It’s official: WeWork isn’t going public this year.
Last week, the co-working giant was turned inside out. CEO Adam Neumann stepped down, agreeing to move to a non-executive chairman position. Several top executives also left and reports surfaced of impending mass layoffs.
And Monday, with the dust still unsettled, the company pulled its plans to go public. Co-CEOs Artie Minson and Sebastian Gunningham, said in a statement that they “decided to postpone our IPO to focus on our core business,” David Jeans reports. The two executives said they still plan to go public eventually but didn’t commit to a timeline.
Looking ahead, the company will need to reassure landlords that working with it is a good idea. After initially halting all new leases, WeWork indicated last week that it expects the pace of new lease agreements to slow over the next year. But WeWork may not have a ton of control over leasing volume.
“WeWork has got to rework its whole position in the marketplace,” Scott Rechler, CEO of RXR Realty, told the Wall Street Journal. “Because if they don’t, landlords aren’t going to be comfortable doing deals with them.”
Coming from Rechler, that’s telling. Earlier this year RXR bet big on WeWork, inking a revenue-sharing agreement in which the co-working firm would manage 90,000 square feet at 75 Rockefeller Plaza.
Not only is WeWork faced with rebuilding its image, it’s running out of money. The company has at least $47 billion in outstanding lease commitments to landlords over the next 10 to 15 years. As of June, the company had $2.5 billion on hand. At the rate it’s been burning through cash, it is expected to run out by the spring.
WeWork has started taking steps to cut costs and is reportedly in talks to raise funds from private investors. And Bloomberg reported on Friday that Softbank is expected to tap former Sprint CEO Marcelo Claure to help right the ship. The real estate world is watching to see if WeWork’s new leadership can keep the train on the tracks.
What we’re thinking about next: Who will replace Seth Pinsky at RXR?! Send a note to [email protected]
Residential: The priciest residential closing recorded on Monday was for a condo unit at 170 East End in Yorkville, at $5.2 million. Commercial: The most expensive commercial closing of the day was for a hotel at 52 West 36th Street in Midtown, at $85.5 million.
The largest new building filing of the day was for a 286,274-square-foot mixed-used building at 72-17 Queens Boulevard in Woodside. The Hakimian Organization filed the permit application.
NEW TO THE MARKET
The priciest residential listing to hit the market was for a condo unit at 635 West 42nd Street in Hell’s Kitchen, at $22.5 million. River2River Realty’s Dan Neiditch has the listing. — Research by Mary Diduch
A thing we’ve learned…
The legal term “actual fraud” relies on the “five fingers of fraud,” namely (1) misrepresentation; (2) fraudulent intent; (3) intent to induce reliance; (4) justifiable reliance; and (5) damage. Thank you to Kevin Sun, who discovered this phrase while searching through bankruptcy filings.
Top stories from our other markets:
Blackstone is doubling down on its e-commerce bet with another multibillion dollar industrial portfolio deal. The company is buying Colony Capital’s national warehouse portfolio for $5.9 billion, according to the Wall Street Journal. The portfolio Colony sold to Blackstone spans 60 million square feet across 465 warehouses in 26 markets. Areas of strong concentration include northern New Jersey, California, Florida, Dallas and Atlanta.
A former presidential bodyguard is leading the holdouts in Chicago’s second-longest strike ever. For over a year, Sam Yolo, a former bodyguard for the Nigerian president, along with 28 other hotel workers, have been on strike at the Cambria Chicago Magnificent Mile hotel, according to a report in the Chicago-Sun Times. Each day, they march outside the hotel on Superior Street for eight hours to demand higher pay and year-round health coverage.
Nearly five years after Equity Residential proposed a 428-unit tower, new renderings show the project is slightly scaled back. Like many recent large residential developments in Downtown L.A., the 31-story tower — dubbed 4th and Hill — is a podium design. In addition to the apartments, plans also call for 5,610 square feet of ground floor retail space, according to Urbanize, which first reported the updated design.
Developer Ari Pearl just closed on a $100 million loan to develop the first phase of a major mixed-use project in Hallandale Beach. Pearl’s PPG Development and Michael Herman’s Premium Capital secured the financing from the Related Cos.’ Related Fund Management, said Faisal Ashraf, managing partner of Lotus Capital Partners. Lotus arranged the financing, which has a five-year term. Construction will begin soon.