One of China’s largest online apartment rental sites is now over three billion yuan (US$459 million) in debt, according to a report by Chinese financial magazine Caixin.

Danke Apartments, whose name means “eggshell” in Chinese, has borrowed loans worth 1.6 billion yuan from Tencent-backed WeBank. It also owes 1.2 billion yuan to landlords and renters, as well as 500 million yuan to contractors, a source close to Danke’s board of directors told Caixin.

More than 160,000 tenants have reportedly been affected.

Danke’s collapse was partly caused by the COVID-19 pandemic, which led to falling rents and tenants backing out of contracts, Caixin reported. The company ran into financial trouble after its CEO Gao Jing was detained by authorities, which put a halt to Danke’s development plans and sent investors scurrying.

Founded in 2015, Danke has grown to manage 415,000 rental apartments across 13 cities in China. The company was listed on the New York Stock Exchange in January this year.

CEO Gao Jing, 38, was detained by Chinese authorities in June over an incident related to a previous business venture in advertising.

Analysts have cast doubt on Danke’s business model, which encouraged tenants to take out loans from the company’s partner banks to pay a year’s rent up front. Danke pays property owners quarterly, and uses the cash to fund expansion.

Danke also purchased property at high prices then offered them for rent below market rates, in order to increase competitiveness and market share.

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