Administrators reveal The Collective rescue plan
An administrator’s report has revealed the rescue plan for co-living developer The Collective and its landmark schemes.
Administrator FTI Consulting said it is not “reasonably practicable” to save any of the three companies: The Collective (Living) Group Limited, The Collective (Living) Limited or Harewood Properties Limited.
Furthermore, as none of the companies has direct ownership of property, FTI said it is not expected that creditors, or any shareholders, will receive a dividend from the administration.
An administrator’s report has revealed the rescue plan for co-living developer The Collective and its landmark schemes.
Administrator FTI Consulting said it is not “reasonably practicable” to save any of the three companies: The Collective (Living) Group Limited, The Collective (Living) Limited or Harewood Properties Limited.
Furthermore, as none of the companies has direct ownership of property, FTI said it is not expected that creditors, or any shareholders, will receive a dividend from the administration.
Parent company TCLGL owes £107.5m to secured creditors and £47.7m to unsecured creditors. The secured debt is owed to Deutsche Bank and GCP Asset Backed Income Fund, following a £140m financing package agreed at the start of 2020 which The Collective aimed to use for global expansion.
The developer was widely recognised as the poster child for co-living, with a vision to grow a 9,000-bed portfolio to 100,000 by 2025. But it was hit with loss of income and development delays during the pandemic, creating a significant funding requirement which the group was unable to meet. Accounts for the parent company show a net loss of £36m for the year ended 31 December.
Earlier this year, a sale process conducted by Credit Suisse failed to secure a bid high enough to repay secured creditors. The company was subsequently unable to continue trading and fell into administration in September.
The secured creditors have set up a funding vehicle to acquire six of the assets, the two operational sites in London at Old Oak and Canary Wharf, three development sites in London and one operational scheme in New York.
They have bought the 50% stake in the Hackney scheme previously held in a joint venture with developer Hurlington. The creditors have also taken over a development at Waltham Forest.
The secured creditors have identified Scape as an alternative operating partner and the board approved the company takeover operations. Scape is a specialist third-party operator with 25,000 student and co-living beds. According to the report, Scape has committed to providing initial funding to the administrators to cover professional costs and enable the transition.
Other assets in Harrow, Earlsfield and Battersea are owned by the Coliv fund from DTZ Investors. The Coliv fund website is currently under maintenance, though it is thought that DTZi will continue these projects and will source a different operator. The rest of its residential portfolio is currently managed by Urbanbubble.
FTI is seeking to avoid liquidation of the three companies. Instead, administrators aim to support the secured creditors in protecting their interests, limited ongoing trading of the operating company and transition these to a specialist third-party provider and make changes to the board of each company.
When administrators were appointed, The Collective had 62 employees. Some 39 have subsequently been made redundant, 19 have transferred to the new employer and four have left.
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