SOHO China’s losses further expand in 2025, plans to continue disposing of some commercial office properties

Cailian Press, April 2 — (Reporter Li Jie, Intern Feng Zixi) SOHO China (00410.HK) recently released its full-year 2025 performance.

Against the backdrop of continued adjustments in the leasing market, in 2025 SOHO China, despite pushing up the occupancy rate through flexible pricing, still faces operating pressure brought by declining revenue, high liabilities, and historical tax issues.

According to SOHO China’s 2025 annual report, during the reporting period the company achieved operating revenue of 1.37 billion yuan, down 10.9% year over year; the annual net loss was 291 million yuan, with losses further expanding compared with 2024; after stripping out the changes in the valuation of investment properties and one-off tax expenses, the underlying net profit was 134 million yuan; the overall occupancy rate was 82.8%, up 5.1 percentage points year over year.

“One of the reasons for the revenue decline is that SOHO China proactively adopted a rent reduction strategy to stabilize occupancy rates, which led to a drop in total rental income. Although the overall occupancy rate increased, the downward pressure on the rent per unit dragged down revenue,” said Yan Yuejin, Deputy Dean of the E-House Research Institute.

From the perspective of revenue structure, rental income is still the revenue pillar of SOHO China. In 2025, its rental income was approximately 1.367 billion yuan, accounting for 99.6% of total revenue, but it declined year over year; property sales revenue was only 0.05 billion yuan.

“Under the heavy pressure of the 2025 market, we proactively adjusted our strategy, exchanging flexible pricing for asset liquidity and vitality, so that every square meter is put to good use,” SOHO China Chairman Xu Jin said in the performance report.

Public information shows that SOHO China’s primary investment properties are still mainly concentrated in Beijing and Shanghai, including Wangjing SOHO, Guanghua Road SOHO 2, the Qianmen Street project, Lize SOHO, SOHO Fuxing Plaza, Bund SOHO, SOHO Tianshan Plaza, and Gubei SOHO—eight projects in total.

As for the reasons behind the widening losses at SOHO China, Yan Yuejin believes that the main factors are the squeezing of gross profit margins due to the decline in rental income, and the continued accumulation of late-payment penalties and interest stemming from historical tax issues.

In August 2022, SOHO China’s subsidiary Beijing Wangjing Souhou Real Estate Co., Ltd. received a tax payment notice from the local tax authorities, requiring it to pay 1.733 billion yuan of land value-added tax related to Wangjing SOHO Tower 1 and Tower 2 before September 1, 2022. From the date the tax payment became overdue, a late-payment penalty would be charged at 0.05% of the overdue tax amount per day.

The financial report shows that as of the end of 2025, about 180 million yuan of land value-added tax had been repaid. As of December 31, 2025, the remaining land value-added tax principal and accumulated late-payment penalties totaled approximately 2.566 billion yuan and had not yet been paid.

SOHO China said that late-payment penalties for value-added tax may lead to cross-defaults on bank loan principal, or arise as cross-defaults.

“These major uncertainties may pose significant doubts about whether the Group can continue to operate its business. In light of the above, when assessing whether the Group will have sufficient financial resources to continue operating, the management of the Company has prudently 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 amounted to approximately 15 billion yuan, of which about 99% were secured by investment properties with a book value of approximately 53.7 billion yuan; cash and cash equivalents were approximately 0.5 billion yuan; current liabilities exceeded current assets by approximately 7.6 billion yuan.

Facing the dual challenges of market downturn and financial pressure, Xu Jin said in the performance report, “In 2025, we achieved no layoffs, no salary cuts, no owing money to suppliers, and no delays to customers’ project schedules. These are basic operating principles, but in difficult years, achieving them is not easy.”

SOHO China said it will take several plans and measures to ease liquidity pressure and improve cash flows in the future, including continuing to communicate with local tax authorities and seeking feasible settlement options for unpaid land value-added tax and late-payment penalties; continuing to dispose of some commercial properties to repay land value-added tax; and improving operating cash flow by controlling administrative expenses and saving on capital expenditures.

Analysts point out that, in the context where commercial real estate has not yet exited the adjustment cycle, how to balance the maintenance of asset value and the safety of the debt structure has become an important question for SOHO China’s next stage of development.

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