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Source: Internet North (ID: hlwzhibei)
On September 1, when Yang Yu and Chen Xin left work, the landlord had been waiting at the door for a long time. This is the house they rented through Qingke apartment. It is less than 2 months since they moved here.
The landlord told them that they had not received the rent for a long time. As for whether to stay or not, we could discuss it again.
But at the same time, the landlord also clearly mentioned, “my contract notes that the rent is not received within 7 days after the deadline. The landlord has the right to take back the house unconditionally, so we can only ask you to move out if we can’t negotiate well.”
The next morning, Yang Yu and Chen Xin arrived at the local police station early. ID card, lease contract, payment certificate, the time is almost 11 o’clock, but the police did not give any specific and effective feedback, just repeatedly said that you can negotiate with the landlord.
Together with Chen Xin and them, there was also a couple and another tenant, which together involved about 20000 yuan. At the same time when Chen Xin and Chen Xin reported the case, there were several other informers in the police station. Without exception, they also ran into a long-term apartment.
Qingke was listed in the United States last year as the “first share of long-term rental apartments”. Yang Yu and Chen Xin chose to be listed here because of their reputation behind the listed companies. However, this time, they were obviously careless.
Before that, microblog actually had relevant topics in fermentation. On August 29, according to netizens, a number of second landlords ran away in Chengdu, ranking the top of the hot search list in Chengdu. According to incomplete statistics, in recent months, the cumulative number of long-term rental apartment enterprises has reached more than 20. Among them, Mansheng apartments alone involve more than 40000 units in Chengdu and Chongqing.
And compared with the whole country, Chengdu is still lucky. At the same time, there are also a number of enterprises in Shanghai, Hangzhou, Shenzhen and other places.
According to the Beijing News, more than 5000 people have been involved in the running of the Youke apartment in Hangzhou, with a total amount of nearly 200 million. According to the report of Qianjiang Evening News, the number of landlords involved in the nest guest apartment, which belongs to Hangzhou, is far more than that of friends, and the total number may exceed 10000.
Such a number is restoring a reality to some cruel fact: today, when young people are still considering whether to give the delivery boy five minutes more, they may not know whether they can live in the house that has paid the rent for another five days.
Tenants of long-term apartments petitioned by Chengdu
As a country with a large population, coupled with the differences in economic development between regions, China has formed a huge floating population in the process of long-term development because of migrant work and study. According to statistical data, by 2010, the total number of floating population in China has reached 221 million.
After 2010, due to the rapid increase of urban white-collar population and the impact of consumption upgrading, the young people who are wandering and struggling in the city put forward higher requirements for living, but also brought huge business opportunities to the rental market.
Around 2011, the first batch of enterprises to see this blue ocean market began to explore the business model of long-term rental apartments. In May 2011, ziziyou was officially put into operation; the next year, Qingke apartment and Youke Yijia were established; by the end of 2014, there were nearly 30 long-term apartment brands worthy of name in the industry.
By this time, the main players in the long-term apartment market have basically assembled; at the same time, the long-term apartment industry has also ushered in intensive investment and financing activities
In June 2014, Tujia completed round C financing of US $100 million
In September 2014, Qingke apartment obtained tens of millions of dollars of round a financing from Dachen venture capital;
In November 2014, Youke Yijia obtained 22 million US dollars in round B financing;
By the end of 2014, mushroom apartment completed round B financing of US $25 million;
At the beginning of 2015, Yujian apartment obtained a round of financing from Shunwei capital investment;
On May 11, 2015, eggshell apartment completed a round of financing of tens of millions of RMB.
Until around 2017, with the continuous influx of capital, coupled with the decline in the popularity of bike sharing and the emergence of hidden worries, the long-term rental apartment has officially become the pig standing on the wind to replace the bike sharing.
At that time, a research report of Dongfang Securities pointed out that in 2017, China’s leasing population was expected to be 190 million, so the scale of the leasing market has exceeded one trillion yuan. The broader the market is, the more crazy the capital will be. It can be said that the long-term rental apartment to a large extent inherited the capital’s passion for killing the red eye in the field of bike sharing.
But in fact, capital is also fascinated by the blood, because behind the vast rental market, long-term rental apartments are not a very profitable business.
In the history of long-term apartment development, the complex market environment has spawned three mainstream formats.
Among them, there are scattered long-term rental apartments, represented by free and eggshell apartments. They rent rooms in residential buildings in various communities, and then rent them after renovation; there are centralized long-term rental apartments such as Xinpai apartment and Rubik’s cube apartment, which usually rent a whole building and turn it into an apartment for rent; and there are real estate self rental apartments such as Vanke Park apartment and Longhu Guanyu For land holding construction projects, they are owned by real estate companies to take their own land, build on their own, and then lease, which is relatively more standardized.
However, in addition to the apartments built by the real estate itself, whether it is a decentralized long-term rental apartment or a centralized long-term rental apartment, it is essentially the role of the operator as a second landlord, making money through the rent difference of “low in and high out” and subsequent maintenance services. Even for decentralized long-term apartments, due to the lack of follow-up maintenance services, the profit space becomes more narrow.
In his early years, Pan Shiyi, who has been committed to the real estate leasing business, once said in an interview, “it is still a loss to double the rental price.” In Pan Shiyi’s opinion, the return on investment of housing rental is no more than 5% and 6%, and the highest rate of return is no more than 1%. If the enterprise’s management expenses and operating costs are added, the business is basically in a loss.
If pan Yishi’s judgment is more based on his rich industry experience, then 36 krypton’s sensitivity analysis on the interest and tax profit margin of long-term rental apartments in previous reports based on the data at that time has more objective reference value. The pre tax profit margin of 0% for a 100 person apartment will be 11% higher than that for a 100% occupancy rate.
Some people say that in this way, long-term apartments still seem to have a lot of profit margins. But the fact is, even if we don’t mention whether the high premium long-term rental apartments are competitive enough in the price sensitive and competitive rental market, enterprises still need to pay for the decoration, materials, operation and maintenance, leasing, brand promotion, labor and other expenses for each apartment. Whether they can be even or not remains to be discussed. What’s more, companies must ensure that all of their homes have more than 95% occupancy.
How difficult is this occupancy rate? It should be noted that in addition to the small-scale and refined operation of Qingke apartment, the free apartment will only announce 95% by the end of 2019, while the eggshell apartment, which is also listed in the US stock market, will have a occupancy rate of only 75.5% by March 2020.
Therefore, it has become the consensus of the market that long-term rental apartments are difficult to make profits. However, since we all know that this business is difficult to make money, why has the long-term rental apartment been expanding wildly in recent years?
The paradox of commerce is often here.
In 2019, when the capital market recognizes that the long-term rental apartments are difficult to make profits, and the short-term losses can not be narrowed, the long-term apartments with financing difficulties tell a new story to the market — unit economic model profit.
The so-called unit economic model profit, that is, in the field of long-term rental apartments, enterprises put aside all the shared expenses such as management and marketing, and only from the point of view of the profit and loss balance of a single room. If the unit economic model is profitable, the enterprise can dilute the fixed cost by expanding the scale to achieve profit.
Eggshell apartment is a typical representative of this logic. According to the prospectus, the number of eggshells increased by 2.166 million in the period from 2015 to 2015, which is even more than the number of apartments in operation.
Eggshell apartments operating apartments and urban distribution, source prospectus
However, in fact, the so-called unit economic model profit is still a market scale effect in essence, and for the expansion of scale, long-term rental apartments have never stopped yearning for it since the day when they stood on the wind.
According to public data, from September 2016 to November 2019, in less than three years, the number of freely managed rooms has increased from 250000 to 1 million, with a growth rate of four times. Even though it is not famous for its growth and focuses on refined operation, the number of rooms in Qingke apartment has increased from 44200 in 2016 to 97300 in 2019.
And in the long-term rental apartment crazy expansion, seize the market at the same time, the rental market prices also began to show a rising trend.
In September 2018, a person who claimed to be the landlord of Beijing Tiantongyuan published a post entitled “capital aims at renting houses to suck the blood of young people” in Shuimu community, a real estate forum, and set off a nationwide discussion on the rise of rent.
In the post, the man who claimed to be the landlord of Tiantongyuan wrote that he owned a 120 square meter three bedroom apartment, and the expected price was 7500 yuan / month. Then he was in a fight with the eggshell apartment. After two intermediary companies raised their prices one after another, the house was finally entrusted to the eggshell apartment with 10800 yuan.
Almost at the same time of this post’s popularity, Hu Jinghui, the former vice president of my family, resigned in a high profile, and publicly said that “in order to expand the scale, the long-term apartment operators represented by the free and eggshell apartments are scrambling for housing resources with 20% to 40% higher than the normal market price, completely destroying the normal housing rental market”.
It is also in this context, in order to speed up the pace of market expansion, at the same time reduce the cost of capital, attract tenants to settle in, rental loans for long-term apartments began to appear.
The so-called rent loan, in fact, is that tenants rent their houses through loans. After the contract is signed, the financial platform will pay all the rent of the tenant to the apartment party in one time. In turn, tenants can pay monthly or quarterly rent to the financial platform for repayment.
In this process, on the one hand, the apartment party gets all the rent in advance during the period of the tenant contract, on the other hand, it still pays the landlord monthly. And this because of the time difference between the emergence of capital precipitation, also became the apartment can freely control the cash.
In this way, the long-term apartments get a lower cost source of funds for market expansion, but at the same time, the risks also come.
On the one hand, the funds obtained by the long-term apartment through the rent loan are actually the rent that the long-term apartment needs to pay to the landlord in the future. So when apartments use the money for market expansion, they have to keep the occupancy rate of new developments. Because only in this way, the apartment can use the rent prepaid by the new tenant to pay the rent that should be paid to the landlord before.
Therefore, in this case, once the market fluctuates, such as the expansion is not smooth, the occupancy rate is lower than expected, or there is a sudden large number of tenants to check out, etc., the long-term apartment will face the risk of breaking the capital chain.
On the other hand, due to the lack of capital supervision, there will be some long-term apartments that will not use the funds for market expansion, but will invest the funds in the stock market or other capital markets in pursuit of higher return on investment, which will further increase the risk of capital loss.
It is also against this background that in January 2018, Shanghai was able to rent and rent well, and in March, the capital chain of “love life and love apartment” was broken; in May, the legal person of Changsha excellent tenant disclosed the problem of capital chain and closed down for rectification.
In August of the same year, Dingjia, a brand of Hangzhou’s long-term rental apartment, said that the company’s poor management led to the suspension of its operation, and became the first star brand of long-term rental apartments. Only two months later, the Yujian apartment, which won the support of Softbank and Shunwei capital, began to rush people to their homes because of the broken capital chain.
And all this just opened the prelude of long-term apartment from scenery to silence.
In 2019, the long-term apartment market, which has experienced a lot of thunder, is obviously much calmer.
On the one hand, the number of new growth apartment rental enterprises began to decrease, and people no longer rush into the industry; on the other hand, the word “tuyere” began to drift away from long-term rental apartments. So, when the aura fades, long-term apartments must also reexamine the cruelty of the market.
However, although tuyere was in the past, the capital did not give up the plan of investment for many years. On the contrary, in 2019, the financing amount of long-term apartments still reached a record high of RMB 12.301 billion, becoming the largest amount of financing in the past eight years.
However, different from the era in which all the giants once rose together, in 2019, the capital market obviously preferred those large-scale head enterprises. Among them, the head enterprises represented by free, eggshell, Rubik’s cube apartments and Chengjia apartments raised a total of 1.64 billion US dollars, more than 90% of the total financing amount of that year.
Correspondingly, since April 2018, Qingke apartment has announced the completion of tens of millions of US dollars in round C financing, with an accumulated financing amount of US $100 million. But after that, there was no financing related news from Qingke apartment.
As a result, by the end of June 2019, according to hexun.com, Qingke’s cash and cash equivalents and restricted cash totaled about 450 million yuan, which was not enough to support the losses of the past year according to its loss ratio.
On the contrary, in 2019, the eggshell apartments with a total financing of US $690 million in round C and round D were completed in 2019, and the days were also on the thin ice.
Affected by the centralized explosion of long-term apartments, after 2018, the state began to tighten the rent loan related control, and eggshell apartment was the first to bear the brunt.
According to the eggshell apartment prospectus, 91.3%, 75.8% and 67.9% of eggshell apartment tenants used rental loans from 2017 to the first nine months of 2019, respectively.
In the first nine months of 2019, eggshell apartment received 110 million yuan of advance payment from tenants and 3.16 billion yuan from financial institutions, accounting for 80% of the rental income of eggshell apartment.
On the other hand, while financing and rental loans bring capital chain risks, the financial situation of eggshell and Qingke is also not optimistic.
According to the eggshell apartment prospectus, from 2017 to the first three quarters of 2019, eggshell apartment achieved revenue of 657 million yuan, 2.675 billion yuan and 4.999 billion yuan respectively, with net losses of 272 million yuan, 1.370 billion yuan and 2.516 billion yuan respectively.
In addition, according to the prospectus submitted by Qingke apartment, the revenue of 2017 and 2018 young guest apartment were 523 million yuan and 890 million yuan respectively, and the net loss was 245 million yuan and 499 million yuan respectively; as of June 30, 2019, the revenue of youth guest apartment was 898 million yuan, and the net loss was 373 million yuan.
That is to say, no matter Qingke or eggshell, although the revenue continues to grow with the expansion of scale, the loss is also expanding synchronously, and there is no sign of narrowing. More seriously, according to the prospectus of Qingke, as of June 30, 2019, the total assets of Qingke will be 2.03 billion, and the liabilities will be 2.7 billion, with a debt ratio of over 133%. In fact, Qingke apartment has become insolvent.
Therefore, at this time, there is no other choice for Qingke and eggshell, who are in urgent need of help, in addition to listing.
On October 8, 2019, Qingke apartment is the first to submit a prospectus to the US Securities and Futures Commission to raise up to US $100 million in the form of ads (American Depository shares). Only 20 days later, eggshell apartment also submitted its prospectus, which is expected to be listed on the NYSE under the trading code “DNK”.
Since then, Qingke apartment was officially listed on NASDAQ on November 5, 2019, becoming the first share of long-term rental apartments in China; in January of the following year, eggshell apartment was officially listed on the NYSE.
But, unlike most of the celebrations of going public, for Qingke and eggshell, going public may just be the beginning of another hard time.
After listing, the offering price of Qingke apartment was $17.00 and the opening price was $17.37. In the following three days, although the share price of Qingke apartment once rose to $19.42, the share price began to fall rapidly after three days.
By November 13, only eight days before it was listed, the Qingke apartment fell below the offering price. So far, the stock price of Qingke apartment has dropped to about 7 yuan, less than half of that at the time of issuance.
And for this kind of situation, eager to appear on the market the youth guest may have anticipated. After all, just the day before the IPO, Qingke apartment also updated its prospectus again, reducing the IPO size from the previous 5.2 million ads to 2.7 million ads, and its fund-raising scale also decreased by nearly half. Among them, it seems to reveal a kind of self-confidence in the future of itself and the industry.
Stock price trend of Qingke apartment
Similar to Qingke, the eggshell opened at $13.50 on the day of listing, and within an hour after that, the share price fell below the issue price. As of September 14, 2020, the eggshell stock price was $5.79, which was less than half of the price when it was issued.
It can be said that for eggshells and young customers, it is just a helpless move when they are desperate to go public. However, for the long-term rental apartment which has been in deep trouble, in the complex market environment, nothing is more important than living.
This is just like the first sentence of CEO Jin Guangjie of Qingke apartment: “I’m still alive!” when he saw his peers after ringing the bell from NASDAQ
However, “to live” also means “uncertainty”, which is the antonym of “final conclusion”.
And this layer of uncertainty was amplified to the extreme in early 2020. With the outbreak of the epidemic in Wuhan at the beginning of January, all provinces, autonomous regions and municipalities directly under the central government successively launched the first-class epidemic prevention response, and strictly implemented the nationwide home isolation and shutdown and production suspension. Therefore, the particularity of the industry of long-term rental apartments has been the first and most obvious impact
On the one hand, due to the suspension of production, many tenants still in the city began to check out in large areas; on the other hand, due to the Spring Festival, more tenants have returned home. At this time, rent reduction has become another problem for long-term apartments.
On February 2, 2020, according to local media reports in Shenzhen, Ms. Lin, the landlady in Shenzhen, voluntarily reduced the rent for half a month, with a total reduction of 800000, benefiting more than 1200 tenants. Since then, relevant topics have been hot searched on microblogs, with a total of 240 million readers. As a result, many tenants who are out of town and can’t return in time due to the epidemic also ask for rent reduction and exemption.
On February 4, eggshell apartment released an announcement on its official app, announcing the subsidy policy for all tenants during the epidemic period. Under the leadership of eggshell apartment, multi parent apartments such as Rubik’s cube apartment and micro territory also began to reduce the rent that can’t be returned to tenants in Wuhan or even Hubei. However, behind the public welfare, the survival of long-term apartment enterprises is also difficult.
Liu Jia, CEO of Rubik’s cube apartment, once said, “the rent reduction accounts for about 10% of our revenue, and large enterprises can barely absorb it. But what makes enterprises face pressure is the large-scale rent refund caused by not allowing tenants to return home, and the financial crisis of banks not renewing loans. ”
The CEO of another well-known long-term apartment brand operator also told the lookout think tank, “how to maintain cash flow under the epidemic situation is his most headache. When leasing institutions apply for loans, banks mainly look at cash flow. ”
At the same time, due to large-scale check-out and rent reduction and other issues, the cash flow of long-term rental apartments is even more precarious.
While the leading enterprises in eggshell, Qingke and Rubik’s cube apartments are still struggling for survival, at the end of the market, there are many local small and long-term rental apartments quietly rising after the epidemic.
According to his work in Chengdu, Xiaobei, who just completed the rental in April this year, said that in the process of renting, he had encountered many routines from long-term apartments.
“I find a house in many ways, 58 city, shell, Douban group, but no matter which platform, whether the source certification is an individual or the landlord, when I finally meet to see the house, I come to the trusteeship platform.”
“Before I saw a house near Chengdu east railway station, which is a real estate of Vanke. The house is very new. It has two sets and fine decoration. The platform quotation is 1800 / month, but it must be paid annually.
“The community environment is very good, the traffic is convenient, and the place to work is also very close.” Xiaobei said: “the main reason is that the price is very low. For such a house, the price was 2500. To be honest, (at that time) it was very exciting.”
“The heart returns to the heart, but we also know about the explosion of long-term rental apartments. Out of caution, I inquired about his company background. ” “When I first asked him [the name of the company], he claimed to be a long-term rental apartment brand owned by shell,” Xiaobei said. But when I questioned and questioned several times, the salesman changed his words and said that it was only the name of the company called shell house. ”
Company profile about shell house
According to the company’s investigation, the company, which is called Chengdu Shell House Technology Co., Ltd., has a registered capital of only 300000 yuan.
We have calculated a simple account. If the annual rent of 1800 yuan is paid, the annual rent will be 21600 yuan. If the company operates 50 sets of houses, the funds collected through rent collection will exceed 1 million yuan. This is far beyond the scope of risk that a company with only 300000 registered capital can bear.
Later, Xiaobei did not rent the house. After several trips, Xiaobei finally chose another house not far away through a regular intermediary.
“The house is cheap and good, but it’s not reassuring.” Xiaobei said that at that time, the salesman saw that we were hesitant and had offered to reduce the rent for us. In the end, it was 1450 months, but he insisted on paying annually.
The lower the price, the more uneasy we were in fact. At that time, we also asked whether we could directly sign a contract with the landlord, but the salesmen refused several times. When the question was tight, he said that he would increase the price by signing a contract with the landlord, and the monthly rent should reach 2000, and he would also have to pay him another month’s rent as an intermediary fee.
Later, I saw the news of “high in and low out” in Chengdu’s long-term rental apartments on Weibo, and most of them were “high in and low out”. I was still scared, but I was more lucky. After all, if I didn’t resist the temptation at that time, I might be trapped in it now.
In Xiaobei’s view, the reality is often so magical, full of all kinds of routines and temptations. So a lot of times, we have to polish our eyes by ourselves.
And the long-term rental apartment, from the attention of the public to frequent explosions. Today, it is still difficult to say whether this business model is really sustainable. After all, in foreign countries, those long-term rental apartment brands that have achieved stable profits are not uncommon. Their existence is like saying, stick to it again, after this cold winter, it will be a beautiful spring.
But who knows the truth? This may be like sharing bicycles. Some enterprises are dead, while others are blooming on the ruins.
(statement: This article only represents the author’s point of view, not Sina’s position.)