China’s leading prime office landlord announces the completion of four new projects, strong leasing progress, and the launch of SOHO 3Q “Office Space for the Mobile Generation”
 
•       Excellent progress in strategic transition from “Build-to-Sell” to “Build-and-Hold” business model
•             Turnover of RMB 6.1 billion with rental income from leasing up 52% to RMB 424 million
•             Net Profit of RMB 4.1 billion
•             Core Earnings of RMB 1.8 billion; Core Net Margin of 29%
•             Final Dividend of RMB 0.13 per share; Annual Dividend RMB 0.25 per share
•             RMB 12.5 billion in cash, strong financial position with net gearing ratio at only 19%
•             New Office Product SOHO 3Q launched in February 2015
(6 March, 2015, Hong Kong) SOHO China Ltd. (hereinafter referred to as “SOHO China” or the “Company”; Stock Code: HK410) announces today the Company’s annual results for the period beginning 1 January 2014 and ending 31 December 2014 (hereinafter referred to as the “Period”).
 
In 2014 the Company achieved excellent progress in the strategic transition from “build-to-sell” to “build-and-hold” business model first announced in August 2012. During the Period, the Company achieved turnover of RMB 6.1 billion, with net profit of RMB 4.1billion and core earnings of RMB 1.8 billion.
 
The board has approved a final dividend of RMB0.13 per share, bringing the annual dividend to RMB0.25 per share for the full year. The Company has consistently paid a high and stable dividend, with an average dividend yield of 5.3% over the past five years.
With the strategic transition well underway, the Company accomplished strong performance in its leasing operations. Leasing speed has increased while rental income grew 52% year on year to RMB 424 million. The delivery of four new projects, Wangjing SOHO Tower 3 and Guanghualu SOHO 2 in Beijing and Sky SOHO and SOHO Fuxing Plaza in Shanghai raised the Company’s Total GFA available for lease to 838,000 square meters. This represents a completion of 47% of the Company’s overall investment property portfolio. As strategic transition nears completion, the Company will continue to report growing rental income due to the enlarging GFA available for lease in addition to the maturation of completed projects. In 2015 the Company will complete and deliver two additional projects in Shanghai, namely Bund SOHO and Hongkou SOHO.
 

Wangjing SOHO
 
With a Total GFA of 170,000 square meters, Wangjing SOHO Tower 3 was fully leased out within just 10 months. In addition to leasing out quickly, the rental rate for Wangjing SOHO Tower 3 increased significantly by 26% over the same period of time. Wangjing has become a hub for Beijing’s expanding IT sector with high-tech and internet companies making up 71% of Wangjing SOHO Tower 3’s tenant base.
 

SOHO Fuxing Plaza
 
SOHO Fuxing Plaza with a Total GFA of 137,000 square meters is currently 87% leased. It is located in an excellent area in Shanghai, next to the city’s premiere entertainment district, Xintiandi. The Company is delighted to announce that SOHO Fuxing Plaza was the first building in Shanghai to provide tenants with PM 2.5 pollutant free, purified air. PM 2.5 air filtration systems are installed in all of the Company’s newly built investment properties.
 

Sky SOHO
 
Sky SOHO, Shanghai’s newest landmark, located in the city’s Hongqiao District, opened in November 2014. With a Total GFA of 343,000 square meters, half of the project was sold to China’s leading travel company Ctrip in September 2014. Ctrip will use the space as an owner-occupier. With Ctrip as the anchor for Sky SOHO, the Company expects the rest of the space to be filled up quickly in 2015.
 

Guanghualu SOHO 2
 
In the heart of Beijing’s Central Business District, Guanghualu SOHO 2 with a Total GFA of 166,000 square meters was also delivered in November 2014. Having developed a Total GFA of 2.2 million square meters in Beijing’s CBD, SOHO China is regarded as the largest office developer in the area. The Company is confident that with its knowledge and expertise in the area, it should be able to lease out this space quickly in 2015.
 
SOHO China’s success in leasing can be attributed to three main factors: the Company’s unique online leasing model; our focus on China’s domestic tenant base; and the attractiveness of the SOHO China brand name and products as defined by beautiful architecture and clean air.
 
Firstly, in response to the huge advancements in technology in the internet age and as an effort to enhance the efficiency and transparency of management, SOHO China has developed an online leasing platform, which posts real-time, real-price information online. This unique online leasing model allows tenants to inquire about rental prices at any time, without the need to work through brokers or other third party agents. Standardized leasing terms have also been established to eliminate the inefficiencies of the entire negotiation process, greatly increasing the speed and ease the leasing process for the Company and tenants alike.
 
Secondly, the Company targets mainly a domestic tenant base. According to data by Savills, domestic tenants currently account for 70% of the total prime office market in Beijing, and have been increasing their lead over foreign tenant demand steadily over the past five years. In Beijing, domestic demand has increased 25% annually over the past six years while foreign demand has decreased nearly 8% annually; and in Shanghai domestic demand has increased 28% annually while foreign demand has been growing at a much slower annual rate of only 2%. In a market dominated by domestic players, SOHO China’s unique online leasing model caters extremely well to their needs, fulfilling the market demand very well. 
 
Lastly and perhaps most importantly, the SOHO China brand is widely acclaimed for iconic architectural design and purified clean air. Landmark buildings designed by leading international architects greatly enhance leasing ability as their striking aesthetics resonate with tenants who appreciate creativity, beauty and innovation. As pollution has continued to be a primary health concern for Beijing and Shanghai residents, SOHO China’s commitment to offering purified PM 2.5 free air in all the Company’s projects is a major attraction for tenants. The Company publishes daily indoor PM2.5 readings to ensure tenants of a firm dedication to clean air in all SOHO China projects. These two distinguishing characteristics have defined the SOHO China brand and allowed the Company to become a market leader.
 

SOHO 3Q
 
With the widespread use of mobile technologies allowing a growing number of people to work outside of traditional office spaces, SOHO China has developed an innovative new product to meet increasing demand for flexible, ready to use office space: SOHO 3Q.
SOHO 3Q is an office solution for the mobile generation, allowing anyone, anytime, anywhere in the world to book a desk or office at any SOHO 3Q location. Using our APP or SOHO3Q.com website, a space can be leased for as short as one week, and can be paid for directly online on any device.
 
SOHO 3Q targets the growing demand from professional mobile people who want office space designed for the mobile generation, with the convenience of online service, the flexibility of week-to-week leasing, and the added bonus of beautifully designed space to work in and connect with likeminded professionals.  SOHO 3Q also provides complimentary amenities such as conference room, Wi-Fi, coffee, photocopying, printing and more.
 
The Company’s first two SOHO 3Q locations opened in February 2015 at Wangjing SOHO in Beijing and SOHO Fuxing Plaza in Shanghai. In 2015 the Company will continue to expand SOHO 3Q to Zhongguancun SOHO, Danling SOHO, Guanghualu SOHO 2 and Wangjing SOHO Phase II in Beijing; and The Exchange SOHO, Bund SOHO and Hongkou SOHO in Shanghai.
 
SOHO China Chairman Pan Shiyi says, “For SOHO China, the Internet is not merely a tool nor technique, it is a way of thinking. Every aspect of our management has gone “online” from design to procurement, leasing and energy management. This has led to greater efficiency in managing costs and has improved efficiency in our day-to-day work operations. Today, we can proudly proclaim that in terms of management SOHO China is an industry leader. SOHO3Q is a continuation of this way of thinking. It is a new office product for the Internet age and will be a bright spot for SOHO China’s further development. A company needs to constantly innovate, because only innovation can make an enterprise everlasting.”