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The deal follows a string of consolidations in the co-living space, with notable acquisitions including Starcity’s purchase of Ollie, another co-living startup, in an all-stock deal in December 2020, and Habyt’s acquisition of Quarters in March 2021.
“We’re now the largest co-living operator in the United States, possibly in the world so we’re actively looking to continue to grow,” said Common CEO Brad Hargreaves. “One of the things that made Starcity very appealing was the majority of its buildings were under management contracts.”
The acquisition is of select management agreements, and not Starcity’s development portfolio. The deal came after Starcity CEO Jon Dishotsky approached Common regarding the company acquiring its management assets about three weeks ago, Hargreaves said.
Common, which offers co-living and traditional units and acts as a property manager, is not disclosing the acquisition price. The company intends to retain the majority of Starcity’s team, Hargreaves said.
Starcity operates co-living spaces in parts of California, New York and Barcelona. One part of its business was tech-enabled property management, while the other part was building housing supply. The company’s largest co-living project, which was planned for San Jose, was put on hold due to litigation, according to the San Francisco Business Times. Starcity raised at least $51.3 million in funding from investors including Bullpen Capital and Deciens Capital. It last raised money with a $30 million Series B in April 2020, per Crunchbase.
“We were essentially building two businesses at once, and that was a bet that was working extraordinarily well until the pandemic hit,” Dishotsky said in an interview with Crunchbase News.
The company focused on its operations during the pandemic as the capital markets for real estate “froze out.” But coming out of the pandemic, Starcity had to consider what the business should look like, and the company realized the bet to address housing supply creation wasn’t going to pan out, according to Dishotsky.
“With any startup you take certain bets and they pay off, and then the macroeconomic climate can change certain things,” Dishotsky said. “The bet we really cared about was resident experience, innovative design, the cost of living coming down over time, so a lot of those values are the same as Common.”
Common had a “winning formula,” Dishotsky said. He will be joining the company and work in business development. Starcity will likely end up selling off its real estate assets.
Common will be expanding into Europe — something it was planning to do last summer before the pandemic hit — and Starcity’s presence in Spain will help bolster that effort. Common currently has more than 6,400 units under management, with more than 26,000 units signed and under development. The company will have 14,000 units under management by the end of the year, according to Common.
Illustration: Dom Guzman
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