- CapitaLand Integrated Commercial Trust on 20 April announced it acquired Paragon, a premier freehold integrated development in Orchard Road, for S$3.9b. This will be funded by divestment of Asia Square Tower 2 for S$2.5b, new equity of S$600m and debt.
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Deal details
- CapitaLand Integrated Commercial Trust will acquire 100% freehold interest in Paragon for agreed property value of S$3,919m. Total net lettable area is ~715K sq. ft. with ~68% exposed to retail and the rest to medical/office space. The committed occupancy for both retail and medical/office space is 100%.
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Strategic and financial merits
- The deal will enhance portfolio attributes with a freehold asset in a tightly held downtown precinct with no new major supply. The tenant profile should appeal to locals and tourists and benefit from themes such as ageing population and medical tourism. There is potential for rental upside from lease expiries of ~40% until 2027.
- The transaction is 2.1% DPU accretive, led by 3.9% entry yield (4.1% retail, 3.4% medical/office space). The accretion assumes cost of new debt at ~2.7% (4Q 3.2%) and 50% fee in units. Gearing will rise from 38.6% to 39.2%.
Maintain BUY
- Read more at SGinvestors.io.
