Singapore-based mall operator Paragon Real Estate Investment Trust (Reit) has received a US$2 billion buyout offer from Times Properties, a wholly owned subsidiary of Cuscaden Peak Investments.

In a joint statement, the managers of Paragon Reit and Cuscaden Peak announced the proposed privatisation and delisting of the mall operator by way of a trust scheme of arrangement.

The offeror proposes a scheme consideration of 98 cents per unit, or SG$2.78 billion (US$2 billion), representing a 7.1 per cent premium over Paragon Reit’s net asset value.

Paragon Reit will also pay cash distributions of 2.33 Singapore cents per unit for the second half of FY24. The statement noted that the buyout price will not be affected by this amount.

The offeror said Paragon Reit has been facing trading conditions that constrain its potential for sustained growth. The company’s portfolio also relies heavily on Paragon, but the mall’s status is being challenged by heightened competition from current and upcoming redevelopments.

In addition, a persistent slowdown in luxury spending post-pandemic has also weighed on Paragon’s performance.

The offeror believes the privatisation will pave the way for a potential asset enhancement initiative to maintain Paragon’s long-term competitiveness.

As the private company, the company will implement such initiatives without subjecting unitholders to execution risks, as well as distribution per unit and unit price volatility, the offeror added.

The deal will require amendments to the Paragon Reit Trust Deed and approval of more than 50 per cent of unitholders representing at least 75 per cent in value of the units held. Cuscaden Peak and its subsidiaries holding 61.5 per cent in the company will abstain from voting.

Paragon Reit owns Paragon and The Clementi malls in Singapore and Westfield Marion Shopping Centre in Australia.