CEO of Rental Specialist Phoenix Tree Placed Under Investigation
What’s new: New York-listed Chinese renting specialist Danke Apartment said Yan Cui, a co-founder, had been appointed interim CEO of its operator, Phoenix Tree, after CEO Jing Gao was placed under investigation by unnamed local authorities.
The investigation into Gao is over “certain matters related to his business ventures prior to the founding of Danke,” the company said in a statement on Thursday. The firm said it does not believe that the investigation of Gao “relates to or results from any business activities or other dealings” of the company.
The background: Founded in 2015, Danke leases apartments from individual owners on a long-term basis. It then renovates and furnishes these properties before renting them out to new tenants.
The company has, since last year, faced a backlash from many of its individual owners after the company demanded they reduce their rates – or offer a complete waiver – on what it pays for temporary control of their properties.
Danke’s cost-cutting exercise came as it was looking to reduce an incremental accumulation of losses over the years. For the first quarter of this year, its losses expanded by 417 million yuan ($58.8 million) to 1.2 billion yuan on the same period last year.
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