Hongkong Land Holdings Limited (HKL) is selling 147,025 square feet (sq ft) of One Exchange Square to Hong Kong Exchanges and Clearing (HKEX) for HK$6.3 billion ($1.07 billion).

The company is also entering into a new long-term lease for circa 63,000 lettable square feet in Two Exchange Square with respect to space currently occupied by HKEX.

The 147,025 sq ft of One Exchange Square includes the top nine floors which is currently its permanent headquarters in Hong Kong, and a retail space on level 1 and level 2. The retail space will be enhanced into an immersive lobby for HKEX.

Under two sale and purchase agreement terms, two of HKL's wholly-owned subsidiary and HKEX have agreed to purchase the strata title acquisition in phases.

The total cash proceeds of HK$6.3 billion will be received over time as individual floors are handed over to HKEX. Approximately 45% of gross sale proceeds are expected to be received in 2025, and the balance of 55% in 2026.

HKL says that it will contribute up to HK$400 million towards planned enhancements to the property, with the costs expected to be incurred over the next few years.

The property represents 3.2% of the total value of HKL's central portfolio. HKL intends to use up to 6.3% of the gross sale proceeds to provide enhancements to the property and use the remaining proceeds in two ways - 80% for the reduction of net debt, and 20% for a share buyback.

The company says that a share buyback programme is in line with its recently announced corporate strategy in which it intends to return capital to shareholders by way of a share buyback programme of up to US$200 million, which will be financed using proceeds from this transactions and other capital recycling programmes carried out during the FY2024 ended Dec 31, 2024.