Co-Living Company Quarters Files For Chapter 7 Bankruptcy
German co-living company Quarters appears to be the latest real estate player to fall victim to the coronavirus pandemic.
Eight property LLCs and two other entities tied to Quarters filed for Chapter 7 bankruptcy Friday in the U.S. Bankruptcy Court for the Southern District of New York, according to public court filings first reported by The Real Deal.
The eight property LLCs owned assets in New York City, Washington, D.C., Philadelphia and Chicago.
Quarters didn't respond to requests for comment. Two former Quarters executives, North American head Bobby Condon and Senior Vice President of Strategic Partnerships Greg Gould appear to have left the company this month, per their LinkedIn pages and automated email responses.
The bankruptcy filings come after Quarters raised $300M in January 2019 to fund its U.S. expansion. The company, founded in 2012, had previously raised over $1B to expand in Europe. As of December, Quarters had nearly 3,000 units in operation and 1,500 under development, it said in a release last month.
The company master-leases units from apartment building owners and rents them out as co-living units, with leases ranging from three to 12 months.
The eight properties that filed for bankruptcy included at least one fully occupied property, the 239-bed location near D.C.'s Union Market, TRD reported. They also included two properties that hadn't begun leasing, in Philadelphia and Brooklyn's Clinton Hill neighborhood.
The bankrupt properties also included four actively leasing properties in New York's Lower East Side, East Village, Bedford-Stuyvesant and Williamsburg neighborhoods, plus one in Chicago's West Loop, TRD reported.
Quarters CEO Rui Barros told Bisnow April 1, just as the pandemic was beginning to take its toll on the real estate industry, that the company was seeing leasing demand slow down. The nine months since have been marked by multiple resurgences of the coronavirus and multifamily demand shifting away from dense, urban environments.
"Our occupancy as a company has been in the high-90s, we're seeing a bit of a dip, but it's still holding pretty high for us," Barros said April 1. "I do think our business model can weather a big downturn, and this is the mother of all downturns."