Two co-living companies are joining forces in a merger after neither firm managed to attain profitability on its own.
New York-based Common and Habyt, which is based out of Berlin, are forming Habyt Group, the Wall Street Journal reported. Financial terms of the merger were not disclosed.
The new company’s initial portfolio should consist of thousands of units. Common manages 4,000 units stateside, while Habyt operates 7,000 units in Europe and Asia.
While Habyt signs long-term leases and rents out bedrooms in furnished and shared apartments, Common manages its units under revenue-sharing agreements with landlords. Common has more recently also been managing traditional apartments, which Habyt Group will continue.
The newly formed company expects to keep costs down by joining together and combining resources. Habyt co-founder Luca Bovone will take on the chief executive role in the new company.
Sequoia Capital and Burda Principal Investments are among those to support Habyt in recent years. Investors in Common have included Kinnevik AB and Maveron.
Common is one of the better-known startups in the co-living and property management platform space. Founded in 2015, the company’s venture capital fundraise hit $113 million in 2020 following a $50 million Series D round.
The company reached an agreement in 2021 with former rival Starcity to take over management of much of the latter’s portfolio across the globe. The deal came shortly after Starcity acquired Ollie, another co-living startup.
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The company has faced issues, though. Last year, the Daily Beast reported on a pattern of tenant complaints at the company’s communal spaces, including poor security, maintenance delays and alleged threats from occupants that went unaddressed.
Founder Brad Hargreaves stepped down in August from the startup. Former Point Hospitality Group CEO Karlene Holloman ascended to the top job after a period as Common’s head of property management.
The occupancy rate for co-living units in the United States hovers around 90 percent, according to Cushman & Wakefield. Rents in the sector are 10 percent above pre-pandemic levels.
— Holden Walter-Warner