New fund will be Singapore’s biggest private real estate fund; move follows divestments of other major assets
[SINGAPORE] Following the sale of its stake in Marina Bay Financial Centre (MBFC) Tower 3 to Keppel Reit, Hongkong Land on Friday (Dec 12) announced that it is injecting its interests in One Raffles Quay, MBFC Towers 1 and 2 into a new real estate fund that will be set up.
The Singapore Central Private Real Estate Fund (SCPREF) is expected to hold more than S$8 billion in assets under management (AUM) at its inception.
It will be Singapore’s biggest private real estate fund and focus exclusively on managing prime commercial property assets in the Republic.
“The establishment of SCPREF is in line with the company’s strategy to grow its AUM to US$100 billion by 2035, with meaningful participation from third-party capital investors,” it said.
Hongkong Land’s joint venture partners had the right of first refusal to purchase its stakes in the projects, along with its one-third stake in MBFC Tower 3, with the rights having expired on Thursday.
Keppel Real Estate Investment Trust (Reit) announced on Thursday that it was purchasing Hongkong Land’s Tower 3 stake for S$1.5 billion. The pre-emptive offers for One Raffles Quay and MBFC Towers 1 and 2 lapsed on the same day.
Hongkong Land thus plans to transfer its interests in these remaining assets, along with its 100 per cent interest in One Raffles Link, to the new fund, it said.
Combined, the assets designated for the fund held an attributable property value of S$3.9 billion as at Jun 30, representing around 3.2 million square feet of office space.
Net proceeds from the sale of MBFC Tower 3 will increase Hongkong Land’s total capital recycling achieved since 2024 from US$2.1 billion to US$2.8 billion. This figure represents around 70 per cent of the group’s US$4 billion capital-recycling target set for 2027.
The injection of assets into SCPREF follows Hongkong Land’s divestment of other major assets. In September, Malaysia’s Sunway said it was buying Hongkong Land’s development arm MCL Land for S$738 cash.
In April, Hongkong Land sold office floors and retail spaces at One Exchange Square to the Hong Kong Stock Exchange for HK$6.3 billion (S$1 billion).
Jardines-controlled Mandarin Oriental in October announced the US$925 million sale of 13 floors at One Causeway Bay, to Chinese e-commerce giant Alibaba Group.
Hongkong Land said SCPREF is expected to launch with an AUM more than double the value of the seed portfolio provided by the company. It indicated that an announcement regarding the fund’s establishment is expected in Q1 2026.
Equity commitments from third-party capital investors are currently in the final stage of documentation.
The launch of the S$8 billion fund marks one of the first major milestones in the “fund management” pillar of Hongkong Land’s new strategy, which was unveiled in October 2024.
At the time, the group announced it would exit the build-to-sell residential development business and pivot towards fund management, with a focus on ultra-premium integrated commercial properties in Asia’s gateway cities.
Then, group chief executive Michael Smith said in an interview with The Business Times: “The ideal situation is that we become a much more investment property-oriented, high-quality income company. We want to have third-party capital. We want to be a fund manager.”
MBFC was originally developed by a consortium comprising Hongkong Land, Keppel Land and Cheung Kong.
Following the development’s completion, Keppel Reit acquired its initial one-third interest in the property from its sponsor, Keppel Land. The remaining one-third stake, currently held by anchor tenant DBS, was acquired from Cheung Kong’s share of the building.
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