The Real Deal New York

WeBuild? WeWork’s CEO, partners invested $65M in Chelsea dev site

Co-working giant buys debt on Dagowitz's West 23rd Street assemblage
By Konrad Putzier | November 08, 2017 05:23PM

131 West 23rd Street and Adam Neumann

WeWork CEO Adam Neumann just made his second big real estate play in less than a month, acquiring a $65 million mortgage on a Chelsea development site with partners.

Property records filed with the city Wednesday show that a company called Chelsea Realty Capital LLC took over a $65 million mortgage from Bank of America on the assemblage. The firm’s address is 115 West 18th Street, which happens to be WeWork’s headquarters, and WeWork CEO Adam Neumann signed the mortgage document.

A tipster told The Real Deal in recent months that the company toyed with the idea of building a WeLive co-living tower from the ground up on the site, which includes parcels at 123-131 West 23rd Street and 116-120 West 24th Street. It wasn’t immediately clear whether that’s still the plan.

WeWork and the assemblage’s owner, Jeffrey Dagowitz, did not immediately respond to requests for comment.

Dagowitz, who runs the real estate firm JHG Holdings, put together the development site over several years. In January, the developer bought 83,000 square feet of air rights, meaning the owner can develop a building of up to 243,000 square feet, according to the Commercial Observer. The publication noted Dagowitz paid a combined $79.4 million for the parcels and air rights. It wasn’t immediately clear whether the developer will remain a part of the project.

In May 2016, Dagowitz was scheduled to speak on behalf of WeLive and its 110 Wall Street location at a Lower Manhattan community board meeting along with WeWork co-founder Miguel McKelvey, documents show. A source familiar with the project told TRD that Dagowitz was overseeing construction at 110 Wall at the time.

WeWork’s investment comes two weeks after the co-working company and its private equity partner Rhone Group announced the $850 million acquisition of the Lord & Taylor building in Midtown. The two firms, which launched a joint real estate investment fund earlier this year, are also reportedly in talks to buy a London office complex from the Blackstone Group for $785 million.

WeWork, which its latest investors valued at $20 billion, has dabbled in ground-up development before. In 2015, the company partnered with Rudin Management and Boston Properties to build an office building at the Brooklyn Navy Yard’s Dock 72.  The company also briefly partnered with Kushner Companies at its mixed-use development One Journal Square in Jersey City, but ended up exiting the project.