Hongkong Land divests One Exchange Square floors to HKEX for $810 million

HONG KONG - Hongkong Land Holdings Limited has contracted to sell nine upper floors and two retail levels of One Exchange Square in Hong Kong to Hong Kong Exchanges and Clearing Limited (HKEX) for HK$6.3 billion (US$810 million). The deal, announced today, includes the top nine floors designated as HKEX’s permanent headquarters and an immersive, experience-led entrance lobby on the first two floors.

The transaction also encompasses planned enhancements to the property and Exchange Square, which Hongkong Land will oversee, pending customary government approvals. The enhancements are expected to be completed over the next few years.

This sale is part of a broader agreement that sees HKEX also entering into a new long-term lease for approximately 63,000 square feet in Two Exchange Square, indicating a slight increase in HKEX’s total footprint within the Exchange Square complex.

The phased strata title acquisition is set to deliver approximately 45% of the gross sale proceeds to Hongkong Land in 2025, with the remaining 55% anticipated in 2026. Hongkong Land will contribute up to HK$400 million for property enhancements and will continue to earn rental income until each floor space is sold.

The purchase price reflects the property’s carrying value as of 31 December 2024, based on independent valuation. The sale is expected to be earnings accretive for Hongkong Land, as the majority of the proceeds will be used to reduce net debt and lower net financing costs, which should more than offset the loss of rental income.

The property represents 3.2% of the total value of Hongkong Land’s Central portfolio. The company plans to allocate up to 6.3% of the gross sale proceeds for property enhancements, with 80% of the remaining proceeds going towards reducing net debt and 20% for a share buyback program.

The share buyback program, part of the company’s corporate strategy to return capital to shareholders, is set to run through to 31 December 2025, with a budget of up to US$200 million. It will be funded by the transaction proceeds and other capital recycling activities from the financial year ended 31 December 2024. Shares repurchased under the program will be cancelled.

HKEX, a leading global exchange group, operates a variety of financial markets, products, and services, including the London Metal Exchange. Hongkong Land is a major property investment, management, and development group with a notable presence in Asian gateway cities.

This news is based on a press release statement issued by Hongkong Land Holdings Limited.

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