The Collective has completed a management buyout of its £125m Old Oak co-living scheme after its proposed sale to Newham Council collapsed earlier this year.
The MBO was backed by Deutsche Bank and Catalina Re. The 546-bed residential scheme in north Acton, NW10, also has commercial and retail elements and is touted as the largest co-living building in the world.
The management team, led by founder Reza Merchant, acquired the remaining 75% stake that it did not already own. The deal reflected a net yield of around 4% for the co-living element of the building.
The site was purchased in April 2014 by The Collective and a consortium of investors comprising a Singaporean family office and a group of UK-based private investors.
It was close to being sold to Newham Council’s PRS company, Red Door Ventures, before it was disrupted by political changes within the council’s leadership team.
Old Oak, which opened in May 2016, has achieved 98.6% occupancy for the past six months, with 98% of members reporting that they are happy to live there.
Merchant said: “Co-living is fast becoming the housing solution of choice for people who want to live in a more convenient and connected way. This transaction demonstrates our confidence in and long-term commitment to both our business and the co-living sector.
“We are now looking forward to the next phase of the project with our new partners – Deutsche Bank and Catalina Re provided the senior and mezzanine financing respectively and we hope this to be the first of many transactions.
“Their support in this deal typifies the demand for the co-living asset class from tier 1 institutional investors and takes us one step closer to realising our ambition of becoming the co-living provider of choice globally.”
He added that the business was focused on acquiring “new opportunities” in the UK, US and Germany.
The Collective has raised more than $670m in capital so far – the equity and debt of which comes from a mix of UK and international financial institutions as well as family offices.
The funds have been used to acquire sites, develop projects and build its platform.
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