Soho China is selling 32,000 square metres (344,445 square feet) of what it calls “high-quality properties” in Beijing and Shanghai at a 30 percent discount, as the developer looks to shore up its financial position after a planned takeover by US private equity titan Blackstone fell through last year.
At a Thursday meeting with brokers, the Beijing-based group controlled by real estate power couple Pan Shiyi and Zhang Xin touted the marked-down properties and promised a fat 4 percent commission on sales, according to a WeChat posting by Soho.
The properties in question appear to consist mainly of strata space at buildings developed by Soho before its 2012 shift to a leasing strategy, as they show little overlap with the portfolio of nine major investment properties sought by Blackstone. That distinction could explain the deep discounts, according to consultants active in the market.
“We understand that these projects were partially or mostly strata-sold in the past and the liquidity of the remaining areas and units is relatively low, which I think will factor into its selling price today,” an industry source familiar with the properties told Mingtiandi on Friday.
In its WeChat post, Soho said the sale properties include listings at nine of the group’s projects. It mentioned four projects by name: the Zaha Hadid-designed Galaxy Soho commercial complex and the mixed commercial-residential Sanlitun Soho, both in Beijing, and the Soho Donghai Plaza and Soho Zhongshan Plaza office buildings in Shanghai.
Of the four specified projects, only the 2012-completed Galaxy Soho appears on the list of the developer’s nine major investment properties, which span 830,654 square metres of leasable gross floor area in Beijing and Shanghai.
The other investment properties include trophy projects such as the Hadid-designed Wangjing Soho in Beijing and Bund Soho on Shanghai’s storied riverfront.
Blackstone in mid-2021 had agreed to a $3 billion buyout of the majority stake in Soho held by chairman Pan and CEO Zhang, but by September the deal had fizzled after failing to win regulatory approval.
Chairman Checks In
Soho said its stable business strategy in recent years had resulted in its current ratio of assets to liabilities of 44 percent, a relatively low level for the industry. The group aims to “reduce the burden” and position itself to respond to market changes with more flexibility.
Calling in to Thursday’s meeting by video, Pan said all the income from the sale of the properties would be used to reduce debt and not to pay stock dividends.
Both Pan and Zhang have faced criticism on mainland social media after they were spotted attending last September’s US Open tennis tournament in New York while still attempting to sell their company to Blackstone.
With Zhang having purchased a Manhattan townhouse in 2013 for $26 million, Pan was reported by Hong Kong news site HK01 to have spent much of 2020 and 2021 in the US.