On Thursday, Soho China released an announcement that its chairman Pan Shiyi intended to sell 32,000 m² of properties in Beijing and Shanghai at a 30% discount. The proceeds from the sale were all for debt reduction with no stock dividends, Pan said.
Over the last two years, several factors, such as the recurring epidemic and the Double Reduction policy on education, have brought considerable negative impact on the office and commercial leasing market. Despite these challenges, Soho China still recorded an average occupancy rate of 83.4% at the end of 2021.
Soho China has adopted a relatively prudent business strategy in recent years, intensively engaging in the office leasing market and generating stable rental revenues. Its net gearing ratio is currently about 44%, remaining at the low end within the industry as a whole.
Soho China will sell nine projects, ranging from office and commercial space to condominiums. The sale of properties is an effort to reduce the company’s burden while allowing it some room to be more flexible in response to market changes a long-term healthy development.
For investors interested in the office property market, the 30% discount offers a great opportunity to pick up a deal. To sweeten the deal, Soho China has raised the commission bonus percentage to 4% of the transaction value, much higher than the industry average.