Title: Oriental IC
No assets that cannot be sold
The core assets of Pan Shiyi and Zhang Xin: The eight “SOHO” series of commercial properties in Beijing and Shanghai will be sold soon. After the news spread on October 30th, SOHO China(0410.HK) The stock price rose strongly, soaring by about 18%.
SOHO China holds a total investment property of 61 billion yuan, and the total price of eight projects is estimated to be 50-60 billion yuan. This also means that SOHO China will sell nearly 90% of its properties at once. . After the cash is sold, the funds will be used to repay the RMB 15.5 billion net interest-bearing liabilities. The remaining cash will exceed 50 billion yuan, which is close to becoming a “pure cash” real estate investment company.
Dafu Finance understands that the above trading targets will be sold in batches and all transactions are expected to be completed within the next two years. At present, the first batch of asset packages – including Beijing Guanghua Road SOHO, Beijing Wangjing SOHO Tower 3, Shanghai SOHO Renaissance Square – are in the final stage of negotiations, and the negotiating opponent is the buyer group established by Blackstone Group and Singapore GIC.
The other five projects are sold by Gubei SOHO, SOHO Tianshan Square, Bund SOHO, Lize SOHO and Qianmen Project. Among them, Gubei SOHO in Shanghai just opened in February this year, with a occupancy rate of 45%, which is the main contribution of SOHO China’s performance growth in the first half of the year. Lize SOHO is the new landmark of Beijing Lize Business District and will officially open in November this year.
It is worth mentioning that the Bund SOHO and Wangjing SOHO have been called “I can never sell” projects by Pan Shiyi, and they are all on the list for sale.
SOHO China Clearance
Since 2012, SOHO China has changed from a sales model to a self-sustaining rental. However, in recent years, SOHO China has only made progress, almost no new development properties, and has been selling and selling. Previously sold SOHO Jingan, SOHO Helen, Lingkong SOHO, SOHO Century Plaza, Hongkou SOHO and other properties, and transferred the 50% equity of the Bund International Financial Center to Fosun, a total of 28.5 billion yuan.
After the completion of this transaction, SOHO China’s accumulated cash amount in the past five years will be close to 100 billion yuan.
Before the clearance, SOHO China also sold its parking space assets and shared office project SOHO 3Q.
On September 30, SOHO China sold 2,583 underground parking spaces under nine SOHO projects for $761 million. The buyer is We Park’s Huibo parking lot investment (Guangzhou) company. After less than a month, at the end of October, Pan Shiyi’s SOHO China shared office project SOHO 3Q, which was once fully invested, was also sold. It is understood that SOHO 3Q has packaged its 11 projects and sold them to the Dream Star, which has entered the contract approval process.
Dafu Finance noted that SOHO China has a total of nine major property investment projects, and the only project that does not appear on the list for sale is Galaxy/Chaoyangmen SOHO. The project ranked highest in all opened projects with a occupancy rate of 98%, but the rental income was only 50.12 million yuan before the newly opened Gubei SOHO.
However, some of the only “survived” projects have already been included in the sale list.
Just four months ago, SOHO China announced plans to sell 13 holdings in batches with an estimated total value of about 7.8 billion yuan.
The first batch of sales items included 9 sets of separate transaction listings of Wangjing SOHO, Galaxy SOHO, Jianwai SOHO, SOHO Donghai Plaza and SOHO Zhongshan Square, totaling 20,000 square meters. The second batch of sales listings has not yet been announced.
It is understood that the underlying assets that are sold in the Galaxy SOHO project are the whole floor of the 12th floor of Block A and the 18th floor of Block D. The total sales area is 6322.4 square meters. This also means that the saleable floor area of Galaxy SOHO has 3,8778.6 square meters. According to the current average transaction price of less than 70,000 / square meter, SOHO China assumes that the last SOHO project will be sold, and at most 2.7 billion yuan.
At the SOHO China performance meeting earlier this year, Pan Shiyi made it clear that he would no longer sell assets in the future. But after only a year or so, SOHO opened the clearance sale. Why?
Pan Zhang and his wife are transforming overseas?
Pan Shizhen’s motives for the sale of clearance stocks have led to speculation. It is reported that with the sale of domestic core assets, Pan Shiyi’s overseas assets layout, which has been laid out for many years but has been stagnant for many years, will be restarted again.
As early as 2011-2013, Pan Shiyi and Zhang Xin and his wife frequently took out overseas property assets through family trusts. They successively acquired the Port Authority Station Bus Terminal Office Building and Manhattan Park Avenue Plaza, 49% of Manhattan Park Times Square. And the joint Brazilian consortium acquired a 40% stake in the US General Motors Building, the total amount of these investments is about 2.7 billion US dollars.
But in 2016-2017, as the country strengthened its foreign exchange controls, SOHO slowed down the pace of selling its properties and suspended overseas investment. At that time, Hongkou SOHO had negotiated the sale and planned to use the cash for overseas investment. However, Pan Shiyi had to cancel the transaction because the funds could not leave the country.
Pan Shiyi’s son, Pan Rui, is currently pursuing a Ph.D. in Real Estate at the Henry Business School in Reading, and has established a local EREC Estates real estate company with several large-scale real estate projects, including the first Chinese-led UK student apartment brand. UNINN.
On the latest Hurun Rich List, Pan Shiyi and Zhang Xin were ranked 153rd with a wealth of 22 billion yuan. The two were respectively the chairman and chief executive of SOHO China, and the overseas family trust controlled by Pan Shiyi Zhang Xin. SOHO China 63.93% equity.
SOHO China’s latest market capitalization is HK$14 billion, but its market value has fallen by 30% from today’s high. In the first half of this year, SOHO China’s net profit was 565 million yuan, down nearly 50% year-on-year.