Soho China considers Us$8bil commercial property sales

SHANGHAI: Soho China Ltd is considering selling a majority of its commercial property holdings in deals that may fetch as much as Us$8bil, according to sources.

At least eight office towers in Beijing and Shanghai are being discussed as part of the planned sales, the sources said.

The developer’s Hong Kong-listed stock surged as much as 24% Wednesday, the most since the company debuted in 2007. Daily trading volume topped 100 million shares for the first time since 2009.

An initial batch of projects worth as much as Us$3bil is being shopped to potential buyers, the sources said. Sovereign wealth funds and private equity groups are among those being approached, a source said. Talks are still at an early stage and the final number of projects is still to be decided, the source said.

The potential sales signal Soho China may be shifting away from the nation’s office market, which has been hit by declining rents and decade-high vacancy rates as economic growth slows. Beijing has suffered one of the biggest declines in office rent yields globally in the past three years, according to Savills Plc. Soho China declined to comment. If completed in a single line, the deal would be China’s biggest commercial property transaction. China Overseas Land & Investment Ltd paid Us$4.4bil for Citic Ltd’s property assets in 2016 as part of a government-backed restructuring, according to data from Real Capital Analytics.

However, Soho China will probably sell the assets in stages, the source said.

Soho China’s properties were worth Us$8.6bil as of June 30, according to company filings. The company’s price-to-book ratio is near a record low of 0.3, suggesting the assets would be more highly valued in the private market. The company has already started to offload some non-core real estate assets. In June, it began marketing individual floors in 13 properties for a combined Us$1.1bil. Last month, it sold parking lots under nine of its buildings for Us$108mil to a Hong Kong private equity fund.

The buildings being evaluated for potential sale include its signature Bund Soho in Shanghai’s city centre and the landmark Wangjing Soho in Beijing, designed by Zaha Hadid, the first woman to receive the prestigious Pritzker Architecture Prize, the source said.