CICT sells Asia Square Tower 2 to IOI for S$2.5 billion, buys Paragon for S$3.9 billion

[SINGAPORE] CapitaLand Integrated Commercial Trust (CICT) has sold its 100 per cent interest in Asia Square Tower 2 (AST2) to Malaysia-listed IOI group for nearly S$2.48 billion.

The Singapore reit also announced on Monday (Apr 20) that it is buying the iconic Paragon mall for S$3.9 billion, to be funded with funds from the Asia Tower divestment.

The Asia Tower 2 sale represents a 9.9 per cent premium over the property’s market valuation of around S$2.25 billion as at Dec 31, 2025, CICT said.

The divestment is structured through a put and call option agreement between the trustee of CapitaLand Commercial Trust and the buyer, IOI Marina View, a subsidiary of the Bursa Malaysia-listed IOI Properties Group.

The manager of CICT noted that the property “has reached a mature phase in its property cycle, marking an opportune time to monetise the asset and crystallise value for unitholders”.

CICT, through the then CapitaLand Commercial Trust, bought the property from BlackRock in 2017 for $2.09 billion. CapitaLand Commercial Trust was merged with CapitaLand Mall Trust and renamed CICT in November 2020.

The divestment is expected to generate net proceeds of about S$2.45 billion after accounting for divestment-related expenses, yielding a net gain of roughly S$199.9 million.

Strategic acquisition of Paragon

In a move to redeploy this capital, CICT simultaneously announced the proposed acquisition of a 100 per cent interest in Paragon, a premier freehold integrated development on Orchard Road, for an agreed property value of S$3.9 billion.

The property, which includes retail, office, and medical suites, is being acquired from a group of vendors comprising Cuscaden Peak, Cuscaden Peak Two, Times Properties, and Paragon Trust Management. These vendors are all indirect wholly owned subsidiaries of Temasek Holdings.

The acquisition is being made at a net yield of 3.9 per cent.

The manager described the acquisition as a rare opportunity to secure a “premier freehold integrated development in the heart of Orchard Road”.

Funding and private placement

The S$3.9 billion total acquisition outlay for Paragon will be funded through a combination of debt, the net proceeds from the AST2 divestment, and a private placement, which was also launched on Monday.

The private placement aims to raise at least S$600 million. New units are being offered to institutional and accredited investors at an issue price range between S$2.292 and S$2.332 per unit.

This range represents a discount of about 2.7 per cent to 4.3 per cent to the volume weighted average price of S$2.3955 on April 17.

Financial impact

The proposed acquisition of Paragon and the divestment of AST2 are expected to be 2.1 per cent distribution per unit-accretive on a pro forma basis for FY2025.

If the acquisition and divestment had both been completed on Dec 31, 2025, CICT’s aggregate leverage is projected to be 39.2 per cent.

For the AST2 divestment specifically, assuming the proceeds were used only to repay debt at the start of 2025, the pro forma distribution per unit for that year would have adjusted slightly from S$0.1158 to S$0.1149.

Completion of the AST2 sale is anticipated in the second half of 2026, while the Paragon acquisition is expected to conclude in the third quarter of 2026, subject to unitholder approval at an Extraordinary General Meeting.

Shares of CICT ended flat at S$2.39 on Friday. CICT requested a trading halt on Monday morning pending these announcements.