CapitaLand Integrated Commercial Trust (CICT) has agreed to acquire a 100% interest in Paragon, a prime freehold integrated development along Singapore’s Orchard Road, for S$3.9 billion, while divesting Asia Square Tower 2 (AST2) for S$2.48 billion as part of a capital recycling strategy.
The transaction marks a strategic portfolio shift toward higher-yielding and more resilient assets. The Paragon acquisition carries an entry yield of 3.9%, compared with the 3.0% exit yield from AST2, and is expected to lift CICT’s distribution per unit (DPU) by 2.1%.
Paragon comprises a retail podium, medical suites, and office towers, with committed occupancy at 100% across both retail and office/medical components as of early 2026. The asset is positioned along Singapore’s premier shopping belt and is seen as benefiting from structural tailwinds such as rising medical tourism and an ageing population.
CICT CEO Tan Choon Siang said the acquisition strengthens the REIT’s exposure to upscale retail while adding a defensive healthcare component, enhancing income resilience over the long term.
The divestment of AST2, sold at a 9.9% premium to its December 2025 valuation, allows CICT to unlock value from a stabilised leasehold office asset and redeploy capital into a freehold development.
Following the transactions, CICT’s pro forma aggregate leverage is expected to stand at 39.2%, below the regulatory ceiling of 50%, maintaining balance sheet flexibility.
The acquisition, which involves vendors linked to Temasek Holdings, will require unitholder approval. Completion of the AST2 divestment is expected in the second half of 2026.
CICT, Singapore’s largest listed REIT with a market capitalisation of about S$18.6 billion, owns a diversified portfolio of commercial assets across Singapore, Europe, and Australia.
Business News Asia
