News & Media
SOHO China Announces 2020 Annual Results
Revenue of RMB 2,192 Million Achieved; Average Occupancy for Mature Investment Properties Recovers and Reaches Approximately 82%.
- Achieved revenue of approximately RMB2, 192 million during the year, representing an increase of approximately 19% year over year.
- Due to the impact of the COVID-19 pandemic, office leasing markets in Beijing and Shanghai were under great pressure in 2020. However, as the economy improved, the average occupancy for the Company’s mature investment properties recovered and reached approximately 82% as at 31 December 2020.
- Leeza SOHO, which started leasing at the beginning of 2020, successfully introduced Huawei’s China headquarters as its anchor tenant, achieving an occupancy rate of 60% as at 31 December 2020.
- Approximately RMB1, 600 million profit before income tax was achieved during the year, representing a decrease of approximately 17% year over year due to the impact of COVID-19 pandemic.
- As at 31 December 2020, the Company’s net gearing ratio was approximately 43% and average funding cost was approximately 4.7%.
(March 25, 2021, Hong Kong) SOHO China Limited. (hereinafter referred to as "SOHO China" or "Company", stock code: 410.HK) announced today the company's 2020 audited annual results.
During the year, SOHO China achieved revenue of approximately RMB 2,192 million, a year-over-year increase of approximately 19%. Profit before income tax of approximately RMB1, 600 million was achieved during the year, representing a decrease of approximately 17% year over year. Due to the impact of Covid-19, the office leasing market in Beijing and Shanghai was subject to tremendous pressure. However, as the economy improved, average occupancy for the Company’s mature investment properties recovered and reached approximately 82% as at December 31, 2020. Leeza SOHO, which entered the market in early 2020, achieved an occupancy rate of 60%. By the end of 2020, the Company’s net gearing ratio was approximately 43% and average funding cost was approximately 4.7%.
2020 has been a challenging year with the outbreak and spread of the pandemic impacting the global and domestic economy at an unprecedented level. The office leasing market was severely affected. According to data from Cushman & Wakefield, the net absorption of Grade A offices in Beijing in the first half of 2020 was negative, and the vacancy rate hit a new high since 2011. SOHO China’s business, like many other companies, felt the impact of the pandemic. At the end of last April, occupancy rates had significantly dropped.
As the nation fought against COVID-19, SOHO China, as a comprehensive office building service provider, actively and quickly responded to the government's call to action via two initiatives: the implementation of strict pandemic preventive measures to safeguard its tenants, and by offering subsidy measures to clients from severely affected industries. In the meantime, SOHO China strived to expand its business resources by focusing on the market. The Company strengthened its rental strategy and sought out for high-quality tenants with strong core competitiveness and abilities to mitigate risk. In May 2020, with the pandemic contained and economy rapidly recovering, SOHO China's rental business began to rebound. By the end of the year, the average occupancy rate of the Company's mature investment properties bounced back to approximately 82% with client structure becoming more diversified. Newly signed tenants include Huawei, Alibaba, Yuanfudao, Taikang Life Insurance, and Shanghai Pudong Development (SPD) Bank.
Leeza SOHO, which only entered the market in early 2020, has also made remarkable achievements. Designed by renowned architect Zaha Hadid, the project, whose design features the world's tallest atrium, has become a new landmark in Beijing with its stunning iconic architecture. Since its debut, Leeza SOHO has won numerous awards. Despite the pandemic, Leeza SOHO’s occupancy rate reached 60% as of the end of last year, much higher than the average occupancy in Lize Financial Business District. The Company introduced Huawei's China headquarters as the building’s anchor tenant, with a signed area of 59,000 square meters. This was also the largest single Beijing office rental market transaction in 2020.
In recent years, the government has overseen the real estate market in a more specialized and detailed manner. Aiming to prevent financial risk and real estate bubbles, the People's Bank of China and the Ministry of Housing and Urban‑Rural Development jointly launched "Three Red Lines" policy to regulate debt metrics for property companies. SOHO China's financial indicators have remained healthy and sound, and the Company has not broken any of the red lines. At the end of 2020, the net gearing ratio of the Company was approximately 43%, with average funding cost of about 4.7%.
Pan Shiyi, Chairman of SOHO China, said: “In order to restore the economy after the epidemic, some other countries are issuing currency. The scale has reached an unprecedented level. In the era of capital globalization, these funds will flood into the most promising markets, and SOHO China's high-quality office buildings in the core areas of Beijing and Shanghai will appreciate."