Consider this: CICT’s April 20 announcement states the total acquisition outlay for Paragon is $3.919 billion, comprising the estimated purchase price of approximately $3.848 billion, an acquisition fee payable in units of $39 million, and the fees and expenses incurred in connection with the private placement of $32 million.
Unitholders of Paragon REIT may have sounded somewhat miffed at CapitaLand Integrated Commercial Trust’s (CICT) proposed acquisition of Paragon mall for $3.9 billion. But they shouldn’t be. After all, CICT’s unit price rose after a trading halt on April 20, and its private placement was upsized and 4.8 times covered, evidence that institutional investors like the deal. They should take issue with the rationale for Paragon REIT’s privatisation.
Paragon REIT’s scheme document dated March 27, 2025, stated that Paragon required an asset enhancement initiative (AEI) valued at between $300 million and $600 million over four years to compete with the other malls along Orchard Road. The scheme document had said: Taking into consideration the uncertainties inherent in a potential AEI, the offeror (Cuscaden Peak) believes that a major potential AEI would be more suitably carried out in a private setting. The $300 million to $600 million AEI reason for privatising the REIT came on the heels of a previous AEI done in 2009. Paragon once accounted for 72% of Paragon REIT’s assets. JLL’s valuation as at the end of 2024 was $2.9 billion.
