Sonder Landlords Approach Rivals To Take Over Properties

28.03.2024 - 11:55 / skift.com / Srividya Kalyanaraman / Jason Fudin

Short-term rental operators including Kasa Living, Placemakr, and AvantStay are taking over properties managed by Sonder. 

San Francisco-based Kasa Living opened Kasa Gaslamp Quarter in San Diego last week, which used to be a Sonder-operated property, and signed the contract for another in Alexandria, Virginia. 

Kasa Living CEO Roman Pedan said that it has taken over more than five Sonder properties and is in the process of negotiating on more. 

Similarly, Washington D.C.-based Placemakr opened Placemakr Noma last week, which it took over from Sonder. 

Placemakr CEO Jason Fudin said that it’s evaluating more Sonder properties to either operate or purchase. AvantStay is taking over two formerly Sonder-operated buildings in Nashville. 

A Blueground spokesman said that it has been approached by landlords to take over some Sonder lease agreements, and the team is determining whether they make sense for Blueground’s portfolio.

“We are looking at dozens of properties – it’s not an exaggeration – that are currently leased by Sonder,” Fudin said. He added that Placemakr is working with landlords to figure out takeovers, but Placemakr is also interested in buying some of these properties since they’re custom designed to suit short-term rental purposes. 

Pedan and Fudin explained how this has worked: When Sonder approaches the landlord asking for a rent reduction or lease termination, then the landlords approach companies like Kasa and Placemakr to take over. 

Pedan said that Kasa Living has been approached by several landlords as there is a high overlap with Sonder in the markets it operates in. Fudin also noted that Placemakr has also been approached by landlords who are anxious about Sonder’s financial position. 

Sonder previously announced that it would be looking to shed some master lease contracts.

“As we mentioned in our last investor call, we are implementing a portfolio optimization program to address a minority of our properties that are not profitable. This is part of our company goal to deliver sustainable positive free cash flow as soon as possible,” a Sonder spokesperson said in an email to Skift. “At certain properties that no longer meet our brand standards, we have decided to exercise termination rights or exit at the end of our lease. In some cases the owner has found another operator which has different brand standards for their portfolio.”

Sonder’s business model is that it signs long-term leases with apartment buildings and operates the units as short-term rentals. In the recent past, the company has reached out to many of its landlords and asked for lease reductions and early termination as it struggles to curb losses. 

Short-term rental industry veteran Carl Shepherd compared Sonder’s