Blackstone terminates tender offer to acquire SOHO, Pan Shiyi’s sale plan is frustrated | Blackstone-Finance News

Original title: Blackstone terminates tender offer to acquire SOHO Pan Shiyi’s sale plan is frustrated Source: Securities Times

　　SecuritiesTimes reporter Yu Shengliang

　　Pan Shiyi’s plan to sell was once again frustrated, according tosoho China(00410.HK) In the latest announcement, in view of the insufficient progress of the prerequisites, the parties determined that the prerequisites could not be met on or before the final deadline and decided not to proceed with the tender offer.However, on September 10SOHO ChinaThe stock price has risen by 9.37%.

　　The announcement on June 16 showed thatBlack stoneIssued a comprehensive takeover offer to SOHO China to obtain a controlling stake in SOHO China. After the transaction is completed, SOHO China’s existing controlling shareholders will retain 9% of the equity at a purchase price of HK$5 per share. Excluding the 10% that Pan Shiyi and his wife want to retain, the maximum amount paid is HK$23.658 billion. Pan Shiyi and his wife hold 63.93% of SOHO China. After the planned sale, Pan Shiyi and his wife only had 10% of the equity in their hands.

The current SOHO China share price is 3.5 Hong Kong dollars, and the market value is 18.2 billion yuan. As of the end of last year, the company’s net assets per share were 8.37 Hong Kong dollars.

On June 15th, SOHO China issued an announcement that trading on the Stock Exchange of Hong Kong Limited will be temporarily suspended from 9 a.m. that day. Before the suspension, SOHO China’s stock price rose for 9 consecutive trading days, an increase of 58.33%.

　　Acquisition

　　After the tender offer, SOHO China will continue toHong Kong Stock ExchangeListed. SOHO China now holds and manages 1.3 million square meters of commercial properties.According to official news, Blackstone is very optimistic about SOHO China’sBeijingWith commercial properties held in Shanghai and a first-class management team, after the completion of this offer, Blackstone plans to maintain the company’s existing main business and management team.

According to the announcement, after the tender offer, public shareholding may not be enough to maintain its listing status. Blackstone and SOHO China will take measures to ensure that there are sufficient public shareholdings after the tender offer.

SOHO China’s stock price has been significantly lower than its net assets for a long time, and the stock price has been sluggish. Only acquisition news can stimulate the company’s stock price to rise. Prior to this, there have been three acquisitions.

　　On October 30, 2019, it was reported that SOHO China would consider selling its office building interests in China for US$8 billion. In the afternoon, SOHO China’s stock price rose sharply, rising all the way, reaching 26.64% at the highest intraday increase. As of the closing time, it was reported at 2.7 Hong Kong dollars per share, an increase of 17.9%. On the morning of the 31st, SOHO China issued an announcement on the Hong Kong Stock Exchange: The company is not aware of any information related to the group’s asset sale that needs to be announced.At that time, it was said that the Blackstone Group and Singapore’s state-controlled GIC company established a buyer group, intending to acquire SOHO China’s BeijingGuanghuaRoad SOHO, Wangjing SOHO Tower 3, and SOHO in Shanghairevivalsquare. The source also revealed that SOHO China has five other projects on sale, 8 projects with a total value of RMB 50 billion to RMB 60 billion. It is planned that all transactions will be completed within the next two years.

On the afternoon of March 10, 2020, SOHO China’s stock price suddenly rose sharply, rising 37.58%. SOHO China applied to the Hong Kong Stock Exchange for a trading suspension. The stock price was 4.10 Hong Kong dollars at the time of the suspension. Some media quoted people familiar with the matter as saying that Blackstone is working with SOHO China. Carrying out exclusive privatization negotiations, preparing to privatize it at a price of 6 Hong Kong dollars per share for a total price of 4 billion US dollars, and Blackstone will take over SOHO China’s debt. According to the financial report, as of the end of June 2019, SOHO China’s debt was US$4.7 billion, and Blackstone had to pay a total of US$8.7 billion, or about 60 billion yuan, with the purchase price of US$4 billion.

In November 2020, the market once again reported the privatization of SOHO China. The buyer of this scandal was Hillhouse Capital. However, Hillhouse Capital quickly clarified that it has no intention of privatizing SOHO China.

SOHO China’s annual report shows that as of December 31, 2020, SOHO China’s net asset-liability ratio is about 43%, with a total borrowing of about 18.47 billion yuan, but the average borrowing cost is about 4.7%, which is relatively low among real estate companies.

Last year SOHO China’s revenue increased by 19%, but operating costs increased to 801 million yuan, an increase of 137.7%, and the annual net profit decreased by 58.83% year-on-year to 543.5 million yuan.

It is said that Yan Yan, the former executive director and president who has worked in SOHO China for 22 years, joined the Blackstone Group in 2018. This is the connection point for Blackstone’s acquisition of SOHOU China.

　　Sell

SOHO China began selling assets in 2014.

　　In 2014, SOHO China sold Shanghai SOHO Jing’an Plaza and SOHO Hailun Plaza to a price of 5.232 billionFinancial StreetIn September of the same year, SOHO China sold the 100,000 square meter property of Shanghai Lingkong SOHO to Ctrip for a price of 3.05 billion.

　　In 2015, SOHO China sold the Shanghai Bund International Financial Center land at a price of 8.493 billion yuan. In 2016, SOHO China sold Shanghai SOHO Century Plaza toGuohualife insurance, The total price is 3.22 billion yuan.

In 2017, Hongkou SOHO and Lingkong SOHO were sold to Singapore company Keppel Land and Hong Kong’s well-known private equity firm Gaw Capital for 3.57 billion yuan and 4.944 billion yuan respectively.

In 2019, SOHO China successively sold 13 office property projects worth 7.8 billion yuan and 2583 underground parking spaces worth 761 million yuan.

Since 2014, SOHO China has successively cashed out more than 35 billion yuan through asset sales. At the same time, SOHO China is rarely seen in the public land transaction market.

　　The reason for selling and selling is related to Pan Shiyi’s views on China’s real estate industry. According to himBankCalculating the interest rate, I believe that the current housing prices and land prices are overestimated.

In 2017, Pan Shiyi said in an interview with the media, “Since SOHO decided to sell properties, it has always adhered to the most basic principle of doing business, which is to buy at low prices and sell at high prices.”

He has repeatedly said on different occasions that the standard for measuring the value of commercial properties is the rental rate of return. In the United States, when interest rates are very low, the return on investment of general commercial properties is 5%, and particularly good projects can reach 4.7% or 4.5%. In China, the net rental return rate is only about 2.7%, and interest rates are several times higher than in the United States. Therefore, Pan Shiyi feels that this time is a more appropriate time to sell the property.

Pan Shiyi’s account is: “In a city like Beijing, SOHO China’s rental rate of return is less than 3%, but the capital cost of bank loans exceeds 4%, which is almost the lowest capital cost of the real estate industry, but in this case This means that the property operation will still lose 2% throughout the year. How can this business be done?” He said before that he would not sell the Bund SOHO and Wangjing SOHO, but later these assets were also included in the list for sale.

Pan Shiyi once said that he was a businessman and wanted to buy low and sell high. However, Pan Shiyi has been selling instead of buying these years.