A European coexistence company is making an effort to acquire property in New York City.
Since Belgium-based firm Cohabs closed with € 58 million, or $ 70.2 million, in financing this spring, the company has begun exploring New York for small empty buildings that could be outfitted as properties. of coexistence with between 10 and 30 bedrooms. , according to its executives.
The company’s portfolio has 760 rooms, 480 of which are operational in Brussels, Paris and New York. In the latter city, Cohabs owns three buildings, two in Crown Heights and another building under development in Harlem. In addition to growing its business in the United States, the firm is also expanding to Madrid.
CEO Youri Dauber said Cohabs is ready to spend up to $ 50 million on purchases in New York.
Buying property is a unique feature of the Cohabs model. Most cohabitation companies sign master lease agreements with landlords to redesign their properties and then rent them out to tenants by the room.
But as consolidation accelerates in the cohabitation market, Dauber said he believes his approach of owning the buildings outright is prudent.
“The master lease model is a real problem. Because as you can see, when you have a drop in rents, you don’t have enough to pay the owner, ”he said.
“We believe that owning the asset requires more capital, but it makes us more capable of doing great things within the asset … We can do whatever we want if it fits into the financial plan,” Dauber said.
Since the pandemic began, several coexistence companies have withdrawn or been bought by competitors. Quarters, a Germany-based co-living company, saw its $ 300 million expansion in the US. bankruptcy at the beginning of this year. Meanwhile, a long-time coexistence company Common has Picked up 7,500 rooms in the portfolio of the San Francisco-based operator Starcity.
Cohabs is reaping some of the rewards from the collapse of potential rivals. Former Quarters real estate director James Grasso has joined Cohabs to work on its growth in the United States.
What sets Cohabs de Quarters apart from Dauber is that, in addition to its strategy of owning buildings directly, Cohabs does not have any private equity firms among its investors. Instead, Cohabs’ main backers are institutional investors, including AG Real Estate, which owns the financial district towers, 70 Pine Street and 20 Exchange Place.
“They tend to be very practical. They say go slow, but go well. So make sure the business model is solid, ”Dauber said. “Because our investors don’t put much pressure on us, we have the time to get it right and, we think, better than others.”
Grasso will work alongside Managing Director Daniel Clark, the first full-time Cohabs employee to found the short-term rental company onefinestay, which was sold to AccorHotels for $ 170 million in 2016.