March 20, 2018 / 8:07 AM / 6 months ago

Developer Soho China says to spin off 3Q co-working business

HONG KONG, March 20 (Reuters) - Property developer Soho China Ltd said on Tuesday it plans to spin off its 3Q co-working business and double the number of co-working seats to 50,000 this year to take advantage of rapid growth in that market.

Developers and financial investors are capitalising on fast-rising demand for leasing of “co-working” spaces in China, as Beijing encourages start-ups and small businesses in a bid to offset slowing growth at traditional industries.

“Young people are very interested in our 3Q ... We will definitely have 50,000 seats by the end of this year, or exceed that number,” Chairman Pan Shiyi said.

He, however, said that Soho China, one of the country’s biggest players in the co-work office segment and an industry pioneer, had yet to decide on the timing of a spin-off and listing venue.

SOHO 3Q owns 26 co-working centres, with around 26,000 seats in the Chinese cities of Beijing, Shanghai, Hangzhou, Shenzhen and Nanjing.

Earlier in the day, Soho reported a 420 percent jump in annual net profit to 4.7 billion yuan ($743 million) due to higher valuation gains on investment properties.

Valuation gains stood at 7.1 billion yuan, compared with 1.3 billion yuan in 2016. Chief Financial Officer Sharon Tong said its core profit also posted growth, discounting the impact of the valuation gains, although she didn’t disclose any figures.

Shares in Soho China plunged nearly 10 percent to a one-month low after the company board did not recommend final dividend for the year ended December.

Pan said he expected the company to post large revaluation gains this year, although it has no plans to sell any more assets after two sales in Shanghai last year.

Asked if Soho China was interested in acquiring any assets of embattled conglomerate HNA Group, Pan said the company would consider “anything cheap”.

The company said it expects rental income to rise around 10 percent in 2018, compared with an 11 percent growth in 2017. ($1 = 6.3252 Chinese yuan) (Reporting by Clare Jim; Editing by Anne Marie Roantree and Subhranshu Sahu)

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