Q&K to be first Chinese long-term apartment rental firm to tap US capital

The Shanghai-based operator wants to raise up to USD 100 million on the Nasdaq.

Chinese long-term home rental company Q&K International Group has applied to list on the Nasdaq to fund expansion, becoming the first such local brand to tap the US capital markets.

Q&K filed its application to the U.S. Securities and Exchange Commission on Monday, seeking to raise as much as USD 100 million. Morgan Stanley and China International Capital are the lead underwriters.

Q&K ranked third among long-term apartment operators in China, both in terms of gross rental value and the number of available rental units as of the end of 2018. It’s behind Ant Financial-backed Danke and Tencent-backed Ziroom, according to a Q&K’s prospectus which cites the China Insights Consultancy.

Using a similar business model, these firms lease apartments from individual landlords, renovate the space with uniform styles, and then sublease fully-furnished rooms to tenants, who are mainly young urbanites looking for affordable housing.

The companies offer most services through apps that allow users to browse available rooms, pay rents or request amenities maintenance.

The Shanghai-based Q&K has nearly 100,000 rental units across six cities including Suzhou and Hangzhou. The company reported a net revenue of USD 129.6 million in the fiscal year 2018, up 70.3% year-on-year. Net losses however doubled to USD 72.8 million in the same period.

In recent years, China’s rental market has boomed on the back of rising housing prices, favorable government policies and with young people embracing the sharing economy.

Money-losing rivals Danke and Ziroom are also mulling IPOs to raise over USD 600 million and USD 500 million respectively, according to multiple local reports.

Over 20 long-term apartment rental platforms stopped operations between February 2017 and March 2019, leaving their tenants homeless, according to Tospur, a Chinese real estate consulting firm.