CapitaLand Integrated Commercial Trust took another step ahead as Asia’s largest REIT. Its placement units, priced at $2.30 were upsized and raised $750 million instead of the minimum of $600 million. The funds were raised to partly fund the proposed acquisition of Paragon, priced at $3.9 billion. Monies from the proposed sale of Asia Square Tower 2 which is being divested at $2.476 billion will also be used to partially fund the acquisition of Paragon. The increased equity portion is likely to lower the accretion to around 1% from the 2.1% suggested based on 261.8 million new units. The new units in issue for CICT are 326.078 million. The transaction is still accretive because CICT is trading above its end-2025 NAV of $2.09.
“The consideration usually between a private placement and a preferential offering is about size and execution. A private placement is usually better for the unitholder because you’re able to place out at a much tighter discount. It is more accretive and there’s less uncertainty around execution.” Tan Choon Siang, CEO of CICT’s manager, says. In addition, private placements can be done overnight compared to the longer time frame required by a preferential offering. Notably, market watchers have pointed out that the preferential offerings of Keppel REIT and Lendlease Global Commercial REIT were not fully subscribed.
Tan cites a few reasons for the difference in CICT’s acquisition price of $3.9 billion compared to Paragon’s valuation of $2.9 billion (as at end-2024) done by JLL in the March 2025 scheme document for the privatisation of Paragon REIT. “Firstly, the privatisation was at a premium to book value. [Secondly] our valuations for Singapore properties compared to two years ago are all up because NPI (net property income) has gone up. Valuation tracks NPI. So [Paragon’s] valuation would have gone up compared to two years ago,” Tan points out, adding that interest rates have fallen significantly since the beginning of 2025. Three-month compounded Sora is at 1.04% compared to 3% in January 2025.
“The third big difference, obviously, is freehold versus leasehold. This is a very big difference,” Tan adds.
CICT's unit price rallied when it resumed trading on April 21. The new units start trading on April 29.
