NYSE Announces Plan to De-List Mainland Apartment Rental Platform Danke 

The New York Stock Exchange this week said it would commence proceedings to delist Phoenix Tree Holdings, the listed entity of Beijing-based rental platform Danke Apartment.

In a Tuesday press release, the NYSE cited several factors that made Danke’s American depositary shares unsuitable for continued listing. They include failure to provide information requested by the exchange, a lack of information disclosed to shareholders and the investing public, and the unexplained late filing of the firm’s semi-annual financial information.

The move to de-list Danke came less than 15 months after the company’s initial public offering and follows protests by tenants and landlords who claim to have been cheated by the rental management platform.

Money for Nothing

In its announcement this week, the NYSE said it would apply to the US Securities and Exchange Commission to delist Danke’s securities upon completion of all applicable procedures, including any appeal by the company. The NYSE had halted trading of the shares on 15 March.

In October 2019, Danke had raised $190 million from Beijing-based investment firms Primavera Capital Group and CMC Capital Group, and just six months earlier had taken in $500 million in financing co-led by private equity titan Tiger Global Management and Jack Ma-controlled asset management firm Ant Financial.

Danke still retains the right to request a review of the NYSE’s delisting determination, although no reports of such a request have arisen since the Monday announcement.

Apartment Mismanagement Platforms

Debuting on the NYSE just two months after competitor Qingke listed on the NASDAQ, Danke was among a host of apartment rental platforms that sprung up in China in the past several years as the country’s government began encouraging rental housing as an alternative for people priced out of homeownership.

The firm takes long-term leases on existing homes and divides them into dorm-style flats, which it subsequently sublets to young professionals.

While this allowed the company to scale quickly without needing to acquire real estate assets, it also burdened Danke with long-term liabilities that it took on in a race with other rental operators to scale up catalogues of available properties at any expense.

The company also regularly steered tenants into structuring their lease agreement as a loan, with Danke then making payments to property owners quarterly. The cash, in theory, funds expansion, but this practice became controversial when Danke’s cash crunch caused it to miss payments to landlords, with many tenants being left on the hook for the loan even after being evicted by property owners.

Danke’s rapid expansion since its 2015 founding helped it amass over 400,000 rooms in China. But a COVID-induced cash crunch caused the operator to delay or miss payments on its leases, leading to tenant evictions and obligations for outstanding rental loans.

The situation came to a head last November when Chinese media reported that angry crowds of evicted tenants and unpaid landlords had gathered outside the company’s Hangzhou, Beijing and Shenzhen offices demanding termination of the contracts and accompanying loans.

Danke Goes Dark

As bankruptcy rumours swirled, Danke released a statement on 16 November assuring tenants that it was solvent and was actively working on a solution to its financial quagmire. Since then, the firm’s executives have gone silent.

Plagued by multi-year losses, Danke had nonetheless listed its shares on the New York exchange in January of last year, raising $130 million. But questions about the viability of the firm’s model lingered, and the South China Morning Post reported in late December that Danke’s app had ceased listing vacant homes available for rent.

The company has not reported its financial results since the first quarter of 2020, when it posted a net loss of RMB 1.23 billion ($188 million), the SCMP said. In November, the firm’s chief executive, Gao Jing, was placed on a debtor blacklist by a Shanghai court due to unpaid financial obligations by Danke.