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The Survival Picture Of Long Rental Apartments: The Three Party Game Among Operators, Owners And Tenants

2020/2/13 8:37:00 2

Epidemic SituationApartmentSurvivalPictureOperatorOwnerTenantThree Party

The outbreak of pneumonia caused by a sudden new coronavirus has led many tenants to postpone returning to the rented cities after the Spring Festival. Many of those who have returned have not been able to enter the rented house for the time being.

Uncertain rework dates bring uncertain vacant costs. Should this be done by operators, landlords or tenants? Break or continue? Rent increase or rent free? It has become a problem between landlords, landlords, operators and tenants. It also makes the long rental apartments in the shuffle of 2019 heavy.

Compared to the long rental apartment managed by developers, eggshells, free and decentralized operators are more stressed. Over the past week, the eggshell has asked the landlord to rent, free part of the housing rent and other actions have been questioned, the two agencies subsequently issued corresponding remedial measures.

There is no doubt that the new pneumonia caused by coronavirus has brought new challenges to long rental apartments. Even if the eggshell just listed in the United States has to face a loss of up to 2 billion 500 million in the first three quarters of 2019, how to survive will be the theme of the long rental apartment in 2020.

Three party game

In 2019, the long rental apartment industry, which was constantly linked to the capital chain, was caught off guard against a new pneumonia outbreak of coronavirus in 2020.

Since February, the "rework tide" has not been able to arrive as scheduled. The long rental apartment operators in the second tier cities have to deal with the vacancy problem of 2 to 3 months or even longer for the tenants to retreat or continue their headaches.

Before February 3rd, the owners of the eggshell apartment were not entrusted to the apartment owners. The company received a telephone call from the company. Because the epidemic is a force majeure factor, the tenant should be relieved of 1 months' rent and the owner will take it.

In the letter to the tenant of the eggshell apartment, it is also mentioned that the 1 month rent can be repaid for the Wuhan tenant who is unable to return to the city. Other urban tenants will return the rents corresponding to the tenants, or be extended free of charge, combined with the number of days postponed by the government.

Some owners said that it is good for Hubei tenants to exempt rents to help them lighten their burdens, but the eggshell did not rent the tenants equally. Many tenants' rents were normally deducted, which took place in Beijing, Shanghai, Hangzhou, Wuhan, Tianjin and other places.

According to the open letter issued by eggshell, its promise to rent the rent of the tenant can not be reclaimed, it can only be used to deduct the maintenance fee, the housing service fee and so on.

In addition to the eggshell apartment, another tenant of the other parents who rent the apartment has a smooth growth rate of 10% to 30%. Responding freely, it was mostly because the tenants wanted to renew their contracts.

Operators of long rental apartments try to find a balance between the three parties. "Landlords, tenants and operators bear a little bit of cost, which may be a feasible solution," said Yan Yuejin, director of the research center of E-House think tank.

But it is obvious that tenants, especially those tenants who may not be able to return to work in March, are more vulnerable.

During the interview, many owners expressed willingness to exempt the rent for one month from Hubei or other tenants, but it must be a real exemption. In fact, in Shenzhen and Xiamen, some of the owners who rent their own houses voluntarily removed the rent for the tenants, but they all directly rented the house and did not go through the middle operator.

In February 12th, we made further solutions. In January 2020 and February, the average renewal price of the houses was stable, and the future will remain stable. In addition, the "nine guarantees" for the 0 cities in the nine cities of the whole country will relieve the tenant burden.

Freely speaking, it will provide a convenient renewal and refund process for the private tenants who can not return to the rented cities due to the epidemic situation, including the expiration of tenants for one month, the equivalent renewal of one month, the return of residence after March 1st, the reduction of the service fee in February, etc., and the failure to return after March 1st, and those who do not intend to rent, can handle the rent without responsibility.

Recently, some tenants in Beijing and other places reflected that they would not be able to enter the rented area when they returned to Beijing, but they would be able to provide temporary resettlement housing under the conditions of community management, while the suspected infected tenants could also coordinate their 14 day temporary housing.

Safety first, "live."

During the epidemic, some long rental apartments tried to shift their operating costs to landlords and tenants, causing controversy. Behind this, we can get a glimpse of the cash flow dilemma of long rental apartments.

As far as business and profit models are concerned, the long rental apartments in China are mainly divided into centralized and decentralized ones. The former is dominated by Vanke, Longhu, Biguiyuan and other three independent brands, and the latter is mainly free and eggshell.

If there are still some self possessed property in the apartment of the developer, then the scattered apartment can basically be summed up as the "two landlord mode", which is rent from a large number of individual landlords, and then sublease.

Based on this, because the contract has stipulated that the operator must pay the rent to the landlord every month, the loss of the vacant house will be borne by the operator.

Before that, long term rental apartment operators lost their operations for a long time, mainly relying on continuous financing. In January 17, 2020, after several rounds of financing, the eggshell was listed on Nasdaq, issuing a price of $13.5 per share, raising a total of $149 million, lower than the previous estimate of $201 million.

According to the prospectus, in 2017, the net loss of eggshell apartments was 272 million yuan, a net loss of 1 billion 369 million yuan in 2018 and a net loss of 2 billion 516 million yuan in the first three quarters of 2019.

As of September 30, 2019, eggshell apartments had 173 million yuan in cash, 7 billion 674 million yuan in total assets, 7 billion 661 million yuan in total liabilities, and 99.8% in assets and liabilities.

Eggshell is still the operator of the head, and other long rental apartments are also operating in this way. Billion Han think tank analysis, the arrival of the epidemic, exacerbated the long rental apartments capital flow tense situation.

According to Kerri statistics, in the most serious epidemic situation in Wuhan, there are as many as 4 housing sources, followed by Jiangyu and 3 000. In the developer's brand apartment, Longhu has 25 stores, 2569 rooms, Vanke owns 4 stores and 554 rooms.

Ding Zuyu, CEO of Yi Ju enterprise group, said that the impact of the epidemic on the long rental apartment operators is multidimensional, including the delayed vacancy rate caused by the resumption of work delays, the increased cost of rents and staff salaries, the tenant default, and so on.

From the overall loss situation of the industry, the assets (charter mode) is more serious than the light assets, and the dispersion is more serious than the centralized ones. Low rental apartments are less risky than rents.

Ding Zuyu believes that the long rental apartment enterprises can negotiate with the owners to reduce rent, and strive for the corresponding rent free period and rent payment post support. It is understood that some Chinese business owners have taken the initiative to provide enterprises with the policy of reducing rent.

In addition, enterprises have the opportunity to establish better cooperative relations with local governments and actively communicate with banks about subsidies or preferential policies such as interest on debt financing.

It is worth noting that the long rental apartment operators are also putting resources into the epidemic. Take liberty as an example. It is the largest long rental apartment platform in Wuhan. During the epidemic period, it will suspend business outside the country, open all apartments near the hospital, disinfect 265 beds and receive medical staff free of charge.

Ding Zuyu said that the long rental apartments are facing the "cold spring", and above all, safety first. At present, the strong operation ability of the head enterprises is highlighted, and the "rent control" has achieved the control of the vacancy rate in the off-season, and there has been no cliff fall.

 

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