Quarters — which rents out bedrooms and shared living spaces in New York City and Chicago to young professionals and is part of Berlin-based co-living provider Medici Living Group — told Inman in October that it wanted to expand to every major city in the U.S. and would be open to working with real estate professionals to find and buy buildings suitable for co-living.
Now, Quarters will have the funds to do just that.
Parent company Medici Living and investment firm W5 Group have inked a deal to invest $300 million over the next three years to develop 1,300 units across the U.S. in target cities such as New York, Washington, D.C., San Francisco, Los Angeles, Chicago, Boston, Philadelphia, Denver, Austin, Seattle and Miami.
The principal of W5 Group is Ralph Winter, who bought a “significant minority stake” in Quarters in October, according to a company announcement.
Winter is also the founder and main shareholder of European real estate investment manager Corestate Capital Group, which, along with Medici Living, agreed in December to invest about $1.1 billion in equity and debt into Quarters to expand further across Europe.
“This new round of investment cements Quarters as one of the top players in the U.S. co-living space,” said Gunther Schmidt, founder and CEO of Medici Living Group, in a statement. “With more than $1.4 billion for our European and U.S. expansions, we are well on our way to becoming the WeWork of co-living in 2019.”
Quarters indicated that it anticipates raising additional capital for its U.S. expansion in the future. Medici Living, which also offers student co-living, plans to grow its current portfolio of 1,800 rooms in the U.S. and in Europe to more than 9,000 rooms across the two areas.
“The concept of co-living is perfectly tailored to the needs and desires of millennials, the most important demographic group over the next decade, so we anticipate rapid growth in the coming years. Now is the best time to secure a strong position within the co-living market and greatly benefit from economies of scale,” Winter said in a statement.
As part of the deal with W5, Medici Living will be in charge of the conceptual design and operation of the new Quarters locations, which will be in either retrofitted or new construction properties in metropolitan areas with more than 1 million people and “a sophisticated tech presence,” the company said.
W5 Group will lead investment, project development, financing and asset management for the new locations, the company added.