentiated entry point into the attractive purpose-built worker accommodation (PBWA) and purpose-built student accommodation (PBSA) sectors,” states Wong in his initiation report on this counter.
“Backed by a strong sponsor in Centurion Corporation, CAREIT combines stable operating performance with visible growth opportunities, and provides attractive distribution yields relative to peers,” says Wong, who has given this stock a “buy” call along with a $1.09 target price.
The REIT’s initial portfolio comprises five worker accommodation assets in Singapore and nine student accommodation assets across the UK and Australia, with a total of approximately 24,000 beds, boasting an occupancy rate of nearly 97%.
The REIT has already given investors some growth visibility. From an initial portfolio size of $1.8 billion, it will eventually acquire Epiisod Macquarie Park, a student housing project in Australia, bringing its portfolio size to an estimated $2.1 billion.
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Meanwhile, the PBWA market, facing a “structural supply-demand imbalance”, will continue to support this REIT. Wong notes that occupancy has remained above 95% and rents are projected to grow 3%–4% annually through 2029.
Wong likes CAREIT for its strong operating track record, noting that its PBWA assets achieved an average occupancy rate of 97.9% between 2022 and 2024, with renewal visibility secured months ahead of lease expiries. Rents in the PBWA segment grew at a 26.3% CAGR over the same period.
Additionally, the PBSA assets in the UK and Australia are experiencing “sustained” demand and an undersupply of beds, thereby supporting rental growth at a 3.9%–5% CAGR. The REIT’s PBSA assets posted a healthy 94.1% average occupancy and 11.3% rent CAGR.
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Including Epiisod Macquarie Park, CAREIT enjoys a right of first refusal over sponsor Centurion Corporation’s pipeline of accommodation assets worth $2.6 billion. Coupled with asset enhancement initiatives, the REIT is set for both organic and inorganic growth.
Wong estimates that with the acquisition of Macquarie Park, the REIT’s gearing will increase to 31% from its current 20.9%. Even so, that leaves ample debt headroom of $558.8 million to fund further acquisitions before reaching a gearing ratio of 45%, which was the previous cap. If the REIT leverages up to the 50% current limit, that’s $834.3 million to be utilised.
Based on the IPO price of 88 cents, CAREIT offers a projected distribution yield of 7.5% for 2026 and 8.1% for 2027. Wong observes that this yield is above that of peers in the living sector, such as Far East Hospitality Trust’s 7%, CapitaLand Ascott Trust’s 6.6%, and CDL Hospitality Trust’s 6%.
Wong likes CAREIT for its attractive projected yields, ample debt headroom with gearing at 31%, and potential for yield compression given its unique positioning as a pure-play living sector REIT.
The REIT offers investors direct exposure to the PBWA and PBSA sectors, supported by Centurion, its sponsor. “Over time, the platform could expand into other accommodation segments such as build-to-rent, co-living, and senior housing,” says Wong.
He sees the REIT offering income visibility, underpinned by consistently high occupancy, strong tenant retention, and positive rental reversions, reflecting the robust fundamentals across both PBWA and PBSA markets.
Growth in distributions is supported by the forward purchase of Epiisod Macquarie Park in Australia, as well as additional upside potential from capacity expansion at another property in Mandai, which Wong has yet to include in his projections.
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Wong’s target price of $1.09 is based on the dividend discount model, assuming a cost of equity of 8.7% and a terminal growth rate of 1%. At $1.09, the REIT will offer a distribution yield of 6% for FY2026.
For him, key risks include concentrated exposure to two key assets, exposure to leasehold assets, and regulatory requirements, amongst others.
Jaimes Chao of Tickrs Financial Singapore is similarly upbeat, with a “buy” call and $1.05 target price. In his Sept 15 initiation report, he states that the REIT is unlocking value from Centurion Corp’s lodging portfolio, converting a previously undervalued, illiquid asset base into a high-yielding, growth-ready REIT platform.
Robust rental demand for quality worker dormitories and student housing ensures stable occupancies of over 90%.
He notes that the REIT’s initial portfolio’s revenue rebounded strongly, with a 23.7% CAGR over FY2022–2024, driven by post-pandemic demand recovery and new capacity, which drove top-line growth. He expects further revenue growth to reach $200 million by FY2026–2027, following the acquisition of Macquarie Park. High occupancies and periodic bed rental rate adjustments will underpin the sustained growth trajectory, says Chao.
“In our view, CAREIT offers ‘shelter’ in the form of defensive cashflows — essential housing is non-discretionary — and ‘growth’ via asset enhancement and pipeline injections, all at an attractive entry yield,” says Chao.
