Slide 1: 2017 Annual Results Presentation
2017 Annual Results Presentation March 2018 0
Slide 2: Executive Summary
Executive Summary 3 3 1 2017 rental income up 11% YoY, leasing gross margin 80.5% 97% average occupancy across the stabilized portfolio Successful sale of Hongkou SOHO and Sky SOHO at cap rate <3% 87% average occupancy for SOHO 3Q SOHO 3Q expanding nationwide, owning 26,000 seats in Beijin
Slide 3: 2017 Rental Income up 11% YoY
2017 Rental Income up 11% YoY Rental income achieved RMB1,669 million in 2017, gross margin 3 of3 80.5% 1 Average occupancy 97% across the stabilized investment properties portfolio at the end of 2017 Asset management model, incentive based on net profit 900 Half Year Rental Income 800 700 600
Slide 4: 97% Occupancy across the Stablized Portfolio
97% Occupancy across the Stablized Portfolio 3 3 1 99% 100% 99% 97% 96% 95% As at 31 December 2017 SOHO Tianshan Plaza was launched for lease in 2017 and achieved an occupancy of 64% as at 31 December 2017 3
Slide 5: Successful Asset Sale at Cap Rate <3%
Successful Asset Sale at Cap Rate <3% Hongkou SOHO sold at RMB3,573 million in July 3.7% higher than revalued book value Cap rate only at ~2.9% based on rental NOI Sky SOHO sold at RMB5,008 million in October 7.9% higher than revalued book value Cap rate only at ~2.8% based on rental NOI
Slide 6: Asset Disposal Unlocked its Value
Asset Disposal Unlocked its Value While our stock is trading at 40% discount to NAV, we are able to sell properties at premium to revalued BV Asset disposal helped to unlock asset value and to narrow down NAV discount Asset disposal realized investment profit and supported high dividends 5
Slide 7: Maintain High Dividend Yield
Maintain High Dividend Yield Paid special dividends of RMB0.922 per share, from the net sales proceeds of Hongkou SOHO and Sky SOHO Dividend yields for the year 2015, 2016 and 2017 were 22%,16% and 24% RMB/Share Interim DPS Final DPS Special DPS Dividend Yield 24% 1.00 Dividend Yield 22% 0.80 Di
Slide 8: Borrowing Cost 4.1%
Borrowing Cost 4.1% Borrowing cost remained low at 4.1% Issued a CMBS of RMB3.8bn at 4.66% in March 2017 Onshore bank loans could enjoy 5% discount to PBoC prime rates Offshore bank borrowing at low spread of ~150bp 7
Slide 9: Net Gearing Ratio Remained Healthy at 51%
Net Gearing Ratio Remained Healthy at 51% RMB million 31-Dec-17 31-Dec-16 Investment Properties 56,276 55,087 Total Cash 4,326 4,461 Total Debt 21,034 15,436 Equity Attributable to Shareholders 32,704 34,539 Total Assets 71,218 67,406 Net Gearing Ratio 51% 32% Note: Total debt excluding bank loan of
Slide 10: SOHO 3Q: The Co-working Leader in China
sOHO@ The Co-working Leader in China Built on SOHO China's Brand Name
Slide 11: SOHO 3Q: Sharing Creates Value and Profit
SOHO 3Q: Sharing Creates Value and Profit Sharing of office spaces Average space occupied per person is 5-6 sqm, much lower than that in traditional office buildings Flexible in leasing term and size and fully-equipped with working facilities, the innovative environment meets various office de
Slide 12: Why Co-working Works in China?
SOHO 3Q: Why Co-working Works in China? China has advantages for this business Plenty of buildings not fully occupied Plenty of start-ups and plenty of high growth companies need immediate office space No lease duration mismatch 11
Slide 13: Unique Competitive Advantages
SOHO 3Q: Unique Competitive Advantages A strong brand is essential to success of the shared-office model with low entry barriers SOHO 3Q leverages SOHO China’s sector influence and experience “Standardization" in operation, which is the Key to quick expansion and to growing and strengthening t
Slide 14: Born with Sector Influence and Experience
SOHO 3Q: Born with Sector Influence and Experience 13
Slide 15: Leveraging SOHO China's Expertise
SOHO 3Q: Leveraging SOHO China’s Expertise The Largest Office Landlord in Beijing & Shanghai 22 Years’ Experience in Commercial Real Estate 5.0mm sqm+ Cumulative Property Development 14
Slide 16: THE Leader in China's Co-working Market
SOHO 3Q: THE Leader in China’s Co-working Market Market Leader in Product Modern, stylish design Market Leader in Scale Leader in Beijing and Shanghai, expanding nationwide ~26,000 seats and growing Market Leader in Branding Strong brand recognition of SOHO China Successful branding
Slide 17: Hub for Top & High Growth Companies
SOHO 3Q: Hub for Top & High Growth Companies Start-ups take up over 50% of SOHO 3Q space, high growth and traditional companies take up another 50% Start-ups High growth Traditional Uber 16
Slide 18: Best In Class Products
SOHO 3Q: Best In Class Products 17
Slide 19: Best In Class Products
SOHO 3Q: Best In Class Products 18
Slide 20: Best In Class Products
SOHO 3Q: Best In Class Products 19
Slide 21: Fully-equipped Working Space
SOHO 3Q: Fully-equipped Working Space 20
Slide 22: Fully Integrated Digital APP & Website
SOHO 3Q: Fully Integrated Digital APP & Website Generating Operating Leverage Across the Network Through Fully Integrated Digitalization Monitoring Access Online Payment Online Booking Intelligence Office System 21
Slide 23: Expanding Nationwide
SOHO 3Q: Expanding Nationwide Current and Planned Market Beijing Owns 26 centers，providing 26,000 seats in Beijing, Shanghai Shanghai, Hangzhou, Nanjing Nanjing Chengdu Wuhan Suzhou and Shenzhen Hangzhou Expanding to more cities in China Guangzhou No. of seats expected to double Shenzhen in 20
Slide 24: Unlock Value through Spinoff in the Future
SOHO 3Q: Unlock Value through Spinoff in the Future Current market cap of SOHO China reflects almost ZERO 3valuation3 on 1 SOHO 3Q business, implying a huge upside potential 23
Slide 25: THANK YOU!
THANK YOU! 24
Slide 26: Appendix
Appendix 3s SOHO cHina
Slide 27: Financial Results Summary – Income Statement
Financial Results Summary – Income Statement RMB million 2017 2016 YoY % Change Turnover 1,963 1,577 24% Gross Profit 1,453 1,242 17% Gross Margin 74% 79% Profit from Operations 8,815 2,703 226% Net Profit 4,733 910 420% Dividend per Share (RMB) 0.922 0.536 26
Slide 28: Financial Results Summary - Balance Sheet
Financial Results Summary - Balance Sheet RMB million 31-Dec-17 31-Dec-16 Investment Properties 56,276 55,087 Total Cash 4,326 4,461 Total Debt 21,034 15,436 Equity Attributable to Shareholders 32,704 34,539 Total Assets 71,218 67,406 Net Gearing Ratio 51% 32% Note: Total debt excluding bank loan of
Slide 29: Properties Portfolio
Properties Portfolio # of Status/ Project Attributable City Total GFA Office Retail Projects Completion Time Name Leasable Area sq.m. sq.m. sq.m. sq.m. 1 Completed Qianmen Avenue Beijing 54,691 54,543 - 54,543 2 Completed Galaxy/Chaoyangmen SOHO Beijing 55,310 44,197 14,351 29,846 3 Completed Wangji
Slide 30: Flexible Term and Size Matching All Needs
SOHO 3Q: Flexible Term and Size Matching All Needs 3 3 Membership by Size Membership by Industry Membership by Tenure Education & Experience 3% Design 3% HR & Consulting 8% >12M, 12% >300 ppl, 20% <10 ppl, 34% 6M~12M, < 1M, 14% 1 IT 40% 100~300 45% ppl, 12% Individual 15% 1M~3M, 17% 10~100 ppl, 34%
Slide 31: Qianmen Avenue
Qianmen Avenue Location Qianmen ,Tiananmen South, Beijing Transportation Subway lines 1 & 2 All-in Cost RMB 1.86 billion Total GFA Retail 54,691 sq.m. Lettable GFA Retail 54,543 sq.m. Design Firm Fei Chang Jian Zhu 30
Slide 32: Wangjing SOHO Tower 3
Wangjing SOHO Tower 3 Location Wangjing, Beijing Transportation Subway lines 13 & 15; Airport Express Land Cost RMB 1.4 billion Development Cost RMB 2.0 billion Total GFA 157,318 sq.m. Lettable GFA 133,766 sq.m. Office 123,568 sq.m. Retail 10,198 sq.m. Completion Date Sep 2014 Design Firm Zaha Hadid
Slide 33: SOHO Fuxing Plaza
SOHO Fuxing Plaza Location Near Xintiandi, Puxi, Shanghai Transportation Subway lines 10 & 13 Land Cost RMB 2.6 billion Development Cost RMB 1.8 billion Total GFA 124,461 sq.m. Lettable GFA 88,234 sq.m. Office 46,344 sq.m. Retail 41,890 sq.m. Completion Date Sep 2014 Design Firm GMP 32
Slide 34: Guanghualu SOHO II
Guanghualu SOHO II Location Central Business District, Beijing Transportation Subway lines 1 & 10 Land Cost RMB 1.3 billion Development Cost RMB 1.2 billion Total GFA 165,201 sq.m. Lettable GFA 94,279 sq.m. Office 63,308 sq.m. Retail 30,971 sq.m. Completion Date Nov 2014 Design Firm GMP 33
Slide 35: Bund SOHO
Bund SOHO Location Bund, Shanghai Transportation Bund's transportation hub Land Cost RMB 2.3 billion Development Cost RMB 1.5 billion Total GFA 141,043 sq.m. Lettable GFA 72,826 sq.m. Office 51,317 sq.m. Retail 21,509 sq.m. Completion Date Aug 2015 Design Firm GMP 34
Slide 36: SOHO Tianshan Plaza
SOHO Tianshan Plaza Location Hongqiao Foreign Trade Center, Shanghai Transportation Subway line 2 Land Cost RMB 1.9 billion Est. Construction Cost RMB 1.9 billion Total GFA 166,377 sq.m. Leasable GFA 95,385 sq.m. Completion Time Dec 2016 Design Firm KPF 35
Slide 37: Investment Properties Under Construction - Gubei Project
Investment Properties Under Construction —— Gubei Project Hongqiao Foreign Trade Center, Location Shanghai Transportation Subway line 10 Land Cost RMB 3.3 billion Est. Construction Cost RMB 1.7 billion Total GFA 158,648 sq.m. Leasable GFA 113,416 sq.m. Completion Time 2019 Design Firm KPF 36
Slide 38: Investment Properties Under Construction - SOHO Leeza
Investment Properties Under Construction —— SOHO Leeza Between Southwest 2nd & 3rd Ring Road, Location Beijing Transportation Subway lines 14 & 16 (in planning) Land Cost RMB 1.98 billion Est. Construction Cost RMB 1.8 billion Total GFA 172,800 sq.m. Leasable GFA 133,780 sq.m. Completion Time 2019 D