SOHO sells mainland property. Eight commercial buildings cost 62.4 billion. Interested in transferring overseas. The stock price rose by 18%.
SOHO China (410) emptied mainland assets and intends to turn to overseas investment. Bloomberg reported yesterday that SOHO China is considering selling most of its commercial properties in the mainland, including eight office buildings in Beijing and Shanghai, for a maximum price of US$8 billion (approximately HK$62.4 billion), or will become the largest commercial property in the Mainland. transaction. SOHO China’s share price surged 27% in the afternoon, closing at 2.7 yuan, up 17.9%.
Bloomberg quoted people familiar with the matter as saying that at least eight office projects in Beijing and Shanghai are currently under negotiation, and the first batch of projects worth a total of US$3 billion (approximately HK$23.4 billion) is underway. SOHO China’s current P/B ratio is close to a record low of 0.3.
Three project transactions near the final stage
Internal media Caixin also quoted sources in the evening yesterday, SOHO China’s asset sales plan involves 8 projects, the total price is about 50 billion to 60 billion yuan (RMB, the same below); will be sold in batches All projects are scheduled to be completed within the next two years. The first transaction involving three of these projects is in progress and near the final stage. The buyers are Blackstone Group and Singapore Government Investment Corporation (GIC). The acquisitions are Beijing’s Guanghua Road SOHO, Wangjing SOHO Tower 3, and SOHO Renaissance in Shanghai. square. The other five projects are for sale in Shanghai, Gubei SOHO, SOHO Tianshan Square, Bund SOHO, Beijing’s Qianmen project and Lize SOHO.
According to SOHO China’s 2019 interim results report, SOHO China has 9 projects in Beijing and Shanghai with a total investment property value of over 61 billion yuan. The sale of the above 8 projects means that SOHO China will empty the mainland’s overall self-sustaining property assets. Caixin quoted sources as saying that SOHO China intends to turn to overseas investment, and emptying domestic assets may be an important step in its strategic transformation.
Valuation is not quite a sale
Wang Dan, head of China’s real estate industry research department at DBS Bank (Hong Kong) Research Department, said that the price of 50 billion to 60 billion yuan is basically the same as the valuation of SOHO China property investment, not a sale. SOHO China has not sold assets in large quantities for a long time, and its dividend payout is relatively small. Therefore, the market attention is also low, and the stock price is undervalued. It is expected that the company may be transforming its investment strategy. If the use of funds for this return is to give back to shareholders, it is expected to be in the short term. The stock price is very exciting. SOHO China did not reply to this newspaper yesterday.