Bankrupt co-living company The Collective sold its Williamsburg development site for $54 million, allowing it to avoid foreclosure and even net a small amount of cash.
A joint venture of the Loketch Group, the Joyland Group and Meral Property Group bought the site at 555 Broadway. The Collective had planned to build a 500-unit apartment building there.
The co-living firm, currently under control of a receiver in the U.K., used proceeds from the sale to pay off a $49 million mortgage held by the Kalikow family’s Gamma Real Estate, which had scheduled a foreclosure auction for the property next month.
Loketch Group founder Pinny Loketch said in a statement that the “transit-oriented site … enables us to accommodate strong demand for superior-quality rental apartments in Williamsburg.”
Rendering of 555 Broadway (ODA Architecture)
A representative for The Collective could not be immediately reached.
The site, near Broadway Triangle, has about 330,000 buildable square feet and any qualifying project would be entitled to the Affordable New York property tax exemption.
The deal was a bit of a highwire act, as the buyers needed to move quickly so The Collective could repay Gamma before the foreclosure auction.
JLL’s Ethan Stanton, who led a team of brokers that negotiated the deal, said the tax program created a “clear pathway to build” that helped both sides close the deal in fewer than 60 days. A foundation must be laid by the program’s expiration on June 15 to qualify for the 35-year tax break; permits are in place.
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The Collective, founded in 2010 by Reza Merchant, went into bankruptcy over the summer as a result of the Covid pandemic. Occupancy levels at its co-living locations dropped and the pandemic forced delays at its pipeline of projects.
The company’s net loss of 9.9 million pounds in 2019 jumped to 35.9 million in 2020, according to a report by FTI consultants, which have been appointed administrators of the company’s U.K. bankruptcy.
The Collective owns another Brooklyn development site, in Bed-Stuy. It is also facing foreclosure.