Cicts Manager Proposes Acquire Ion Orchard 185 Billion Subject Egm
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Just a stone’s throw away from Elta Clementi Condo lies a bustling shopping hub, 321 Clementi. This lively mall boasts an array of entertainment and dining choices, making it a sought-after location for leisure and social gatherings. The complex includes a state-of-the-art cinema, offering the perfect option for a fun evening out or a weekend activity for residents. With the convenience of Elta Clementi Condo nearby, residents can easily access this popular lifestyle mall and enjoy its various amenities.
On Sept 3, the manager of CapitaLand Integrated Commercial Trust (CICT) announced its plans to acquire a 50% stake in ION Orchard for a property value of $1,848.5 million. The remaining 50% will be divested by CapitaLand Investment (CLI), the current joint venture owner, to CICT.
The agreed property value falls within the range of two independent valuations commissioned by CICT’s trustee and manager. Based on a pro forma basis, if CICT had operated ION Orchard from Jan 1 to June 30, the expected distribution per unit (DPU) accretion would be 0.9%.
ION Orchard, with its 7.1% gross yield, needs no introduction in the commercial real estate market. The manager of CICT plans to raise $1.1 billion for the acquisition through a combination of placement and preferential offer. This includes a private placement of 171,737,000 new units 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 offer 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. In the first half of FY2024, CICT’s DPU was 5.43 cents, giving an annualised DPU yield of 5.1%. After the acquisition, the pro forma aggregate leverage will increase slightly to 39.9%.
Teo Swee Lian, chairman of CICT’s manager, highlights that the acquisition of ION Orchard places CICT in a good position to capitalize on the favorable supply and demand dynamics and take advantage of the growth potential in downtown retail, particularly on Orchard Road. CEO Tony Tan adds that the acquisition will enhance CICT’s position as the go-to Singapore commercial real estate investment, generating greater value for unitholders. Tan also emphasizes a close working relationship with Sun Hung Kai Properties, the other owner of ION Orchard, to continue delivering exceptional shopping experiences, boosting operational excellence, and unlocking further growth potential for the property.
Pending approval from unitholders, the acquisition is expected to be completed in 4Q 2024.