SOHO China’s losses are expected to further widen in 2025, with plans to continue disposing of some commercial office properties.

Cailian Press April 2 (Li Jie, reporter; Feng Zixi, intern) SOHO China (00410.HK) recently released its full-year 2025 results.

Against the backdrop of ongoing adjustments in the leasing market, although in 2025 SOHO China boosted its occupancy rate through flexible pricing, it still faced operating pressure stemming from falling revenue, high leverage, and historical tax issues.

According to SOHO China’s 2025 annual report, during the period the company recorded operating revenue of RMB 1.37 billion, representing a year-on-year decrease of 10.9%; annual net loss of RMB 291 million, with losses further widening compared with 2024; after excluding changes in fair value of investment properties and one-off tax charges, underlying net profit was RMB 134 million; overall occupancy rate was 82.8%, up 5.1 percentage points year on year.

“One of the reasons for the revenue decline is that SOHO China has proactively adopted a strategy of lowering rents to stabilize occupancy rate, which has led to a decline in total rental income. While the overall occupancy rate has improved, the drop in rental unit prices has dragged down revenue.” Yan Yuchin, deputy director of the E-house Research Institute, said.

In terms of revenue structure, rental income remains the revenue pillar of SOHO China. In 2025, its rental income was approximately RMB 1.37B, accounting for 99.6% of total revenue, but it saw a year-on-year decline; property sales revenue was only RMB 5M.

“Under the heavy market pressure in 2025, we proactively adjusted our strategy, exchanging flexibility in pricing for the liquidity and vitality of our assets, so that every square meter can be put to its best use.” SOHO China Chairman Xu Jin said in the earnings report.

According to publicly available information, SOHO China’s main invested properties are still concentrated in Beijing and Shanghai, including a total of eight projects: Wangjing SOHO, Guanghua Road SOHO 2, the Qianmen Street project, Lize SOHO, SOHO Renaissance Plaza, The Bund SOHO, SOHO Tianshan Plaza, and Gubei SOHO.

Regarding the reasons for the widening losses at SOHO China, Yan Yuchin believes that mainly it is the decline in rental income squeezing gross profit margins, as well as the continuing accumulation of late fees and interest expenses brought about by historical tax issues.

In August 2022, SOHO China’s subsidiary Beijing Wangjing Souchou Real Estate Co., Ltd. received a tax payment notice from the local tax authorities requiring it to pay RMB 1.73B in land appreciation tax related to Tower 1 and Tower 2 of Wangjing SOHO by September 1, 2022. From the date the tax payment was overdue, a late fee of five ten-thousandths of the overdue tax per day would be charged.

The financial report shows that by the end of 2025, it had paid off approximately RMB 180 million of land appreciation tax. As of December 31, 2025, the remaining principal of land appreciation tax and accumulated late fees totaled approximately RMB 2.57B and had not yet been repaid.

SOHO China stated that the late fees on value-added tax may lead to the principal of bank borrowings being affected or cross-default occurring.

“These major uncertainties may constitute a material doubt as to whether the Group can continuously carry on its business. In light of the above, when assessing whether the Group will have sufficient financial resources to continue as a going concern, the management of the Company has carefully considered the Group’s future working capital and performance, as well as the sources of funds available to it.” The company said.

As of December 31, 2025, SOHO China’s total loans were approximately RMB 15 billion, of which about 99% of the loans were secured by investment properties with a carrying gross value of about RMB 53.7 billion; cash and cash equivalents were about RMB 500 million; current liabilities exceeded current assets by approximately RMB 7.6 billion.

Facing the dual challenges of a downturn in the market and financial pressure, Xu Jin said in the earnings report: “In 2025, we achieved no layoffs, no pay cuts, no failure to pay suppliers, and no delays to customers’ construction schedules. These are basic operating principles, but it is not easy to achieve them in difficult years.”

SOHO China said that it will take several plans and measures to alleviate working capital pressure and improve cash flow, including continuing to communicate with local tax authorities to seek viable settlement options for the unpaid land appreciation tax and late fees; continuing to dispose of certain commercial properties to repay land appreciation tax; and at the same time improving operating cash flow by controlling administrative expenses and saving on capital expenditures.

Analysts pointed out that, against the background that commercial real estate has not yet fully exited the adjustment cycle, how to balance asset value preservation with the safety of the debt structure has become an important question for SOHO China’s next stage.