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Lenders to collapsed co-living company The Collective are likely to face losses running into the tens of millions, according to a new report from administrators to the company.
A report released this week from partners at FTI, which is managing the administration of parts of The Collective group, said unsecured creditors to the company were owed as much as £66M. Those creditors are unlikely to receive a payout based on proceeds from selling the assets of the companies in administration, the report said.
Secured creditors are owed £114M. These include lenders like Deutsche Bank and GCP Asset-Backed Income Fund. FTI’s report said the amount they get back would depend upon the price fetched by selling assets they took over when The Collective collapsed.
GCP Asset Backed’s annual report said it had provided £30M of debt to The Collective and has since written the value down to £19M, a reduction of about 36%. A write-down of this level for all secured lenders would see their losses total £40M.
Lenders set up a vehicle to take over four of The Collective’s schemes: its operational assets at Old Oak Common in north west London and Canary Wharf in east London; and development sites in Hackney Wick, east London and Blackhorse Road, north east London.
The lenders tried to package these assets into a new REIT that would sell shares on the stock market. That plan is currently on hold, with the war in Ukraine blamed by GCP for creating volatility in the stock market. If the REIT initial public offering can’t go ahead, it is likely to sell the assets, it said.
The annual report said the operational assets are 95% leased.
The Collective was put into administration when it breached loan covenants as a result of reduced occupancy caused by the pandemic.
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