How do you reduce fat around the penis area?

Lose fat everywhere. A man's body does not know he wants to lose fat in special places. That is not how the body is designed. So, in order to lose fat around the penis area, he must lose fat (weight) in general. If he is slim, but has always had an unusually padded pubis area above his penis, he can see his doctor for an evaluation. If the penis and testes work normally, the pubis area fat should not matter much.
Fat. Do you mean that you have a "soft squishy mass on your penis"? Or are you saying that you have an overweight lower belly that hangs over your penis-making it seem less than it really is? If there is a lump on your penis--please see a doctor-urologist-it could be a cyst or mass that needs removal. If you have a hanging belly-best treatment--start exercising and lose weight-you will lose all over.