[SINGAPORE] Property group Hongkong Land will sell 147,025 square feet (sq ft) of One Exchange Square to Hong Kong’s stock exchange operator for HK$6.3 billion (S$1.1 billion), and launch a share buyback programme.
The group plans to use up to 6.3 per cent of the sale proceeds to fund enhancements to the space that is up for sale, it said in a bourse filing on Thursday (Apr 24).
Of the remaining proceeds, 80 per cent will go towards paring down debt and 20 per cent will finance the US$200 million share buyback programme – which will also be funded from other capital recycling activities executed during the fiscal year ended December 2024.
The share buyback programme will run until Dec 31, 2025. It will return capital to shareholders and reduce the group’s share capital, with repurchased shares being cancelled.
Hong Kong Exchanges and Clearing (HKEX) has agreed to buy the top nine floors, or levels 42 to 50, of One Exchange Square, and make the space its permanent headquarters in the city.
It will also purchase the retail space on the first and second floors of the property, and transform it into its entrance lobby, which will provide direct connectivity to the top floors of the building.
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Separately, HKEX will enter into a new long-term lease for some 63,000 lettable sq ft of Two Exchange Square, which it now occupies. This, together with its acquisition of space in One Exchange Square, raises its total footprint in Exchange Square.
The acquisitions will be made in phases under two sale-and-purchase agreements dated Apr 24, between two of Hongkong Land’s wholly owned subsidiaries and HKEX.
The sum of HK$6.3 billion will be paid over time as individual floors are transferred to HKEX, and the group will continue to earn rental income from these spaces until they are sold.
Around 45 per cent of gross sale proceeds are set to be received by Hongkong Land in 2025, and the balance will be paid in 2026.
Hongkong Land will contribute up to HK$400 million towards planned enhancements to the property, and the costs are expected to be incurred over the next few years.
Financial impact and valuation
The purchase price of the property was determined after negotiations between parties involved, said Hongkong Land.
Net sale proceeds reflect the property’s carrying value as at Dec 31, 2024, which was derived from a market valuation by an independent valuation firm.
The transaction is expected to be earnings accretive and the majority of the proceeds will be used to reduce debt and lower net financing costs.
The counter closed 0.2 per cent or US$0.01 lower at US$4.22, before the announcement.
