Co-living brand The Collective has agreed a new £140m financing package from Deutsche Bank and GCP Asset Backed Income Fund.
The group said it would use the fund to focus on the UK, Germany, Ireland and the US as it continued to expand globally.
The Collective currently has 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 five to 10 years.
Jai Madhvani, CFO, 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, US and Germany and look forward to putting this capital to work.”
The transaction followed 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 company said: “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 £120m term loan and a £20m revolving tranche with commitments of £87m from Deutsche Bank and the immediate recommitment of £53m from GCP Asset Backed Income Fund following repayment of its previous term loan to The Collective as part of the transaction.
Following the agreement with Deutsche Bank, The Collective will have raised over £1bn of investment, increasing its capital available for new acquisitions and delivery of its current development pipeline.