Real asset manager CapitaLand Investment Limited (CLI) has agreed to sell its 50% stake in ION Orchard, a high-end mall in Singapore, to its sponsored real estate investment trust, CapitaLand Integrated Commercial Trust (CICT), for S$1.85 billion (US$1.41 billion).
ION Orchard is currently held in a joint venture with Hong Kong-based Sun Hung Kai Properties (SHKP) holding the remaining 50.0%.
The proposed divestment of ION Orchard is part of CLI’s asset-light growth strategy which will grow CLI’s funds under management (FUM) by S$1.85 billion. The sale consideration of approximately S$1.08 billion can be recycled towards future growth opportunities.
ION Orchard is a dominant retail landmark at the heart of Orchard Road, attracting both locals and tourists. With CICT’s predominant focus on Singapore, the proposed divestment will further enhance the quality of its portfolio.
The eight-storey mall, with a net lettable area of 623,600 square feet, is home to nearly 300 international and local brands across the luxury and non-discretionary retail segments.
Integrated with a 56-storey condominium, The Orchard Residences, ION Orchard has sheltered access to the Orchard mass rapid transit (MRT) interchange station which serves the North-South Line and the Thomson-East Coast Line as well as ION Orchard Link, an underground pedestrian link with retail offerings.
The eight-storey ION Orchard has a net lettable area of 623,600 square feet. Photo: CLI
The proposed deal is conditional upon the approval of CICT’s non-interested unitholders and is targeted to be completed in the fourth quarter of 2024. The sale consideration will be paid in cash.
In support of CICT, CLI has undertaken to fully subscribe to its pro-rata entitlement for the preferential offering as part of the funding for CICT to acquire ION Orchard. As at June 30, CLI’s stake in CICT was 24%.
CLI group chief executive officer Lee Chee Koon says: “CLI remains committed to the long-term growth of our listed funds by providing a pipeline of attractive assets with stable yields. This proposed divestment is a testament to CLI’s strong sponsor support for CICT and will strengthen CICT’s market position as the largest proxy for high-quality Singapore commercial real estate.
“This transaction also demonstrates the disciplined execution of our asset-light strategy to recycle quality assets from our balance sheet and grow CLI’s FUM.”
Upon the completion of the deal, CLI will have recycled S$3.6 billion year-to-date, exceeding its annual capital recycling target of S$3 billion.
Divestment proceeds will be used to further diversify the firm’s portfolio across geographies and asset classes as well as establish new fund products to boost its fee-related income, Lee adds.
