Soho China sees coronavirus weighing on revenue after office occupancy, rents fall amid slowing economy
- Mainland developer’s core net profit fell 31 per cent year on year to 1.33 billion yuan in 2019
- No decision has been made yet on whether it plans to proceed with Blackstone’s US$4 billion privatisation deal
Soho China, which is in talks with Blackstone over a US$4 billion privatisation deal, said its slowing office rental income will come under further pressure as the coronavirus outbreak weighs on China’s economy, after it reported a 31 per cent decline in annual profit.
The Hong Kong-listed developer, known for its futuristic curvilinear office buildings in China, posted a core net profit of 1.33 billion yuan (US$188 million) for 2019 on revenues of 1.85 billion yuan, according to an exchange filing on Wednesday.
The company cited the 2018 disposal of Sky Soho, a set of grade A commercial buildings in Shanghai, as the main reason for the drop in profit last year. It had made a net gain of 987 million yuan on the sale.
Rental income, which contributes over 99 per cent to its overall revenue, grew 5.6 per cent year on year in 2019, much slower than the 18 per cent jump in 2018 and 11 per cent in 2017.
Chairman Pan Shiyi said in a statement accompanying the results that average office rent and occupancy rates in Beijing and Shanghai decreased throughout 2019, dropping to around 90 per cent in the fourth quarter.
