Hongkong Land Holdings Ltd. is selling part of its prized One Exchange Square for HK$6.3 billion ($810 million) and starting a share buyback program, as the company cuts back debt and hunts for new opportunities.

The firm, one of the biggest landlords in Hong Kong, will sell 147,025 square feet (13,659 square meters) of the building in the Central district to Hong Kong Exchanges & Clearing Ltd. The property represents 3.2% of the total value of its Central portfolio, it said in a London exchange filing on Thursday.

“We are just building a war chest” for new opportunities, said Chief Executive Officer Michael Smith in an interview on Thursday.

Commercial real estate developers including Hongkong Land are facing growing pressure on rental income as the city’s occupancy rates decline and supply expands. Office rents may slump to a 16-year low this year, according to Bloomberg Intelligence.

The firm is selling the top nine floors of One Exchange Square, along with the retail space on levels one and two, to the HKEX.

It will use 6.3% of the sale proceeds to enhance the property. For the rest, 80% or about $600 million will be used to reduce the company’s debt, which stood at $5.1 billion as of the end of last year; 20% will be used for a share buyback.

The buyback program of up to $200 million will be financed with proceeds from the transaction as well as other capital recycling efforts and will last through December, it said.

In its biggest pivot in years, Hongkong Land unveiled a strategy last October to focus on commercial property management and forgo residential development. The move will eventually see it set up real estate investment trusts, it said at the time.

Last June, the group announced a more than $1 billion, three-year investment project with retail tenants to upgrade its high-end Landmark shopping mall in Central.

Hong Kong’s office rents could drop 8% this year, Bloomberg Intelligence analysts wrote in a report on April 23. The vacancy rate rose to 17.5% in March from 16.8% three months earlier, which may push down average rents to the lowest since 2010, they wrote.

Hongkong Land’s Singapore-listed stock slipped 0.2% on Thursday. The shares have fallen about 5% this year after gaining 28% in 2024.

The company, which is backed by Jardine Matheson Holdings Ltd., saw revenue climb 9% to $2 billion last year. That was still lower than the peak of $2.7 billion in 2018.

HongkongLand USD soars 6.4% at 9:40 am, Apr 25th.