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A bum boat passes under a bridge near the Esplanade concert hall along Marina Bay in Singapore May 20, 2014. Reuters

Singapore's CapitaLand is buying the owner of a clutch of real estate investment trusts from state investor Temasek [TEM.UL] for about $4.4 billion, a deal the developer said would create the largest diversified property group in Asia.

CapitaLand will buy the holding companies of the business of the Ascendas-Singbridge Group, which manages Ascendas Real Estate Investment Trust (AEMN.SI), Ascendas India Trust (AINT.SI) and Ascendas Hospitality Trust (ASHP.SI), for cash and stock.

The deal marks one of the biggest consolidations in Singapore's fragmented real estate investment trust sector, in which some segments, like retail, face increased challenges, partly due to the onslaught of e-commerce.

The deal will create a group with combined total assets under management of more than S$116 billion ($85.81 billion), CapitaLand and Ascendas-Singbridge said in a joint statement on Monday.

Real estate developer CapitaLand's global businesses span shopping malls, lodging, offices, homes, real estate investment trusts (REITs) and funds. The deal will push CapitaLand ahead of its target to grow its assets under management to S$100 billion by 2020.

Ascendas-Singbridge is mainly a business space provider, such as logistics and business parks, as well as data centres.

"Geographically, the deal strengthens CapitaLand's presence in our core markets of Singapore and China, while adding meaningful scale in India, U.S. and Europe," Chief Executive Lee Chee Koon said in a statement.

The deal also gives the company a strong foothold in logistics and business parks.

"In an increasingly competitive global retail landscape environment, this consolidation will help scale and competitiveness for the companies," said a person familiar with the transaction.

The target companies have a combined enterprise value of S$10.9 billion.

Under the agreement, Temasek will effectively receive about S$6 billion, half in cash and half in new CapitaLand shares, which will be priced at S$3.50 a piece.

After the deal closes, Temasek's stake in CapitaLand will increase to about 51 percent, from about 40.8 percent.

With Temasek owning stakes in both acquiring and target companies, the deal must receive approval from CapitaLand's independent shareholders.

Trading in shares of CapitaLand, some of its listed REITs, and Ascendas-Singbridge's REITs, was halted ahead of the announcement.