SOHO China'S "Stone" In The Past 30 Years

After the road of "selling, selling and selling" has been delayed for seven years, the whereabouts of SOHO China has been revealed. Pan Shiyi, as the first generation of star real estate entrepreneurs, will say goodbye to the end.

Mr. and Mrs. Pan Shiyi, who handed over the controlling shares to Blackstone, only retained 9% of the shares and will withdraw from the board of directors, will play a more "off-site help" to SOHO China in the future.

SOHO China, founded in 1995, is an indispensable epitome of China's real estate. From residential development to commercial development, the track was switched to property self-supporting. With novel design and wonderful investment nodes, SOHO China, which once called "surpassing Vanke in five years", was finally left behind by the real estate high-speed rail.

Focus on Pan Shiyi himself, a member of the "Wantong six gentlemen" who ran away from Hainan in the 1990s, has too many labels and carries a halo several times that of the current "professional manager". In recent years, Pan Shiyi has been called "Pan Carpenter", "Pan photography" and "Pan apple". Some people even call him "Pan Paopao" because he has sold property assets many times.

Fading out is not a year or two years, but this sale should be regarded as a landmark action, drawing a concrete end for Pan Shiyi and his SOHO China.

Wang Shi, a contemporary entrepreneur with Pan Shiyi, is still struggling on the commercial road after leaving Vanke. Where will Pan Shiyi's second half of life fall into has not been announced. An executive of an international consulting firm speculated to the 21st century economic reporter that it may be the transformation into an institutional investor facing overseas assets, or it may be a real retirement, "leaving the river and lake and leaving a name.".

This once superb propaganda master only occasionally sends out the contents of Gansu hometown, sports experience, handicrafts and public welfare kindergarten on the shaking tone of the short video platform which is most popular among young people. The number of messages is often no more than three digits, and the message area is always full of ridicule of "running away?".

Only a message from Pan Shiyi is different: "I am a teacher pan, the children are in his school, everything is free, I want to say that he did not forget his origin, is a good man."

SOHO China, founded in 1995, is a microcosm of China's real estate. Visual China

Discount sale, Blackstone admission

Around the corner, SOHO China still chose to reach an agreement with Blackstone Group. However, compared with the plan of the first contact last year, the final plan has been discounted.

After the close of business on June 16, SOHO China issued an official announcement that Blackstone (NYSE: BX) issued a full-scale tender offer, which would purchase 2.856 billion shares from the controlling shareholders at the price of HK $5 per share, accounting for 54.93% of the issued share capital. After the completion of the offer, Blackstone will become the controlling shareholder and largest shareholder of SOHO China.

After the completion of the transaction, SOHO China will continue to be listed on the Hong Kong stock exchange. Pan Shiyi and Zhang Xin will retain 9% of the shares, and will withdraw from the board of directors after the completion of the tender offer. Blackstone Group will nominate a new executive director to the board of directors.

After 26 years of operation, Pan Shiyi and his wife left a promise that as the second largest shareholder of the company, they will continue to mobilize resources to provide help for the development of the company.

What remains unchanged is that Blackstone currently has no plans to change the management and team of SOHO China.

Compared with the negotiation between Blackstone and SOHO China in March 2020, the offer price of Blackstone was reduced from HK $6 per share to HK $5 per share, with the total price reduced by 16.7%.

Different from the previous rumors of "privatization", Li Xiang, head of Research Department of North China region of Savills and assistant director, told reporters that Blackstone adopted the "winding path leading to secluded" approach, and the total cost of equity acquisition was more than half of the original SOHO China's overall asset package price. Moreover, Blackstone's capital cost was lower and its financing method was more flexible.

"This is very consistent with Blackstone's consistent investment logic, especially in view of the large release of US dollars in the post epidemic period and the uncertainty in the global economy, this kind of acquisition is more cost-effective and safer." Li Xiang said that after one year, Blackstone has not given up its acquisition of SOHO China, which shows that Blackstone Group has strong confidence and layout desire in China's commercial market, especially in the first tier cities.

Bai Wenxi, vice president of China enterprise capital alliance, told reporters that Blackstone retained the original operation and management team of SOHO in China. It is precisely because of its team's familiarity, understanding and proper grasp of the operating environment and enterprise assets. Only in this way can we ensure the stability of enterprise operation and the maximization of asset value.

Behind "selling, selling and selling", it is difficult for the "Charter Public"

In 1994, "Wantong Liujunzi" formally broke up because of the inconsistent business philosophy. Pan Shiyi and his wife Zhang Xin jointly established Beijing Hongshi Industrial Co., Ltd., the predecessor of SOHO China, the following year with his wife Zhang Xin. Zhang Xin, with overseas background and investment banking experience, and Pan Shiyi, who has unique business judgment and courage, have formed a good founding team and solid husband and wife partner.

With novel concept and outstanding design, combined with flexible retail mode, SOHO China has risen rapidly. SOHO modern city, the first SOHO project in Beijing built by Pan Shiyi, became the sales champion of Beijing single project in 1999 and 2000. In 2007, SOHO was listed in Hong Kong, setting the largest IPO record of commercial real estate in Asia.

The year 2010 was the most exciting time for SOHO in China. Galaxy SOHO sold 14.6 billion yuan that year, becoming the national sales champion of single project. The company's overall sales reached a record high of 23.8 billion yuan. SOHO China even proposed to surpass Vanke in five years.

At the same time, Pan Shiyi also went beyond the status of an entrepreneur and gradually became a public idol. Microblog opinion leaders, publishing books, doing charity, doing exhibitions, and even co starred in a film.

But business always has ups and downs. In 2012, Pan Shiyi decided to shift the company from sales to "self owned property" mode in 2012, along with the policy of banning the sale of properties in Beijing, coupled with the unbalanced purchasing power of "coal boss, Jiangsu and Zhejiang boss" customers that Pan Shiyi had laid for the company in the early stage, and the macroeconomic impact on the purchase demand of office buildings weakened.

During the period of acting as "rent collector", SOHO China has experienced severe financial test. Pan Shiyi once said publicly that "SOHO China's rent return rate is less than 3%, but the capital cost of bank loans is more than 4%".

Bai Wenxi points out that if it is not the sales property developers who rely on their huge cash flow to "support" the self-sustaining commercial property, and if there is no long-term, low interest large-scale capital source, then the operating income beyond its means will be the black hole of the owner's own cash flow sooner or later.

Since 2014, Pan Shiyi has started to sell assets. In only three months, SOHO China sold Shanghai SOHO Jing'an Plaza and SOHO Helen Plaza; In 2015, 50% of the interest in plot 8-1 of Shanghai Bund International Financial Center was transferred to Guo Guangchang, a former rival, with RMB 8.493 billion; In 2016, Shanghai SOHO Century Plaza was sold to Guohua life insurance with a price of 3.22 billion yuan; In 2017, Hongkou SOHO and Lingkong SOHO sold to Keppel real estate, a Singapore company, and Gehui capital, a well-known private equity fund company in Hong Kong, with a price of 3.57 billion and 4.944 billion respectively.

According to incomplete statistics, since 2014, Pan Shiyi has realized about 30 billion yuan by selling assets. Due to the frequent selling action, there are many doubts in the market that Pan Shiyi imitates Li Jiacheng's "running".

Up to Pan Shiyi's hands, only the so-called "eight King Kong" are the core eight office building projects of SOHO in China: Wangjing SOHO in Beijing, SOHO phase 2 in Guanghua Road, SOHO Qianmen Street, Lize SOHO, and Shanghai's Soho, SOHO Renaissance Plaza, Gubei SOHO and SOHO Tianshan square projects in Shanghai, which are the asset packages contained in the equity acquisition of Blackstone Group.

From 2012 to 2018, the operating revenue of SOHO in China decreased from 16.143 billion yuan to 1.721 billion yuan; The net profit attributable to shareholders of the parent company decreased from 10.585 billion yuan to 1.925 billion yuan. In contrast, Vanke, Evergrande and Biguiyuan, once comparable real estate enterprises, have already achieved sales of hundreds of billions.

According to Bai Wenxi, Pan Shiyi's transition from building a house to selling a house is an inevitable choice for him to be engaged in commercial property development and operation under the specific domestic industry environment. This is obviously different from the residential development business with high turnover and no operation.

He said that it is the natural right of every investor to choose suitable investment fields and investment opportunities and make necessary adjustments to its investment layout when pursuing their own dreams and investment benefits. Therefore, "Pan Shiyi ran away" should not be judged from the moral level.

The cause and effect have been planted for a long time

Pan Shiyi is a group of entrepreneurs who escaped from the real estate bubble in Hainan in the early 1990s. He has always maintained a sense of crisis and a sense of survival.

Bai Wenxi believes that this is also the root of Pan Shiyi's lack of long-term confidence in China's property market.

Looking back on history in the way of flashback, many people in the industry attribute the success of SOHO China to Pan Shiyi's investment vision and accurate grasp of nodes. It is Pan Shiyi's common way to build a high-value office building project after getting land at a low price. Pan Shiyi once said, "the law of doing business will never change, that is, when it is low, when it is high, it will be shipped.". SOHO China will always follow this principle. "

Even Pan Shiyi's good friends evaluate him as a born second dealer.

According to industry insiders, what Pan Shiyi and Zhang Xin have in common is that they insist on low-risk operation, and SOHO China's book will always have abundant cash flow.

But in the long run, Pan Shiyi's career also lacks the determination to innovate. In addition to turning from selling to self-supporting, and continuously "selling", Pan Shiyi has rarely taken unconventional actions for many years, almost only soho3q business.

In 2015, Pan Shiyi introduced the form of shared office into China, dividing the large space into small office space to provide short rent. However, this way of "selling desks more difficult than selling offices" did not bring gratifying results. Soho3q project did not escape the fate of being sold, and was finally packaged and sold to dream star.

Pan Shiyi has repeatedly publicly expressed that the share price of SOHO China is unreasonable. Insiders familiar with SOHO China believe that the reason is Pan Shiyi's investment attitude. After no expansion, investors think that the assets without future are worthless.

When "selling, selling and selling" became a routine action. After he was free from business, Pan Shiyi sometimes helped his hometown in Tianshui, Gansu Province to sell apples. He took a series of portraits of "Chinese entrepreneurs" as a "photographer". He became a carpenter and made a lot of "chopsticks", which came from the Analects of Confucius - "one pot of food, one ladle of wine, one can't bear to worry about in the rough lane, and he will not change his happiness when he comes back.".

Pan Shiyi once recalled his childhood, which was more bitter than sun Shaoan, the protagonist of the ordinary world. When he was a child, he ate relief food, which led to malnutrition in his two younger sisters. Finally, he had to give them to other people's homes. After financial freedom, more than a decade ago, Pan Shiyi, in accordance with his mother's instructions, built a kindergarten for children in the village with his ancestral home. In May 2019, Pan Shiyi invited international architects to make the kindergarten facilities into "amazing" buildings.

However, Pan Shiyi and his wife have also suffered a lot of pressure from public opinion in recent years. Not only was it called "Pan Paopao", but also because the biggest public welfare investment was given to Harvard and Yale, and their two sons entered these two schools respectively, they were denounced by netizens.

Feng Lun once said, "if the legend is over, it will return to mediocrity; When the honeymoon is over, it will return to the day. "

Bai Wenxi said that the first generation of pioneering entrepreneurs, represented by Pan Shiyi and others, after enjoying the dividend of the times, turned their sleeves and turned around. In fact, it was the product of changes in the development environment and business opportunities. It was an indisputable choice driven by commercial interests and did not include moral and value judgment factors.

Pan Shiyi once participated in Hunan Satellite TV's star life experience program "yearning for life" in 2019, and skillfully demonstrated his carpenter's skills. When teaching he Jiong to use saws, he said that the skills lie in "long and light", which was repeatedly recited by a group of guests. Today, I don't know if Pan Shiyi, who leaves China's real estate market, still follows the principle of "long and light".