CapitaLand Trust buys Paragon mall for $3.9 billion, sells Asia Square Tower 2 for $2.5 billion

SINGAPORE - CapitaLand Integrated Commercial Trust (CICT) is reshaping its portfolio by selling a major office tower in Singapore’s financial district and ploughing the proceeds into a prime Orchard Road mall, in a move that signals a shift in where it sees future growth.

The trust on April 20 said it will fully acquire Paragon, a freehold retail and medical complex in Orchard Road, from Cuscaden Peak for about $3.9 billion.

The acquisition will be partly funded by the planned $2.5 billion sale of Asia Square Tower 2, a Grade A office building in the Marina Bay financial district, to Malaysia’s IOI Properties.

A private placement to raise at least $600 million to fund the move was announced. Debt will also be deployed.

Paragon, which is fully occupied and houses more than 190 retail brands, will increase CICT’s presence in Singapore’s downtown shopping belt.

Together with ION Orchard, The Atrium@Orchard, Plaza Singapura, Raffles City Singapore and Funan, Paragon will anchor CICT’s presence from Orchard Road MRT station through Somerset, Dhoby Ghaut and City Hall MRT stations, CICT said.

More importantly, the acquisition will give CICT access to Paragon’s medical component, which provides a more stable and defensive income stream, it said. Paragon’s location next to the Mount Elizabeth medical cluster is also a plus, it added.

Mr Tan Choon Siang, chief executive of CICT’s manager, said in a statement that demand for medical facilities is supported by long-term trends such as an ageing population and rising medical tourism.

He added that the sale of Asia Square Tower 2 will allow the trust to unlock value from a mature office asset and reinvest the proceeds into a higher-yielding property.

The move is expected to increase payouts to investors by about 2.1 per cent, from 11.58 cents per share to 11.83 cents per share, while keeping debt at manageable levels.

Two independent valuers commissioned by CICT to value Paragon had placed the property’s value at $3.895 billion and $3.905 billion as at March 31.

CICT said it is considering upgrading Paragon to boost its long-term value.

The last major refurbishment of the property was in 2009. A preliminary study by Cuscaden Peak suggested that a new round of enhancements could cost $300 million or more, depending on the scope and timing.

CICT will carry out its own detailed studies before deciding on any plans, with the final cost and scale of the upgrades subject to internal approvals, it said.

Cuscaden Peak, a joint holding company of Temasek-owned firms Mapletree and CapitaLand, acquired Paragon in April 2025 as part of a buyout of Paragon Reit for $2.8 billion.

Besides Paragon, the Reit also held Clementi Mall and South Australia’s Westfield Marion Shopping Centre.

The divestment of Asia Square Tower 2, meanwhile, comes at a 9.9 per cent premium to its market valuation of $2.252 billion as at Dec 31, 2025.

Mr Tan said CICT is offloading the office building at a yield of about 3 per cent compared with Paragon’s yield of 3.9 per cent, meaning the trust is selling a lower-return office building and reinvesting in a higher-income, longer-lasting asset to improve returns for investors over time.

The sale is expected to be completed in the second half of 2026, subject to, among other things, the purchaser obtaining shareholders’ approval at an extraordinary general meeting.

CICT said the value of its portfolio will expand from $27 billion to $28.7 billion after the transactions, with about 95 per cent of its assets still in Singapore, where it is already the largest private commercial landlord.

Shares of CICT on April 20 were halted from trading before the stock market opened. They last closed unchanged at $2.39 on April 17.