FB Pixel no scriptStruggling rental platform Q&K to buy rental service company at USD 130 million | KrASIA

Struggling rental platform Q&K to buy rental service company at USD 130 million

Written by Song Jingli Published on   2 mins read

The company has not disclosed its earnings for the first quarter of this year.

Amid disputes with landlords, tenants and bankruptcy rumors, Shanghai-based online home rental platform Q&K International (NASDAQ: QK) said one of its subsidiaries will acquire a rental service company, as well as its lease contracts with landlords and tenants, at USD 130 million, without disclosing the aforementioned company, according to a filing on Wednesday.

The company did not respond to KrASIA’s inquiry about the unnamed company. However, Q&K stated in the filing that the nondisclosure is in line with US securities laws.

To fund this new deal, Q&K will issue convertible notes worth USD 100 million to one unnamed investor, and the subsidiary will engage a contractor to manage the acquired company’s 72,200 rental units in China for eight years.

Q&K, which leases apartments from landlords, then decorates and re-rents to individuals, did not disclose details about the acquisitions but added that this is the third one since its initial public offering in November, 2019. The first two acquisitions enabled Q&K to acquire 49,000 rental units in total.

“Q&K aims to accelerate its growth plan by integrating more high quality rental assets from other operators onto its technology-driven management system and to further enhance its scale, overall operating efficiency, and profitability,” said the company in the filing.

This latest acquisition comes shortly after Q&K admitted in late May this year that the company has met financial difficulties but was operating normally, in response to bankruptcy rumors, according to Chinese media outlet The Paper.

Q&K has not disclosed its earnings for the first quarter of this year, when the rental market was badly hurt by the COVID-19 pandemic outbreak. The company made RMB 498.2 million (USD 69.7 million) in net losses in 2019, almost flat with net losses in 2018.

After ceasing operations in Hangzhou and Nanjing, the rental platform has seen complaints from tenants in those cities who say they were forced out by landlords despite signing a year’s worth of rent in advance to Q&K—which is supposed to pay the landlords.

This rent financing model has proven popular among online rental platforms as it allows them to expand and receive large sums of money quickly, while being able to pay out over long periods of time in the form of month-to-month rent payments.

Danke Apartment (NYSE: DNK), another rental platforms, brought government scrutiny to this problematic model amid its own disputes with customers, as KrASIA reported in February.


Auto loading next article...