QIA mulls injecting HSBC headquarters into Singapore REIT

London, United Kingdom - February 03, 2019: Sun shines on world Headquarters of HSBC Holdings plc at 8 Canada Square, Canary Wharf. It's 7th largest bank worldwide and was established in 1865 (Lubo Ivanko via Getty Images)

By Elffie Chew

(Bloomberg) — Qatar Investment Authority is in talks to inject HSBC Holdings Plc’s London headquarters building into a planned property trust being listed by City Developments Ltd., people with knowledge of the matter said.

The potential deal would boost the value of the real estate investment trust portfolio to 1.8 billion pounds (US$2.6 billion) from 600 million pounds, said the people, who asked not to be identified as the information is private.

The Gulf sovereign wealth fund and the Singaporean homebuilder aim to raise 500 million pounds from an initial public offering of the sterling-denominated REIT, the people said. The IPO could take place in the city-state as soon as the third quarter, they said.

Deliberations are ongoing and there is no certainty that a deal will proceed, said the people. A representative for City Developments declined to comment. A representative for QIA did not immediately respond to requests for comment.

Persimmon Plc, the U.K.’s biggest housebuilder, said the long-term outlook for the country’s housing market remained resilient despite the economic gloom and latest national lockdown.

The IPO denominated in sterling would be only the second such offering in Singapore, after Elite Commercial REIT’s first-time share sale raised 135.4 million pounds last year. City Developments has been working with DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. on the planned REIT IPO, Bloomberg News reported last year.

City Developments has constructed more than 46,000 homes and owns over 24 million square feet of properties in 29 countries and regions, according to its website. Its portfolio includes residences, offices, hotels and shopping malls.

QIA manages about US$300 billion of assets and ranks as the world’s 11th-largest wealth fund, according to the Sovereign Wealth Fund Institute. It bought 8 Canada Square, the building in London’s Canary Wharf financial district that houses HSBC’s head office, in 2014 from South Korea’s National Pension Service for an undisclosed amount.

Sheikh Mohammed bin Abdulrahman Al Thani, QIA’s chairman and Qatar’s foreign affairs minister, told Bloomberg TV in January that the fund is looking to Asia for deals in an effort to diversify an investment portfolio heavily weighted toward North America and Europe.

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