1

Chinas Largest Prime Office Developer

The only pure prime
office developer

(4)

Development

One of the earliest and

most profitable,
market participants

(6)

2012E: 3.1 million sqm

(7)
2015E: 5.2 million sqm

Full range of
development, leasing,
property management
and property investment
capabilities

(5)

(4)

Investment
2012E: 190,000 sqm

(6)

(7)
2015E: 1.7 million sqm

(4)

Property Management
(4)

2012E: 2.3 million sqm

(6)

2015E: 4.4 million sqm

(7)

(3)

Exclusive Focus on Beijing and Shanghai

Beijing and Shanghai are Chinas only true global cities

By far, the deepest and largest office markets in China

Substantially higher rents and lower vacancies than other major cities in China

Comparative Rents in Major Cities in China(1)

Hong Kong

Beijing

Shanghai

Prime Office rents

(Rmb/sqm/month)

746

313

242

189

Vacancy

3%

3%

8%

Market Size (million sqm)

6.7

9.1

5.3

Note:
1. Savills Office Research, 3Q2012

Shenzhen Guangzhou

Tianjin

Chengdu

Chongqing

148

139

125

94

12%

11%

22%

34%

20%

2.6

2.8

1.0

1.1

Extensive Development Experience

By 2015, we plan to have built 5.2 million square meters of commercial developments in
Beijing and Shanghai
000 sqm
6,000

5,212
5,000
4,596

3,962

4,000

3,135
3,000

2,715
2,530
2,307

2,000

1,739
1,543

1,000
508

2001

2002

1,153

2005

2006

802

676
471

1,119

0
Previous Completion

2003

2004

2007

2008

New Completion

2009

2010

2011

2012E

2013E

2014E

2015E

Large Leasing and Management Portfolio

SOHO currently manages over 2 million square meters of SOHO developed prime commercial
space
Largest prime office property manager in Beijing
Fast growing landlord of prime office in Shanghai, and largest land owner on the Bund
000 sqm
Before 2009

2009

2011

2010

2012

2013

2014

2015

Largest Land Owner on the Bund

BUND SOHO

Bund SOHO
RMB30,600/sqm

Land cost
GFA

BUND 8-1

189,000 sqm

Acquisition Time

October 12, 2010

The Bund 8-1

RMB33,200/sqm

Land cost
GFA

423,000 sqm

Acquisition Time

December 29, 2011

Artist image

Tiananmen South (Qianmen)

Image of actual property

77

Build-to-Sell Model: Fast Growth of Equity

SOHOS BUILD-TO-SELL TRACK RECORD
Project Name
Jianwai SOHO
SOHO Shangdu
Chaowai SOHO
Guanghualu SOHO
Sanlitun SOHO
ZhongGuanCun SOHO
SOHO Nexus Centre
The Exchange-SOHO
Danling SOHO
Galaxy SOHO

All-in cost
(Rmb/sqm)
9,397
12,289
12,108
16,134
18,216
23,138
27,992
34,358
35,786
25,700

ASP
Unlevered
Gross Margin
(Rmb/sqm)
IRR
17,525
287%
46%
24,050
51%
49%
30,997
73%
61%
38,147
125%
58%
48,208
46%
62%
39,309
24%
41%
45,482
59%
38%
65,000
64%
47%
48,482
61%
26%
71,244
47%
64%

Note: All-in cost means COGS, including land cost, construction cost, capitalized interest and others related to development process;
ASP refers to average selling price for the entire project;

Build-to-Hold Model: Recurring Income & Long Term Value

SOHO developments have consistently produced rent growth and asset
appreciation
In the past, buyers of SOHO developments captured this value -- now, SOHO will
SOHO has pivoted to Build-to-Hold model to capture this upside
If SOHO Held

Project Name

Jianwai SOHO
SOHO Shangdu
Chaowai SOHO
Guanghualu SOHO
Sanlitun SOHO
ZhongGuanCun SOHO
SOHO Nexus Centre
The Exchange-SOHO
Danling SOHO

Current
Property Value
ASP (Rmb/sqm)
(Rmb/sqm)

17,525
24,050
30,997
38,147
48,208
39,309
45,482
65,000
48,482

Holding
Period
(Years)

55,000
59,000
61,800
56,800
65,400
60,000
80,000
75,000
60,000

10
8
8
6
5
5
3
3
2

Current
Current Rental Buyers' Est. Rental Yield
Yield on ASP Levered IRR on All-in Cost Capital Gain

17%
9%
9%
6%
6%
7%
10%
6%
7%

20%
21%
16%
12%
12%
19%
66%
17%
60%

33%
19%
24%
15%
16%
13%
15%
11%
10%

Note: All-in cost means COGS, including land cost, construction cost, capitalized interest and others related to development process;
ASP refers to average selling price for the entire project;

485%
380%
410%
252%
259%
159%
186%
118%
68%

Transformation from Developer to Landlord

Transition from build-to-sell to build-to-hold captures unique market opportunity

After 2015, our property portfolio will consist of 100% investment properties

Completed Investment Properties

Property Portfolio by Type

2007

2012

After 2015
(1)

For Investment
22%

For Development
78%

For Development
100%

2012

Tiananmen
South (Qianmen)

2013

Galaxy SOHO

Tiananmen
South

For Investment
100%

2014

Sky SOHO

SOHO Century
Plaza

Note:
1.
Completion for investment properties refer to cumulative leasable GFA completed

10

2015

Guanghualu
SOHOII

Hongkou
SOHO

Bund SOHO

Wangjing
SOHO II

SOHO
Hailun Plaza

Bund 8-1

SOHO Tianshan
Plaza

One of the Largest Pure Play Office Landlords in Asia

SOHO China is one of the largest pure-play office landlords in Asia with exclusive focus on
Chinas deepest office markets, Beijing and Shanghai upon completion of current pipeline
Office GFA of Major Asian Landlords

'000 sqm
2,500

2,035
1,910

2,000

1,500

1,219

1,160
939

1,000

497
500

446
279

246

224

195

146

77

68

0
Sun Hung
Hung
Sun
(1)
Kai
Kai
Office as % of
GFA (4)

Cities in
China(5)
Note:
1.
2.
3.
4.
5.

23%

Wharf (2)
Wharf
17%

SOHO(3)
SOHO
70%

Chengdu,
Beijing,
Chongqing,
Beijing
Guangzhou,
Suzhou,
Shanghai
Shanghai
Wuxi

Swire
Prop

HK Land

28%

41%

Beijing

Beijing,
Chengdu,
Guangzhou,
Shanghai

Franshion CapitaLand
6%

8%

Beijing,
Chengdu, Beijing,
Ningbo, Shanghai
Shanghai

CCT
100%

NA

Keppel
REIT

Suntec
REIT

Hysan

Yuexiu
REIT

Champion
REIT

MCT

100%

69%

47%

65%

72%

41%

NA

NA

NA

Guangzhou

NA

NA

Of which 1.8mm sqm are completed office properties for investment, and 697,898 sqm are currently under development
Of which 1.2mm sqm are completed office properties for investment, and 808,257 sqm are currently under development
Attributable GFA excluding Qianmen Project, which is a solely retail project. Includes ground-floor retail of office properties
Includes only office gross floor area intended to be held for investment purposes
Only cities with major investment properties listed
11

Benchmarking SOHO Against Other Asian Blue Chips

SOHO is the largest commercial landlord and developer in Beijing and Shanghai on par with
other major Asian property blue chip players
SOHO is trading at higher discount to RNAV, but has the highest dividend yield and lower net
gearing than most comparables

Market Cap
(US$ mm)(1)

4,090

42,260

25,030

21,780

17,750

17,790

12,723

8,500

6,832

5,440

5,440

2,910

Listing Exchange

SEHK

SEHK

SEHK

SEHK

SGX

SEHK

SGX

SGX

SGX

SEHK

SEHK

SEHK

Total Assets
(US$ mm)

9,712

60,278

43,097

29,955

30,371

20,619

30,370

11,781

7,847

8,288

9,916

12,402

LTM Dividend
Yield

4.2%

2.9%

2.1%

0.9%

2.4%

2.0%

1.8%

0.7%

1.8%

2.3%

0.0%

3.0%

(40.6)%

(32.3)%

(32.8)%

(18.2)%

(13.1)%

(33.7)%

(30.6)%

(20.5)%

(29.4)%

(29.0)%

(53.6)%

Gross Debt /
Equity

91.6%

20.6%

33.2%

19.2%

15.7%

24.2%

94.9%

59.9%

40.1%

11.6%

99.4%

106.9%

Net Debt / Equity

20.1%

16.4%

24.8%

16.7%

12.5%

7.3%

59.0%

26.8%

30.7%

11.5%

60.3%

97.2%

FY2011 Interest
Coverage Ratio(3)

2.0 x

16.1 x

6.3 x

6.6 x

10.8 x

20.5 x

1.5 x

15.5 x

0.2 x

8.9 x

1.9 x

1.7 x

Corporate Credit
Rating
Ba1 / BB+
(Moodys / S&P)

A1 / A+

-/-

A2 / A-

A3 / A-

-/-

-/-

-/-

-/-

Baa1 /
BBB

Baa3 /
BB+

-/-

Landbank %
investment
properties (4)

70.9%

Trading Prem /
(Disc) to RNAV(2)

Note:
1.
2.
3.
4.

5.2%
29.1%

32.8%
67.2%

(33.5)%(2)

31.6%
68.4%

19.1%

24.8%
75.2%

57.9%

42.1%

44.3%
94.8%

Investment properties

55.7%

46.5% 53.5%

100.0%

Development properties

Market data as of 14 January 2013

Based on Goldman Sachs Research estimate as at November. For CapitaMalls Asia, RNAV is based on JPMorgan Research estimate
Calculated as EBITDA divided by cash interest expense. FY2011 used as capitalized interest is not disclosed in many companies interim reports
Includes investment properties under development

12

40.9%

100.0%
80.9%

59.1%

Largest Prime Office Portfolio

SOHO will own 1.7 million square meters of prime office space in Shanghai and Beijing when
current developments are completed
Beijing
Commune by the Great Wall
Tiananmen South
Galaxy SOHO & Chaoyangmen
Guanghualu SOHO II
SOHO Peaks (Tower 3)
Subtotal
Shanghai
SOHO Century Plaza
SOHO Fuxing Plaza
Sky SOHO
Hongkou SOHO
Bund SOHO
SOHO Hailun Plaza
Bund 8-1
SOHO Tianshan Plaza
Subtotal
Total GFA

Attributable Total GFA ('000 sqm)

31
55
45
134
180
444
Attributable Total GFA ('000 sqm)
59
137
350
97
118
152
211
172
1,296
1,741

13

SOHO Peaks Tower 3

14

15

Recurring Rental Income

Largest prime office portfolio 1.7 million square meters by 2015
Current prime office rents in Beijing and Shanghai c.RMB10/sqm/day

SOHO targets RMB4 billion annual gross rental income within 5 years
1.8

1.7

1.6
1.4
1.2
mm sqm

1.2
1.0
0.8

0.7

0.6
0.4
0.2

0.2

0.0
By 2012

2013

2014

16

2015

RMB16 Billion Contract Sales Unbooked

Contract Sales
RMB Bn

25

23.8

20

15

13.7

10.9
9.5

10

0
2009

2010

2011

17

2012

Faster Rental Growth

SOHO Office Rents vs. Market Average Prime Rents
RMB/sqm/month

RMB/sqm/month
4Q2010

3Q2012

4Q2010

350

350
315

313
300

300

273
240

250

242

250
218

205

210
188

200
150

3Q2012

135

126

203

200
150

100

100

50

50

0
ZhongGuanCun SOHO Nexus
SOHO
Centre

Sanlitun SOHO Beijing Market

Average

The Exchange-SOHO

Shanghai Market Average

Shanghai

Beijing
Source: Beijing and Shanghai market average data, Savills 3Q2012 report

18

High Office Occupancy Rate

%
100

96.3

95.4

94.2

96.0

SOHO Shangdu

Chaowai SOHO

Guanghualu
SOHO

92.0

93.1

Sanlitun SOHO

Chaoyangmen
SOHO

75

50

25

0
Jianwai SOHO

Note: Company data for office properties in Beijing with more than three years of operations. Occupancy rate as of December 2012

19

Proven Leasing Record

Case 1. SOHO Century Plaza High Rental Rates

Rent
(RMB/sqm/month)

SOHO Century
Plaza

Shanghai
Prime Office
Rents(1)

270

242

Brand name and

leasing power
drive higher rental
rates

Case 2. The Exchange-SOHO Higher Occupancy

Occupancy %

Occupancy rate
increased from
28% to 82% in six
months under
SOHOs operation

(1) Savills 3Q2012 report

20

Pipeline Projected Initial Yield On Cost >10%

All-in cost: RMB32,000/sqm

Current market rent: RMB10/sqm/day
Gross yield on cost: 11%
Year-on-year rental growth estimate: 10%

21

Stronger Demand Eats Up Inventory Beijing Prime Office

10.0

Million sqm

8.0

6.0

4.0

2.0

0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Market Stock GFA

Source: Savills

22

Occupied GFA

Overwhelming Demand Pushed Down Vacancy - Beijing Prime Office

1,400

30.0%

1,200

25.0%

1,000
'000 sqm

20.0%
800
15.0%
600
10.0%
400
200

5.0%

0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New Supply

Take-up

Source: Savills

23

Vacancy rate

Robust Demand Absorbing Inventory Shanghai Prime Office

6.0

5.0

Million sqm

4.0

3.0

2.0

1.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Market Stock GFA
Source: Savills

24

Occupied GFA

'000 sqm

Demand Exceeding New Supply Shanghai Prime Office

900

18%

800

16%

700

14%

600

12%

500

10%

400

8%

300

6%

200

4%

100

2%

0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

New Supply

Take-up

Source: Savills

25

Occupancy rate

Galaxy SOHO

Image of actual property

26
26

Image of actual property

Galaxy SOHO
27
27

GALAXY SOHO, October 27, 2012

28

Sanlitun SOHO

Image of actual property

29
29

2012 Contract sales RMB9.5bn

2012 Contract Sales

As at 31 December 2012

Amount GFA sold

Average
(RMB
(sq.m.)
price
million)
(RMB/sq.m.)
Projects

Type

SOHO Peaks Tower

Office/Retail
1&2
SOHO Zhongshan
Office/Retail
Plaza
Total

Total Aggregate Aggregate

sellable
percentage contract
area
of sellable
sales
(sq.m.)
area sold
amount
(RMB
million)

8,086

153,349

52,196

283,204

83%

12,766

1,382

31,746

42,463

112,864

57%

3,039

9,468

30

Strong Balance Sheet

Total cash > RMB22bn

Total debt RMB23bn
Net gearing to be significantly lower (<5%)

Cash enriched by strong collection of mortgage

loans for the sales of Galaxy SOHO
Raised a high yield Bond: USD1bn in November
USD600mm 5.75%
USD400mm 7.125%
31

Lowest Geared
Net gearing ratio

Source: 2012 Interim Reports, except SOHO China on estimation as at the end of 2012

32

Lowest Funding Cost *

2011 Effective Interest Rate (%)
12.0

9.0

11.1

8.5

8.4

8.1

7.7
7.1

6.7

6.7

6.5

6.4
5.7

6.0

3.0

0.0
Greentown Country
Garden

Vanke

Agile

Evergrande Shimao

R&F

Sino Ocean Shui On

Note: Total interest (including capitalized interest) / total debt balance as at 31 December 2011 from companies Annual Reports

33

Longfor

SOHO

Diversified Funding Sources

Offshore Debt Markets

Equity/ Hybrid Markets

Syndicated loans:
June 2012: 3-year USD626mm H/LIBOR+4.25%
June 2011: 3-year USD605mm H/LIBOR+3.55%
High yield bond:

October 2007: listed on the Hong Kong Stock

Exchange (410.HK) raising HKD12.9 billion
July 2009: HKD2.8 billion, 3.75%, 5-year
convertible bond
Ranks pari passu with the proposed
offering

November 2012: USD 600mm 5.75%

USD 400mm 7.125%

Onshore Debt Markets

Other Sources

Bank loans: RMB4.7 billion

Leverage existing buyers / investors

Undrawn bank facilities: c.RMB1.9 billion

Passive financial investors

Cashable portfolio of assets

Note: As of December 31, 2012

34

SOHO Plans To Maintain A High Dividend Policy

Average dividend yield of 5.6% for the past three years

Interim DPS

Final DPS

0.30

DPS RMB

0.25
0.20

0.14

0.11

0.15
0.10
0.05

0.20
0.10

0.10

2007

2008

0.12

0.14

0.12

0.00
2009

35

2010

2011

2012E

SOHO Is Greatly Undervalued

SOHO is trading at 58% discount to its NAV
Low share price only reflects the land cost of HK$5.40 per share
(RMB20,200/sqm)
Recent commercial land auction in Beijing at RMB38,000/sqm
15.00

HK$/Share

15.0

10.0
6.28

5.40

5.0

0.0
Share Price

Per share land cost of

investment properties

Note: Closing price at 11th January 2012

36

NAV per share

Appendix: SOHO Pipeline Analysis

Pipeline Completion Schedule

Development Costs of Pipeline Investment Projects

Lettable GFA of Pipeline Investment Projects

37

Pipeline Completion Schedule

Project
(sqm)

Project Total
GFA

Project Completion (Saleable/lettable GFA)*

2012
2013
2014
2015

For Long-Term Investment

Tiananmen South(Qianmen)
SOHO Century Plaza
Galaxy SOHO
SOHO Fuxing Plaza
Sky SOHO
Guanghualu SOHO II
Bund SOHO
SOHO Peaks** Tower 3
Hongkou SOHO
Bund 8-1
SOHO Hailun Plaza
SOHO Tianshan Plaza

54,700
59,000
330,000
137,000
350,000
167,000
189,000
180,000
97,000
211,400
152,000
172,000

17,844 (36,847 already completed)

42,954
33,307
86,620
234,003
93,890
72,927
134,261
66,833
145,486
116,132
101,673

For Sale
Galaxy SOHO
SOHO Peaks Tower 1&2
SOHO Jing'an Plaza
Total

330,000
340,000
81,000

224,693
268,523
318,798

* Saleable/lettable GFA is excluding car parks

** Originally named as Wangjing SOHO

38

589,146

367,911

57,137
420,428

Development Cost Of SOHO Pipeline

Average land cost per lettable GFA RMB20,200
Average all-in cost per lettable GFA RMB32,000
Completed Buildings
(RMB/sqm)
SOHO Century Plaza
The Exchange-SOHO

All-in-cost
45,000
34,000

Projects under Construction

(RMB/sqm)

Construction, capitalized
interest and other costs
15,900
10,000
10,500
16,300
15,300
15,500
14,200
10,700
13,500
9,070

Land

SOHO Fuxing Plaza

27,700
Sky SOHO
7,500
Guanghualu SOHO II
11,500
Bund SOHO
30,600
Hongkou SOHO
22,700
Bund 8-1
33,200
SOHO Hailun Plaza
21,300
Galaxy SOHO
15,000
parks
SOHO* Saleable/lettable
Tianshan Plaza GFA is excluding car
20,500
SOHO Peaks* Tower 3
10,230
* Originally named as Wangjing SOHO
39

All-in-cost
43,600
17,500
22,000
46,900
38,000
48,700
35,500
25,700
34,000
19,300

Lettable GFA Of SOHO Pipeline

Project

Type

Commune by the Great Wall

The Exchange-SOHO
Qianmen I
Qianmen II
SOHO Century Plaza
SOHO Century Plaza
Chaoyangmen SOHO I&II
Galaxy SOHO
Galaxy SOHO
SOHO Fuxing Plaza
SOHO Fuxing Plaza
Sky SOHO
Sky SOHO
Gauanghualu SOHO II
Gauanghualu SOHO II
SOHO Peaks Tower 3
SOHO Peaks Tower 3
Hongkou SOHO
Hongkou SOHO
Bund SOHO
Bund SOHO
Bund 8-1 Land
Bund 8-1 Land
SOHO Hailun Plaza
SOHO Hailun Plaza
SOHO Tianshan Plaza
SOHO Tianshan Plaza
SOHO Tianshan Plaza
Total
Accumulated total

Hotel
Retail
Retail
Retail
Office
Retail
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Office
Retail
Hotel

Lettable GFA Completion (sqm)

By2012
2013
2014
2015
30,586
3,842
22,763
31,928
42,522
432
11,519
12,082
21,225
53,782
32,838
194,394
39,609
63,056
30,834
117,165
17,096
60,194
6,639
50,664
22,263
97,345
48,141
102,132
14,000
52,911
29,762
19,000
176,899
320,623
367,911
363,291
176,899
497,522
865,433 1,228,724

40

Chinas Most Influential Brand

Chairman Pan Shiyi: 14.1 million followers on
Weibo, a.k.a. Chinese Twitter

CEO Zhang Xin: 5.1 million followers on Weibo,

a.k.a. Chinese Twitter

As of 11 January 2013

41

Image of actual property

Jianwai SOHO
42

Artist image

SOHO Peaks
43

Artist image

Sky SOHO
44