Soho China Considers $8 Billion Office Tower Sales
Soho China Considers $8 Billion Office Tower Sales
(Bloomberg) -- Soho China Ltd. is considering selling a majority of its commercial property holdings in deals that may fetch as much as $8 billion, people familiar with the matter said, sending the shares up the most on record.
At least eight office towers in Beijing and Shanghai are being discussed as part of the planned sales, the people said, asking not to be named because the discussions are private.
The developer’s Hong Kong-listed stock closed up a record 18%, erasing most of 2019’s decline. Trading volume of 163 million shares was the highest since the week of Soho’s initial public offering in October 2007.
An initial batch of projects worth as much as $3 billion is being shopped to potential buyers, the people said. Sovereign wealth funds and private equity groups are among those being approached, one of the people said. Talks are still at an early stage and the final number of projects is still to be decided, the people 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 $4.4 billion 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 people said.
Soho China’s properties were worth $8.6 billion 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 $1.1 billion. Last month, it sold parking lots under nine of its buildings for $108 million to a Hong Kong private equity fund.
The buildings being evaluated for potential sale include its signature Bund SOHO in Shanghai’s city center and the landmark Wangjing SOHO in Beijing, designed by Zaha Hadid, the first woman to receive the prestigious Pritzker Architecture Prize, the people said.
--With assistance from Kevin Kingsbury.
To contact Bloomberg News staff for this story: Emma Dong in Shanghai at edong10@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.net;Vinicy Chan in New York at vchan91@bloomberg.net
To contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Peter Vercoe
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With assistance from Bloomberg