Adam Neumann, CEO of the recently rebranded We Company, is facing more blowback for leasing he has ownership interest in to WeWork.
Billionaire real estate investor Sam Zell said WeWork’s size gives them “public responsibilities, including governance,” in an interview with Bloomberg television Thursday.
The Equity Group Investments founder was referring to reports that The We Company’s CEO Adam Neumann is still personally buying buildings that are leased to the company’s co-working arm, WeWork, first reported by The Real Deal in March last year.
In that deal, Neumann partnered with fashion designer Elie Tahari to buy a stake in 88 University Place, before leasing it to WeWork.
Neumann is now making millions by leasing properties in which he has an ownership stake back to WeWork, according to a report this week from the Wall Street Journal. He has been expanding his investments, buying multiple properties in San Jose, California, where WeWork has plans for a campus, including a residential section for its WeLive business.
WeWork has defended the deals, saying they were disclosed to investors after being approved by the board and an independent committee. But according to the Journal report, the practice has sparked concern among some investors over potential conflicts of interest.
However, Zell said those deals “would never have occurred if WeWork was a public company and scrutinized accordingly.”
Zell speculated that The We Company might face difficulty in a future market downturn. “I think the last business like this was the savings and loan business,” he told Bloomberg Television, “Am I being too subtle?” [Bloomberg] — Decca Muldowney