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Malaysia pension fund KWAP buys worker dormitories from Singapore developer for 227 million ringgit

KWAP says it is investing in purpose-built workers accommodation to generate attractive risk-adjusted returns, foster social impact, and support industrial investments in Malaysia
By Goh Thean Eu   
December 8, 2023

Malaysia’s second largest pension fund Kumpulan Wang Persaraan (KWAP) is buying two purpose-built worker dormitories from Centurion Corp Ltd for 227 million ringgit (US$48.55 million) and leasing them back to the Singapore firm, a developer of accommodation assets.

The dormitories are located in Malaysia’s northern state of Penang and southern state of Johor and comprise nine blocks of accommodations with more than 9,000 beds, Centurion says in a filing to the Singapore Exchange on December 6.

The company says it will lease the properties for 15 years under a sale and leaseback agreement signed with KWAP, a pension fund for civil servants.

Separately, KWAP Chief Investment Officer Hazman Hilmi Sallahuddin says the pension fund is investing in the assets to generate “attractive risk-adjusted returns, foster social impact, and support industrial investments in Malaysia”.

“By investing in purpose-built workers accommodation, KWAP aims to not only drive domestic economic growth but also position itself as a catalyst for international investments in the Malaysian industrial sector by owning quality accommodation with better living conditions for industrial companies’ workforce, which is expected to elevate the standards of industrial investments in the country and propel Malaysia into higher value-add industries,” he says in a joint statement issued by KWAP and Centurion.

For the Singapore firm, the sale and leaseback arrangement is an opportunity to unlock value and “drive further portfolio enhancements in an asset-light manner, and at the same time allows the group to remain invested in Malaysia’s growing need for quality worker accommodations going forward”, according to Chief Executive Officer Kong Chee Min.

The deal with KWAP “validates Centurion’s positive track record in Malaysia”, he adds.

KWAP had 184.5 billion ringgit ($39.70 billion) of assets under management as of end-July.