NEW YORK -- Two Chinese apartment rental startups are headed for a Wall Street initial public offering this year, despite heavy losses and brewing investor skepticism of the real estate middleman-model in the aftermath of WeWork's failed IPO. Phoenix Tree Holdings, parent company of Danke Apartment and Dream Apartment, filed late Monday to raise $100 million, a placeholder estimate subject to change, while Q&K International, also known as Qingke, set terms last week to raise about the same amount. Both startups lease property from landlords which they turn into standardized, furnished apartments and market to individual tenants -- similar to WeWork's model with commercial real estate. The platforms attract young renters as they offer the option to rent by the room and make apartment hunting process easier. But despite rapid expansion, Phoenix Tree's cash would run out in less than nine months, while Qingke would last less than a year without raising new funds, their financials suggest. A successful IPO would bring in much needed capital, and by aiming to list in the coming weeks, both companies could capitalize on a favorable market window thanks to a truce in the U.S.-China trade war. But they might also find a post-WeWork new shares market is harder to please, especially when their businesses face similar challenges as the coworking company. For one, both companies have mounting losses. Beijing-based Phoenix Tree recorded a net loss of $352 million in the first nine months of 2019 while generating $699 in revenue. Shanghai-based Qingke, which is smaller in scale and slower-growing, recorded a net loss of $54 million in the nine months ending June 30, while revenue for the period was $131 million. The startups also have outsized lease obligations, which came to be seen as a key liability in the case of WeWork. Qingke has nearly $1 billion in such commitments, while Phoenix Tree has $3.7 billion. Both listed future lease payments as a risk factor in their prospectus. But the two companies also differ from WeWork in that they operate in China's residential rental market -- one that is rapidly growing, supported by the government, and less dependent on flexible demand. According to a 2018 report by real estate investment company Jones Lang LaSalle, China has more than 200 million renters, most of whom are millennials that have delayed buying a home because of high prices and a growing preference for starting a family later in life. The traditional rental market in China is mostly made up of individual landlords who rent larger, multiple-bedroom apartments, but many young renters prefer smaller, more affordable units, the report said. Platforms like Qingke and Danke cater to such preferences with their renting-by-the-room approach, concentrating their operations in large cities which are also hubs for young professionals. Both companies plan use of proceeds to further expand their property portfolio. Danke, backed by Ant Financial and New York hedge fund Tiger Global, was valued at over $2 billion at its latest funding round in March. Qingke's IPO would value the startup at about $1 billion.
Chinese apartment rental start-ups owned by Q&K International (Qingke and Q&K International (Qingke ) are preparing IPOs. Both companies, which have a business model similar to Q&K International (Qingke , have filed in the US and are seeking to raise $352 million . Both companies also have mounting losses and their financials suggest they will run out of cash in the nine months ending June 30 .