Warburg-backed Weave Co-Living inks JV with 32RE, to invest $359m in SG

Weave Co-Living, a co-living rental accommodation provider backed by Warburg Pincus, is entering the Singapore market with a planned investment of S$500 million ($359 million) in a joint venture with property investment manager 32RE to acquire rental accommodation assets in the city-state.

Hong Kong-based Weave will own 80 per cent in the joint venture while the remaining 20 per cent will be held by funds managed by 32RE. The joint venture partners will collectively commit S$150 million ($108 million) of equity, according to a statement.

The development represents Weave’s first foray outside of Hong Kong.

The Singapore JV will initially aim to build a 600-unit, Weave-branded and operated portfolio of properties in the main social and commercial hubs. The first acquisition of the JV is expected to be announced later this year.

After Singapore, Weave also intends to enter Australia, Korea, India and other key markets in the region in the coming year.

“Singapore is a leading commercial gateway city in the Asia Pacific region and we see an enormous opportunity to bring Weave’s flexible, well designed and conveniently located rental accommodation to the city,” said Sachin Doshi, founder and chairman of Weave. He expects to see more opportunities to purchase assets in industries including hospitality, one of the most severely impacted fields during the pandemic period.

In Hong Kong, the company has built a few rental accommodation properties including Weave on Boundary, a 160-unit co-living building in Kowloon, Weave on Baker in Hung Hom, and Weave on Anchor, a brand new property close to Hong Kong’s High-Speed Railway Station which is expected to open in August 2020 with 200 bedrooms.

Weave was founded in 2017 by Sachin Doshi, former Head of Asia Pacific Real Estate at Dutch pension fund APG Asset Management. Unlike most other rental accommodation and co-living operators in the region who have an asset-light business model, Weave is a fully integrated owner and operator of co-living buildings and currently owns over 600 units in Hong Kong alone.

The company appointed Kemmy Sim, former head of operations of Singaporean co-living player Login Apartment, as its Vice President – Operations in Singapore.

The overseas expansion comes as the novel coronavirus pandemic has taken a heavy toll on businesses around the world. Weave saw a decline in the average occupancy rate of one of its Hong Kong co-living locations to 85 per cent in the first quarter of 2020 from 92 per cent in 2019.

This decrease, said Doshi, was partially because many overseas tenants who travelled back to home countries for a new year holiday could not return back to Hong Kong due to travel restrictions imposed to control the spread of the virus.

The company also adjusted its marketing and new customer acquisition plan during this period to target local Hong Kong residents and expats already in Hong Kong. The founder expects the business to recover in the second half of 2020 with “a very strong demand” for co-living services coming in July and August.

But the expansion into an overseas market does not mean business immigration. Weave will “remain committed to the home market of Hong Kong,” said Doshi, despite rising political uncertainties brought by the upcoming implementation of the national security, which has stoked concerns among businesses and investors in the city.

To strengthen its presence in Hong Kong, Weave is planning to build another co-living property on the Hong Kong island later this year. Apart from that, it will also embark on collecting at least $300 million from third-party institutions to acquire more assets in the Hong Kong market in the second half of 2020.

Doshi said that other than the plans to set up a pool of capital to acquire assets in Hong Kong, the company does not have any immediate plans to raise a new funding round at the platform level from external investors because it still has enough dry powder.

It had raised $181 million from Warburg Pincus in November 2018 to help it expand city living offerings across major gateway cities throughout the Asia Pacific. The global private equity major also had an option to upsize the investment to up to $413.5 million.

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