The crisis is repeated. CEO says there is no operational risk.


The crisis is repeated. CEO says there is no operational risk.

Chen Shuzhen

[many people try to sum up the profit model of long rental industry. A widely accepted view is: rent differential + financial leverage + property premium].

Beginning in August, from pushing up rent to rent and installment loans, and then exceeding the standard of formaldehyde, frequent strikes. Recently, the emergency self-help, determined to sacrifice the cost of the vacancy period, the shelves for the first time to rent more than 20,000 units, and stipulated that after all the sources must meet the air quality at the same time and vacant for more than 30 days to rent.

Once the trust of the public collapses, remedy is harder than building at the beginning. Objectively speaking, it is not the only long rental apartment to step on thunder. In order to find out the deep reasons, first finance started an exclusive interview with CEO.

Launch emergency rescue

After being exposed to formaldehyde exceeding the standard, since August 31 was first issued "on the air quality and environmental protection of free sources of housing instructions and commitments" (hereinafter referred to as the "commitment"), that is, from now on, all the nine cities from the shelves for the first time rental housing, until the CMA certification agency inspection qualified shelves, all new housing will be tested qualified in the future After the rental; June 1, 2018 to stay in the first rental room, if air quality problems detected, to provide a solution for tenants.

A few days after the promise was issued, First Finance saw Xiong Lin in Shanghai, and he and his team were busy dealing with formaldehyde. "Recent mood is certainly very different, the busiest or in the country to organize testing capacity, but also with many institutions in the management of environmental protection materials in close contact, for time."

On September 11, the "Notes on Air Detection and Control Work" was released freely to further announce the following information: on September 1, 20 603 first-time rental houses were released from the shelves in Nine Cities nationwide, and they have entered the air detection and control process; on the 24th, all rental houses must be equipped with air quality at the same time. It can be leased by the authority and is vacant for more than 30 days.

But China's air quality testing capacity is not enough. Up to now, we have been working freely with 62 CMA certified air inspection institutes in China, with the maximum daily average capacity of 1147 units and 71 air control institutes, with the maximum daily average capacity of 2211 units.

Taking air detection as an example, Xiong Lin says that the average detection period is five days. Even if the testing and governance agencies can drive full horsepower every day to maximize production capacity, it will take 10 days or more to process more than 20,000 units of power alone, which is not counted as the testing cycle.

As APP shows, all the first-time rental housing sources are currently under air testing and can not be booked, but not the first-time rental housing sources, apart from the labeled air quality instructions reminding tenants to give priority to non-first-time rental housing sources, there is no testing agency issued any proof.

Before this formaldehyde incident, it was clear that there were air pollution problems in some housing sources. Xiong Lin said, "there are customer feedback (pollution), we have special records, there are follow-up treatment."

According to the published data, all the boards used freely in 2011 conform to the national E1 standard, and the houses renovated in 2015 are rented after air treatment. In 2017, the "Free Deep Breathing" project was started. This year, in June, the "Free Deep Breathing" standard, furniture boards were put on line. The material has been upgraded from E1 to E0, and has also upgraded the standard of formaldehyde emission and wall paint and accessories standards.

According to the public information of multi-parent apartments, only the standard of room panels, decoration accessories and formaldehyde release can be freely disclosed. Formaldehyde pollution is not isolated case, YOU +, eggshell, love leased have been exposed to formaldehyde exceeding the standard. "Undeniably, I do not deny that, today, I sincerely apologize to the customers who have suffered physical damage because of the comfortable housing supply problem," Xiong said.

In the first three years since its inception, Mr. Xiong said, the feedback from customers was almost zero. At that time, people thought it was good to find a reliable company and have service. "In 2015, we found that we could not do this, so we had clear requirements for plates, accessories and so on. By 2017, we found that the complexity of the problem is still beyond expectations, the house in the process of decoration, because of temperature, density changes and problems, a tube of glue can destroy a house.

Economies of scale lead to controversy

In fact, from the business model of long-term apartment rental to understand, formaldehyde over-standard and other air quality problems are inevitable events, this is bound to be enlarged to the entire industry.

"It is impossible to completely evade formaldehyde in house decoration. Water leakage, sound insulation, formaldehyde excess and other problems are common problems in the construction industry. However, the fault of long-term apartments is to speed up turnover, not empty ventilation, let off flavor and live in people."

A home decoration industry practitioner told First Finance, "Although long-term apartment furniture and materials can not be compared to home decoration, but the quality of most still meet the standards, the problem is not enough ventilation above."

Previous calculations have been done, the direct decoration of the house, the test results show that more than 80% is qualified, and maintain two weeks of ventilation after testing, almost 100% qualified.

In the final analysis, it is the question of vacancy period. Xiong Lin said that the cost of vacancy is 100 yuan per day, 10,000 rooms is 1 million yuan, and 30 million yuan per month.

On the other hand, when the rental rate of long rental apartments is below 90%, the red light is in urgent need. Xiong Lin has set several profit indicators freely, one of which is that the rental rate is more than 95%. At present, the number of comfortable housing is about 700,000, estimated by the 20603 first-time rental housing from the shelves, can reduce the comfortable rental rate by 2.8 percentage points.

Behind the formaldehyde incident is the dispute over the quality and profit quality of long rental apartments. "Business is slow and fast is relative, slow or slow, or your fast is neither safe nor meaningless," Xiong said. Will it affect the speed of enterprise development, today is not our consideration, we will use a higher standard of testing, how many sets of qualified put how many sets.

Xiong told First Finance that by the end of 2008, the company's size target was 800,000 rooms, but the annual target was adjusted to 900,000. However, the first financial statement found that the original expression was that the target size was 1 million in 2018.

"Long-term apartment rental is a low-margin industry, the size of the industry determines the level of operation and operating costs." Xiong Lin does not deny that the long-Rent apartment industry needs scale support, and the scale of the foundation is the single city up to 200,000 sets.

Many people try to sum up the profit model of long rental industry. A widely accepted view is that rent differentials plus financial leverage + property premium. But the centralized property is relatively small, and the overall decentralized apartments are mainly equipped with a different language system.

It has entered nine cities such as Beishang, Guangzhou, Shenzhen and Hangzhou, but at present, only Beijing can achieve the goal of leveling costs and making small profits.

As mentioned earlier, the profit requirement includes a rental rate of more than 95%, but Xiong Lin ranks scale first among many indicators. "In the Beijing experience, we have found the law is first through the scale to reduce operating costs, service costs and labor costs. Secondly, through the construction of the Internet, the cost and the marketing cost of the client and the owner can be reduced. Finally, the internal management of inventory cost and occupancy rate. After these indicators are locked, they can be profitable.

In Xiong Lin's business model, the bottom line of business is to lease, provide more clients with housing asset management services, and establish a lasting benign relationship with them; the second level is, "the bottom level of customer service, they have a good reputation for you, on this basis, freely hope to become a good relationship." City life service platform.

At present, it is the largest cleaning company in China. Moving business is also in the forefront of the country, and the gross profit of this layer will be higher than that of the bottom.

The top-level design is to be a family Intelligent Company. "If the future is free to manage 5 million, 10 million homes nationwide, all the equipment in the house should be IOT. For the management of refrigerators, customers do not need to report repairs, refrigerators can diagnose their own, in the customer home before the repair master has repaired.

How can we make waves?

Pan Shiyi, chairman of SOHO China, said it was not recommended to make long rental apartments. He reckoned that the benchmark interest rate for bank loans was 4.9%, which could be 5% - 6% in real terms, and that renting apartments built on loans would yield a return of no more than 1%.

But in Xiong Lin's view, Pan Shiyi's simple and crude calculation does not see the value creation of long-Rent apartments in services, products, community operations, the Internet and so on. "Mr. Pan is an entrepreneur I respect very much, but in this matter, he should at least communicate with me."

So far, Xiong Lin still thinks that long rental apartment is a good business. "It has a large scale and prospects, with high unit price and long service life."

But just like adjusting the pace of development freely, user perception, industry policy and other variables are also affecting the direction of ease.

The core reason for the rise and fall of urban rents is supply and demand. Xiong Lin said that the organization has no intention to push up rent, on the one hand, the organization's business model is fast turnover, there is no incentive to hoard and other peak season rental, is more willing to make reasonable rent, let more customers choose them, so that we can expand the scale. On the other hand, "The house is too expensive, if the hands of money on a large number of closures, basically two quarters, no one dare to increase the closure. Because you will find that cash flow is not optimistic, and if you can't get out quickly, the company will be very dangerous.

But Xiong Lin also admitted that in the short term, the funds into the institutions to increase the intensity of housing, so that the supply side of the shortage, resulting in rent increases do exist.

Some cities have taken action, such as Beijing's proposal that operators should not rush up rents to seize housing, and Shenzhen has also announced the pilot stable rent commercial housing project system for rent control.

The situation of rent instalments is similar. At present, regulatory authorities in Beijing, Xi'an and other places have investigated the use of financial leverage such as instalment loans by leasing enterprises to endanger the rights and interests of tenants. The Shenzhen Mutual Fund Association has announced a ban on installment lending in long-term apartments, and some banks have suspended this business.

Xiong Lin did not worry too much about it. "For the industry, 30% is a warning line, 30% of instalment loans, including loans and self-investment, equivalent to the company's overall debt ratio of 50% to 60%. Free operation is more conservative, the company's rigid requirement is that the use of the national rental loan ratio of customers can not exceed 25%, the current free actual ratio is 24.3% (even if prohibited) the company does not have operational risks.


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