The Collective, the global co-living pioneer, has agreed a new £140 million discretionary financing package from Deutsche Bank and GCP Asset Backed Income Fund. The transaction follows Deutsche Bank’s backing of The Collective’s management buyout in 2018 of the 75% that it did not already own of The Collective Old Oak, in London, the world’s largest purpose-built “co-living” building at the time.
The latest facility highlights the sector’s continued emergence as an institutional asset class supported by strong tailwinds of urbanisation, structural changes to consumer behaviour and lack of choice of high quality, affordable rental accommodation.
The Collective’s new four year group level financing package comprises a new £120 million term loan and a £20 million revolving tranche with commitments of £87 million from Deutsche Bank and the immediate recommitment of £53 million from GCP Asset Backed Income Fund following repayment of its previous term loan to The Collective as part of the transaction.
The Collective will use the new discretionary financing package to acquire additional development sites, with a particular focus on the U.K., Germany, Ireland and the U.S., as it continues to expand globally. Following the agreement with Deutsche Bank, The Collective will have raised over £1 billion of investment, increasing its capital available for new acquisitions and delivery of its current development pipeline.
The Collective currently owns and operates the world’s leading co-living business, with over 9,000 units operating or under development across the globe, and a pipeline of sites with the potential for 20,000 further units under consideration as it works towards a goal of having a 100,000 unit global portfolio over the next 5-10 years.
Jai Madhvani, Chief Financial Officer of The Collective, said: “Building on our 10 year track record of creating, delivering and operating co-living spaces across London and, more recently, in the U.S. and Germany, this loan allows us to further accelerate our expansion plans internationally. Securing such a significant discretionary financing package from a renowned global institution as Deutsche Bank, and the renewed commitment from the team at Gravis Capital, are also a further indication of the increasing acceptance of co-living as an institutional asset class and of The Collective’s model and track record in the sector.”
The issues of urbanisation, inadequate and constrained housing supply, changing consumer behaviour and increased loneliness amongst urban populations that underpin our business are global in nature. We believe The Collective’s co-living model can help tackle these issues and make a meaningful contribution to society and the communities in which we operate while at the same time delivering sustainable long term returns to our investors. We have a strong pipeline of potential sites that we are considering, primarily in the UK, Ireland, U.S. and Germany and look forward to putting this capital to work.”