Hongkong Land - Foray into fund management
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- Launched its first private real estate fund, the Singapore Central Private Real Estate Fund, with AUM of SGD8.2bn at inception
- Hongkong Land being the fund’s single largest unitholder
- Share buyback programme upsized by USD300m to USD650m, with extension to end-Jun 2027
- Fund management strategy supports higher valuation; Maintain BUY with higher TP of USD10.13
Formation of its first private real estate fund. In Feb-26, Hongkong Land successfully launched its first private real estate fund, the Singapore Central Private Real Estate Fund (‘SCPREF’), with AUM of SGD8.2bn (or USD6.4bn) at inception. Targeting AUM of SGD15bn over five years, SCPREF has a mandate to acquire additional high-quality, income-producing commercial assets in Singapore’s Central Business District and Orchard Road District. The initial portfolio comprises Asia Square Tower 1 (100% interest), Marina Bay Financial Centre Tower 1 & Tower 2 and Marina Bay Link Mall (one-third stake), One Raffles Quay (one-third stake), and One Raffles Link (100% interest), which have combined total effective net lettable area of 2.6msf. The seed portfolio generates an annual attributable gross rental income of >SGD350m, with committed occupancy standing high at 96% as of Jan-26. Rental reversions have been strong, with resilient income supported by blue-chip tenants.
Hongkong Land as the single-largest unitholder in SCPREF. At inception, SCPREF has committed equity of SGD4.1bn (or USD3.2bn), with >50% contributed by Hongkong Land, and over SGD1.8bn from third party capital, including Qatar Investment Authority, APG Asset Management, and Southeast Asia sovereign wealth fund. Hongkong Land will also act as the fund’s General Partner and Manager, and will maintain at least a 30% interest going forward.
Achieved 85% of its 2027 capital recycling target. In Dec-25, Hongkong Land disposed one-third stake in Marina Bay Financial Centre Tower 3 (MBFC T3) to Keppel REIT, generating net proceeds of USD0.7bn. Following the establishment of SCPREF in Feb-26, Hongkong Land recycled additional net proceeds of USD0.6bn. This bought its total capital recycling achieved since 2024 to USD3.4bn, representing c.85% of its 2027 USD4bn capital recycling target.
Share buyback programme upsized by USD300m. Following the establishment of the fund, Hongkong Land upsized its share buyback programmed from USD350m to USD650m, which reflected c.20% of the USD3.4bn capital recycled to date. The extended buyback programme will continue through Jun-27. Since the launch of the share buyback programme in Apr-25, Hongkong Land has repurchased 51.2m shares for c.USD310m at an average price of USD6.05/sh.
Underlying earnings estimated to be lower in FY25. FY25’s underlying earnings, excluding provisions, should be lower than FY24, in line with Q3 guidance. This mainly due to negative Hong Kong office rental reversions, lower retail income on renovation disruption at the LANDMARK retail portfolio, lower contribution from build-to-sell business as it is being wound down. In 2H25, further impairment provisions will be made for China projects (FY24: USD314m; 1H25: USD23m).
Improved sentiment in Central office portfolio; negative reversions should narrow. Leasing momentum in Hong Kong’s Central office portfolio strengthened on the back of recovering capital-market activity and a robust IPO pipeline. Vacancy tightened across prime buildings, supported by continued flight-to-quality demand. While rents remain under pressure, negative reversionary growth should narrow in 2026.
Lower retail contribution on renovation disruption. Contribution from the LANDMARK retail portfolio is expected to record a single digit decline, despite c.30% of space under renovation in FY25. Demand from the ultra-high-net-worth segment remained resilient, with top-tier customer spending increasing y/y. Reversionary growth stayed positive, supported by retail upgrades. Notably, Prada and Saint Laurent have opened flagship stores at LANDMARK in late 2025/early 2026.
Mixed retail mall performance in China and Macau. WF Central in Beijing continued to benefit from tenant mix optimisation, delivering positive tenant sales growth. The Ring-branded lifestyle malls also showed improving momentum, led by strong performance at The Ring, Chongqing. In contrast, One Central Macau faced headwinds from planned refurbishment works and a weaker operating environment.
Ph 2 of West Bund Central coming onstream. About 176 units at Ph2 of West Bund Central Residences were launched in 2025, achieving high occupancy. Phase 2 comprises 800 residential units in total, with the remaining units scheduled for launch in 2026. Four office buildings with total GFA of 78,000sm have been fully committed, and are being progressively handed over to occupiers. In addition, c.27,000sm of retail space, comprising >100 shops, is scheduled to open from 2Q26 onward.
Maintain BUY with USD10.13TP. Over the past three months, its share price has risen by c.40%. Following the share price rally, the stock is now trading at a 25% discount to our appraised current NAV. The core central office market appears to be bottoming out, supported by improved capital market activity. The ongoing share buyback programme and continuous asset recycling should help to support its share price, while the formation of a fund management business should justify a higher valuation for the stock. Based on a narrower 15% discount to our Dec-26 NAV estimate, we maintain BUY with higher TP of USD10.13.
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