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Worldʼs first institutional co-living fund aiming to raise $850M

Rendering The Collective Harrow, which COLIV has agreed to forward-fund (image courtesy of The Collective)

DTZ Investors (DTZI), a specialist European real estate fund manager, and The Collective, the global co-living platform, have jointly launched the world’s first institutional large-scale co-living fund with the aim of raising total equity commitments of up to $815 million.

The new fund – COLIV – will seek to acquire, or forward-fund, between six and ten co-living assets in London, with a target gross asset value of $1.25 billion over the ten-year life of the fund.

DTZI will act as the investment adviser to the fund, which consists of primarily institutional capital, with The Collective acting as asset manager and property manager.

The partnership provides the platform and vehicle for institutional investment in the co-living sector across London over the next ten years and is a clear signal of increasing institutional appetite and demand for large-scale co-living spaces.

CHRIS COOPER

The fund offers a solution towards addressing London’s housing shortage by increasing the supply of an alternative and much in-demand housing typology.

A heavy emphasis will be placed on positive social and environmental impact with the potential to drive down carbon emissions through the delivery of a sharing economy housing model, and the creation of buildings with energy performance.

The news comes weeks after US co-living investor, Six Peak Capital, tapped Cushman & Wakefield to raise $1 billion in debt and equity to fund its US expansion.

Six Peak invests in co-living projects with Common, a “tech-enabled, community-focused residential brand” that designs and operates traditional apartments and co-living suites.

Common currently manages 30 buildings across New York, Chicago, San Francisco, Oakland, Seattle, Los Angeles and Washington, D.C., at a 98 percent occupancy rate and above-market NOI.

The DTXI fund has launched with $88 million of seed capital, with DTZI and The Collective equally committing to the $12.5 million sponsor co-investment.

Its first acquisition is The Collective Harrow, a new co-living destination in the London Borough of Harrow that will start on site immediately.

It will comprise a nine-story building with 222 shared living rooms, 5,000 ss/f of incubator employment space targeted at local start-up businesses, and 6,800 s/f of shared spaces including a public-facing concept dining experience, gym, library, cinema, mindfulness lounge and a MasterChef-style communal kitchen on the top floor.

DTZ Investors’ CEO, Chris Cooper, said: “We are delighted to announce the launch of COLIV, the world’s first large-scale co-living fund in partnership with The Collective. It’s an important step in the development of our business to be leading the market in the delivery of innovative solutions to London’s housing shortage.

“This fund will bring forward a strong social agenda through: the buildings and places we create; the manner in which we engage with our communities and; the way in which we foster wellbeing for members.

“Co-living is an ideal response to the needs of London’s rented housing market, building on the principles of quality, convenience and community. Modern London life is a conundrum: urban living and technology have managed to create a society that is constantly connected yet alone.

“ People and communities are being pushed apart, contributing to significant loneliness and mental health issues.

“Our aim is to have a positive impact beyond the four walls of our real estate, and in this regard, I am thrilled to have teamed up with The Collective, a business we have grown to know very well over the past few years. We have been very keen admirers of how they have pioneered this market, delivering great spaces for their members and neighbourhoods alike, while investing in the needs of their communities.”

A growing home affordability crisis has emerged in Gateway Markets, especially for entry-level and key workers with incomes between 60 percent to 120 percent of AMI (Area Median Income).

Rents have risen to record high percentages of renters’ income and secondary, and tertiary markets have also begun to experience affordability pressures.

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