CICT Buying Singapore’s Paragon for $3.1B, Selling Asia Square 2 to IOI for $2B

Singapore’s largest commercial REIT has agreed to acquire the Paragon mall and medical complex on Orchard Road for S$3.9 billion ($3.1 billion), according to an announcement by CapitaLand Integrated Commercial Trust (CICT) on Monday, in the city-state’s largest transaction of a single property so far this year. 

With the freehold complex spanning 714,915 square feet (66,418 square metres) of net lettable area, the trust is paying the equivalent of S$5,455 per square foot to acquire the property from Cuscaden Peak, a 50:50 joint venture between CICT’s sponsor, CapitaLand Investment and Temasek Holdings stablemate Mapletree Investments, which took Paragon REIT private last year and has been steadily selling off assets from what had once been the portfolio of Singapore Press Holdings’s property division.

To fund the purchase, CICT is selling Asia Square Tower 2 in Marina Bay to a unit of Malaysian developer IOI Properties Group, for S$2.48 billion ($1.9 billion), the trust said. The trust is selling the office block at a 9.9 percent premium to its most recent independent valuation with a 3 percent exit yield, while it is redeploying that cash into the Paragon at a 3.9 percent yield, according to the REIT’s manager.

“Paragon is a rare, premier freehold integrated development in the heart of Orchard Road,” said Tan Choon Siang, chief executive of CICT’s manager. “This acquisition strengthens the resilience and quality of CICT’s Singapore-focused portfolio, combining sizeable, upscale retail exposure with a defensive medical component, which is supported by strong structural tailwinds such as an ageing population and rising medical tourism.”

Mall Yields Appeal

Based on its 2025 net property income and adjusted for annualised January 2026 rental income, the acquisition yields 3.9 percent overall — 4.1 percent on the retail component and 3.4 percent on the medical and office component, CICT said. That implies an annual net property income of approximately S$152 million for the circa 1986 project, which underwent major renovations in the late 1990s and in 2008.

Located at 290 Orchard Road, the complex has a six-storey shopping centre with two basement levels, and two office and medical towers of three and 14 storeys respectively. Paragon carries a BCA Green Mark Gold rating and was operating at 100 percent committed occupancy as at 31 January 2026, with over 190 retail and lifestyle brands and more than 80 multidisciplinary medical tenants, per CICT’s statement. The complex spans 491,817 square feet of retail space and 223,098 square feet of medical suites and offices.

“We are overall positive on the deal with the tactical swapping of a lower yielding leasehold prime office building at circa 3 percent exit yields and recycling proceeds into a prime Singapore retail at higher 3.9 percent and more importantly a freehold interest,” Vijay Natarajan, an analyst investment bank RHB Singapore, said in a research note.

CICT plans to fund the cash portion through a combination of debt, the net proceeds of a private placement announced on the same day targeting gross proceeds of at least S$600 million, and net proceeds from the Asia Square Tower 2 divestment.

On a pro forma basis assuming both transactions had been completed on 1 January 2025, the combined effect would be 2.1 percent accretive to CICT’s distribution per unit, lifting it from 11.58 Singapore cents to 11.83 cents, the manager said. Pro forma aggregate leverage is expected to increase from 38.6 percent to 39.2 percent.

From Major Fixes Needed to Prime Asset

Prior to the S$2.8 billion privatisation of Paragon REIT last year, Cuscaden Peak had held the freehold title to the Paragon complex, while the listed trust had a 99-year leasehold on the site and held the structures, with those assets described in the privatisation scheme as accounting for 72 percent of the REIT’s valuation.

With the building and land title unified Cuscaden has been able to sell the complex to CICT at close to a 30 percent mark-up from what it paid to acquire the mall. 

In the rationale for the privatisation of Paragon REIT presented to unit-holders in February last year, the REIT manager, which indirectly shares ownership with CICT’s manager, described the Paragon complex as in need of extensive asset enhancements, which would be better resolved under private ownership. 

“Offeror believes a major AEI is necessary to rejuvenate Paragon to remain competitive, but could take several years,” which the scheme noted “could also require sizeable capital investment and carries execution risks.”

In its rationale for the acquisition announced on Monday, CICT’s manager pointed to committed occupancy of 100 percent for the Paragon in 2025, with no new major supply on the way in the Orchard Road area, while noting that, “the proposed acquisition is well-positioned to deliver sustainable income growth.”

Paragon is the last asset remaining from the former Paragon REIT portfolio since the privatisation was completed in May last year, after Cuscaden sold The Clementi Mall to Chinese investor Elegant Group for S$809 million in December with Australia’s Fawkner Property Group having acquired the REIT’s 85 percent stake in a New South Wales mall for A$125 million early last year.

Asia Square Tower 2 Sells Again

IOI Properties is buying Asia Square Tower 2, a 46-storey Grade A office building in Marina Bay, for an agreed property value of S$2.48 billion, or approximately S$3,180 per square foot based on the 778,719 square feet of office and retail net lettable area, according to CICT’s manager. 

“IOIPG (IOI Properties Group) is of the view that the proposed acquisition is an opportunity for the group to strengthen its presence in Singapore’s Central Business District (“CBD”), particularly in the Marina Bay area,” the developer said in an announcement to the Kuala Lumpur exchange. The company added that, “The Asia Square Tower 2 is located adjacent to the IOI Central Boulevard Towers, which is expected to support portfolio clustering within the CBD and facilitate tenant movement and operational synergies across the group’s Singapore portfolio.” 

The price for the 2013-vintage building represents a 9.9 percent premium to an independent valuation of S$2.25 billion based on figures through 31 December 2025, according to the announcement. The Asia Square 2 transaction excludes the Westin Singapore hotel within the tower, which was sold to Japan’s Daisho Group in 2013. The sale is expected to close in the second half of 2026, subject to shareholder approval and other procedures.

“Investors have repeatedly demonstrated their confidence in Singapore, reinforced by recent large scale transactions in the office market. The fundamentals are strong and when combined with the attractive interest rate environment and the depth of the real estate capital markets, we’re confident in the growth of the office market,” Stuart Crow CEO of APAC capital markets at JLL told Mingtiandi.

The S$2.1 billion acquisition of Asia Square 2 in 2017 by CICT’s predecessor, CapitaLand Commercial Trust, ranked as Asia Pacific’s largest office transaction that year, with the planned disposal marking an 18 percent markup from that entry price.

The Asia Square 2 transaction is the latest in a series of major office deals in Singapore’s Marina Bay area in recent months, as a shortage of new projects, rising rents and lower interest rates has fueled landmark purchases.

In December last year, Keppel REIT agreed to buy a one-third interest in Marina Bay Financial Centre Tower 3 from Hongkong Land for S$1.45 billion, pushing its stake in the building to two-thirds.

In February, Hongkong Land’s launched its S$8.2 billion Singapore Central Private Real Estate Fund with that vehicle seeded with its stakes in Marina Bay Financial Centre Towers 1 and 2, One Raffles Quay, One Raffles Link. The Qatar Investment Authority, which along with the Netherlands’ APG Asset Management was a founding investor in that fund, injected its Asia Square Tower 1 property into the strategy.

“The performance of the Singapore office market in terms of factors like leasing, which has been a standout globally, with investors and occupiers alike attracted to high quality assets in the central business district,” Ting Lim, head of Singapore capital markets at JLL said. 

Assembling a Marina Bay Cluster

IOI Properties’ purchase of Asia Square 2 comes around 10 months after the company bought out City Developments Ltd’s 50.1 percent stake in the South Beach complex for S$834.2 million to take full control of the property near Suntec City.

The Malaysian group opened the IOI Central Boulevard Towers office project in 2024 after having paid S$2.57 billion for the site in a 2016 government land tender in 2016, and during that same year IOI Properties CEO Lee Yeow Seng acquired Shenton House in Shenton Way for S$538 million.

IOI Properties has been in discussions with advisers about listing a Singapore REIT on the SGX, which sources told Reuters in November 2025 could cover assets valued at S$7 billion to S$8 billion and potentially including the South Beach complex and IOI Central Boulevard Towers, with a target listing date of 2027. 

In 2021 IOI paid $1.1 billion to acquire a Marina Bay area site where it is currently building a 51-storey project incorporating 37 floors of branded residences above a 360-room W-branded hotel. 

Unitholders of CICT will be asked to vote on the Paragon acquisition at an extraordinary general meeting expected to be held in the second or third quarter of 2026, with completion of the acquisition expected in the third quarter of 2026.