Co-living startup The Collective is set to lose its flagship shared-living development project as the pandemic takes its toll on the $1 billion company’s business.
The U.K.-based company is behind on the $49 million mortgage for its Williamsburg development site at 555 Broadway, where the firm had planned to build a 500-apartment tower, according to a source familiar with the matter.
The lender on the site, the Kalikow family’s Gamma Real Estate, has hired a team at Cushman & Wakefield led by Dan O’Brien and Adam Spies to market the loan for sale to a buyer that could take control of the property.
A spokesperson for The Collective said the company is “considering a number of options to take the project forward.”
A representative for Gamma did not immediately respond to requests for comment.
The Collective, founded by Reza Merchant in 2010, is on the brink of bankruptcy, according to a report from React News via Bisnow. The struggling company hired Credit Suisse in June to pursue a potential sale but The Collective didn’t find any takers and is burning cash.
The Collective hired FTI Consulting to guide it through administration, a process similar to bankruptcy for entities in the U.K., the outlet reported.
But the Williamsburg location near Broadway Triangle was to be the largest property in its portfolio. The Collective bought the site for $25.5 million in 2018 and earlier this year released renderings for a 28-story building designed by ODA New York with a price tag of $450 million.
The plan called for 500 apartments — a mix of traditional rentals and short-stay rooms — as well as shared office space, retail, community facilities and amenities including a rooftop pool.
However, the co-living business was hit hard by the pandemic and The Collective’s mortgage on its development site matured in July after the borrower negotiated an extension with Gamma earlier this year.