(Bloomberg) -- CapitaLand Investment Ltd. will sell its stake in one of Singapore’s most high-end malls to a real estate investment trust backed by the property company as it seeks to reduce assets on the balance sheet.
The deal will divest CapitaLand’s 50% interest in ION Orchard with a property value of about S$1.85 billion ($1.4 billion) to CapitaLand Integrated Commercial Trust. CapitaLand Investment has a 24% stake in the REIT, which is the city-state’s largest by market capitalization. The move is aimed at a “asset-light growth strategy,” the investment firm said in a statement Tuesday.
The REIT will spend about S$1.1 billion in total for the acquisition after adjusting for other factors, it said in an exchange filing. It intends to finance the transaction from the net proceeds of an equity fund raising. The deal, which requires the approval of the REIT’s non-interested unitholders, is targeted to be completed by the fourth quarter.
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CapitaLand Investment said it will be on track to recycle S$3.6 billion this year after the deal, exceeding its annual divestment target of S$3 billion.
Shares of CapitaLand Investment jumped as much as 4.8%, the biggest intraday increase since mid-July, making it the day’s biggest gainer on Singapore’s benchmark equity index. The stock has slid about 12% this year due to the impact of high interest rates and its China exposure.
CICT shares remained halted in the early afternoon.
Bloomberg News reported in July that CICT had also been seeking to sell one of its prime office assets, but was facing pressure from buyers to lower the price. It said in its Tuesday filing that as part of a ongoing “portfolio optimization strategy” it may sell properties to enhance its financial flexibility.
The mall in Singapore’s main Orchard Road shopping belt is held in a joint venture with Hong Kong’s Sun Hung Kai Properties Ltd., which owns the remaining 50% stake.
(Updates with acquisition financing in third paragraph, shares in sixth and CICT potential asset sales in seventh)
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