DTZ Investors (DTZI) has joined forces with co-living platform The Collective to launch the world’s first institutional, large-scale co-living fund with the aim of raising total equity commitments of up to £650 mln (€750 mln).
The new fund – Coliv – will seek to acquire, or forward-fund, between six and 10 co-living assets in London, with a target gross asset value of £1 bn over the 10-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.
'We are delighted to announce the launch of Coliv, the world’s first large-scale co-living fund in partnership with The Collective,' said DTZ Investors’ CEO, Chris Cooper. '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.'
The fund offers an innovative solution towards addressing London’s housing shortage by increasing the supply of an alternative and much in-demand housing typology, the partners said. 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 ground-breaking energy performance.
The fund has launched with £70 mln of seed capital, with DTZI and The Collective equally committing to the £10 mln Sponsor Co-Investment.
The fund has also announced its first acquisition with a deal to forward-fund The Collective Harrow, a new co-living destination in the London Borough of Harrow that will start on site immediately.
The Collective Harrow will comprise a nine-storey building with 222 shared living rooms, 5,000 sq ft of incubator employment space targeted at local start-up businesses, and 6,800 sq ft of world-class shared spaces including a public-facing concept dining experience, gym, library, cinema, mindfulness lounge and a ‘MasterChef’-style communal kitchen on the top floor. The Collective is development manager for The Collective Harrow, where construction is underway with completion targeted for 2021.
The fund will seek to provide investors with an attractive core-plus return, by building a portfolio of best-in-class large-scale co-living assets in Greater London over a four-year investment period. In addition to investing in operating assets, Coliv will also forward-fund developments which will be acquired with pre-agreed occupancy targets to provide stabilised cash flow to meet the fund’s income requirements.
The fund has identified a strong pipeline comprising both existing assets from The Collective, as well as new investment opportunities.
'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,' added Cooper.
Reza Merchant, CEO and Founder of The Collective, said: 'The launch of this fund, which aims to bring £1 bn of institutional capital into the co-living market in London over the course of the next 10 years, marks this sector’s arrival as an institutional asset class.'