China property

Soho China offloads iconic Shanghai complex for US$750m, including debt

Considered one of Shanghai Greater Hongqiao area’s most iconic office addresses, Sky SOHO was designed by the late British-Iraqi architect, Zaha Hadid

PUBLISHED : Tuesday, 24 October, 2017, 3:57pm
UPDATED : Tuesday, 24 October, 2017, 11:06pm

Soho China, one of the country’s largest office landlords owned billionaire Pan Shiyi and his wife, has agreed to sell a flagship Shanghai complex for 5 billion yuan (US$750 million) to Hong Kong’s Gaw Capital Partners – its second major disposal in the city in four months.

Considered one of Shanghai Greater Hongqiao area’s most iconic office addresses, Sky SOHO (Lingkong SOHO) was designed by the late British-Iraqi architect, Zaha Hadid.

The price tag takes into account outstanding bank loans and net working capital. The proposed sale price of the project itself was 2.95 billion yuan, the company said in a statement Monday night.

The development has 128,175 square metres of gross floor area, of which 103,014 sq m is dedicated to offices and 25,161 sq m to retail. As of June 30, 2017, its occupancy rate was 97 per cent.

Soho China expects to record a gross profit of 367 million yuan from the disposal, the company added, and the 5 billion yuan valuation is a 85 per cent premium of its total development costs, as at June 30, 2017. Soho’s Hong Kong shares jumped 4 per cent in the morning trading on Tuesday to HK$4.74.

Soho China to sell three more non-core sites, all in Shanghai

In view of China’s recent property market conditions, Soho China chairman Pan said the board considered the disposal “represents a good opportunity for the group to realise a gain from its investment in the [Sky SOHO] project, at a fair value”.

Gaw Capital, a Hong Kong-based real estate private equity firm, said it had been looking for suitable investment opportunities within the Hongqiao Transportation Hub.

“As Shanghai continues to prosper, there will be continued demand for prime office and retail space, boosted by policy support from the government and superior links to a vast transport network across the Yangtze River Delta region and beyond,” said HumbertPang, Gaw Capital’s managing principal and head of China.

Soho has been offloading assets since 2016 to cash in on the rising commercial property market, as the company said it was shifting towards focusing on core assets in prime locations in first-tier cities.

Last July, it sold its Soho Century Plaza in Shanghai to Guo Hua Life Insurance for 3.22 billion yuan.

And most recently, Hongkou SOHO in northern Shanghai, a 90,000-square-meter mixed-use office and retail complex, was sold to Singapore’s Keppel Group and Germany-based insurer and asset manager Allianz, for 3.57 billion yuan.