SINGAPORE – In a lengthy statement released late on April 24, Cuscaden Peak said the offer from CapitaLand Integrated Commercial Trust (CICT) to acquire Paragon was unsolicited, and came as a major asset enhancement initiative (AEI) was being planned for at the mall.
Nevertheless, CICT’s proposal was evaluated and “having weighed these considerations against the proposed transaction, Cuscaden Peak’s board decided to accept the offer”, Cuscaden Peak said.
It said the $3.9 billion valuation reflects Paragon on a freehold basis, which is not directly comparable to the earlier leasehold valuation when Cuscaden Peak acquired Paragon REIT.
In responses to questions by ST, a spokesperson for CICT added that market conditions have also become more supportive, justifying the price it is offering.
It noted that interest rates were about 1-2 percentage points higher a year ago, and that Paragon’s net property income has also strengthened on the back of high occupancy and rental growth, meaning the current valuation reflects a stronger income base.
Cuscaden Peak added that its offer to privatise Paragon REIT came at a price about 7.1 per cent above the REIT’s net asset value. The offer was assessed as fair by an independent adviser and was approved by a large majority of independent unitholders at a meeting in June 2025.
The move also followed a strategic review of Paragon’s long-term positioning among newer and better malls on Orchard Road, and that the mall had not undergone a major refurbishment since 2009.
Cuscaden Peak is seeking to explain in greater detail why it decided to sell Paragon so soon after privatising Paragon REIT in February 2025, having earlier anchored the move on the need for a substantial $300 million-$600 million AEI at the mall.
The explanation comes amid questions over whether unitholders of Paragon REIT received a fair deal back then, after CICT acquired Paragon for $3.9 billion on April 21, which is substantially higher than the roughly $2.8 billion price tag at which Cuscaden Peak took the REIT private just a year earlier.
It has also raised fresh questions over the privatisation rationale itself.
While Cuscaden Peak had argued that Paragon required a major, multi-year upgrade best undertaken outside the constraints of a listed REIT, CICT has since indicated that any potential AEI would be subject to its own evaluation and may not match the scale previously suggested.
Cuscaden Peak said preliminary studies conducted ahead of the privatisation pointed to a significant redevelopment programme that could span three to four years and require substantial capital outlay.
The Straits Times understands the $300 million-$600 million worth of AEI planned included expanding the 280m facade of mall, reconfiguring its layout, mechanical and electrical replacements, building an underground pedestrian tunnel and raising the ceiling of its luxury retail floors.
The group argued then that the scale, cost and execution risks of such works – coupled with Paragon’s heavy concentration within the REIT, where it accounted for about 72 per cent of assets – made it more appropriate to undertake the AEI in a private setting.
In responses to queries by The Straits Times, a CICT spokesperson said its proposed acquisition of Paragon fits well within its broader strategy to deepen its retail presence along Orchard Road and the downtown core.
The deal would strengthen CICT’s footprint in one of Singapore’s most tightly held retail corridors, where new supply is limited and long-term demand remains strong.
Together with assets such as ION Orchard, Plaza Singapura, Raffles City Singapore and Funan, Paragon would extend CICT’s reach across key nodes from Orchard to City Hall, reinforcing its position across the prime shopping belt and enhancing the overall quality and resilience of its portfolio.
It added that Paragon’s mix of luxury retail, medical suites and office space provides a diversified income stream, offering both growth potential and stability across market cycles.
On potential upgrades, CICT reiterated that it would assess AEI opportunities only after the transaction is completed, and any eventual capital expenditure on its part would depend on its own feasibility studies, design considerations and internal approvals, and may differ from Cuscaden Peak’s preliminary estimates.
Still, the divergence between Cuscaden Peak’s 2025 justification for privatising Paragon REIT and CICT’s current stance on capital expenditure has raised questions over how critical a major AEI really is for the mall, and whether the need to privatise Paragon REIT was necessary to carry it out.
For now, unitholders of CICT may be on the front foot, with analysts noting that the deal is expected to lift CICT’s returns and strengthen its position as one of Singapore’s largest commercial landlords.
Even so, market watchers are not ruling out further capital expenditure at the mall. On April 24, CICT said it plans a $160 million upgrade of Plaza Singapura and The Atrium@Orchard, which will introduce new retail, dining and activity spaces for shoppers.
Given Paragon’s higher-end tenant mix and location in Orchard Road, any enhancements to the mall, if needed, may not come cheap.
