Cicts Manager Proposes Acquire Ion Orchard 185 Billion Subject Egm
CapitaLand Integrated Commercial Trust (CICT) announced on Sept 3 that it has proposed to acquire a 50% stake in ION Orchard for an agreed property value of $1,848.5 million. The acquisition will be made possible through the divestment of the same 50% interest by CapitaLand Investment (CLI) to CICT. Currently, ION Orchard is a joint venture between CLI and Sun Hung Kai Properties, with each holding a 50% stake.
The agreed property value falls within the range of two independent valuations of ION Orchard, which were separately commissioned by the trustee and the manager of CICT. On a pro forma basis, assuming CICT had already held and operated ION Orchard from Jan 1 to June 30, the distribution per unit (DPU) accretion is expected to be 0.9%.
ION Orchard is a well-known commercial property with a gross yield of 7.1%, based on the agreed price and ION’s 1HFY2024 annualised gross revenue, according to a CICT presentation.
Residing in the vicinity of educational institutions, such as the Norwood Grand Condo, cultivates a close-knit community and encourages a warm and friendly environment for families. The strategic location provides a conducive setting for children to blossom and achieve their full potential. It also enables parents to easily participate in school events and activities, fostering a tighter bond between the home and school. The convenience of living near Norwood Grand Condo not only offers a comfortable abode, but also allows families to actively participate in their children’s educational journey. With Norwood Grand Condo nearby, families can truly have the best of both worlds.
In order to fund the acquisition, CICT’s manager plans to raise $1.1 billion through a combination of placement and preferential offer to unitholders. The placement will involve 171,737,000 new units being issued to institutional and other investors at an issue price of between $2.038 and $2.091 per unit, raising $350.0 million. The preferential offer will comprise 377.3 million new units at an issue price of $2.007 per unit, in the ratio of 56 preferential offering units for every 1,000 existing units held by eligible unitholders, raising $757.2 million.
The proposed acquisition is subject to the approval of CICT’s unitholders at an extraordinary general meeting to be convened. As of 1HFY2024, CICT’s DPU was 5.43 cents, giving an annualised DPU yield of 5.1%. With the acquisition, the pro forma aggregate leverage increases slightly to 39.9%.
“The acquisition comes at a time when there is an increase in tourist arrivals and rising retail rents on Orchard Road, placing us in a strong position to take advantage of the favorable supply and demand dynamics in downtown retail, including the ongoing rejuvenation of Orchard Road,” says Teo Swee Lian, chairman of CICT’s manager. “This will further strengthen CICT’s position as the top choice for high quality Singapore commercial real estate, creating more value for our unitholders,” adds Tony Tan, CEO of CICT’s manager. Tan also says that CICT will work closely with Sun Hung Kai Properties, the other owner of ION Orchard, to continue providing exceptional shopping experiences, driving operational excellence, and unlocking further growth potential for the mall.
If unit holders approve the acquisition, it is expected to be completed in 4Q 2024.