The Daily Dirt: WeWork’s new “ruthless” leader

An analysis of New York's top real estate news

TRD NEW YORK /
Feb.February 05, 2020 02:30 PM
Sandeep Mathrani and, clockwise from left: Marcelo Claure, Adam Neumann, Sebastian Gunningham and Artie Minson (Credit: Getty Images)

Sandeep Mathrani and, clockwise from left: Marcelo Claure, Adam Neumann, Sebastian Gunningham and Artie Minson (Credit: Getty Images)

WeWork has a new CEO. He brings with him an extensive background in real estate.

The co-working company, which long billed itself as a non-traditional office-space firm, just tapped industry veteran Sandeep Mathrani as CEO, David Jeans reports. Mathrani most recently served as the CEO of Brookfield Properties’ retail group, a position he left in January.

Before that, he headed Vornado Realty Trust’s real estate division and was CEO of Chicago-based General Growth Properties. Critically, he helped steer GGP out of the largest real estate bankruptcy in U.S. history, in part by shying away from the company’s traditional mall investments in favor of major retail and office deals.

“It’s someone who has come out of the retail apocalypse and now could navigate out of the Adam apocalypse,” said Dror Poleg, a former adviser to WeWork rival Breather, and the co-chair of the Urban Land Institute’s Technology and Innovation Council in New York.

A former co-worker of Mathrani said his appointment was a “coup” for WeWork.

“He’s very smart, very hardworking,” the person said. “He’s a bit ruthless too.”

Mathrani is taking the helm following a botched IPO, thousands of layoffs, a severe reduction of WeWork’s valuation (from $47 billion to $8 billion) and the sale of its non-core businesses. He’s got his work cut out for him.

Real estate professionals are skeptical of a bill that would give tenants the first shot at buying their building.

Sen. Zellnor Myrie plans to propose a measure that would give tenants the first crack at buying their building once it hits the market. According to Myrie, if the owner and tenants couldn’t agree on a price, an independent appraiser would step in and determine the cost based on the market.

It’s not yet clear how the appraisers would exactly decide on price. Affordable housing developers and advocates for the business community also argue that the bill would need to be accompanied by subsidies in order to be effective, Georgia Kromrei reports. Otherwise, many tenants wouldn’t have the financial capabilities to follow through with such deals. There’s also a steep learning curve for managing a building, some argue.

“If a tenant were to buy a building, it would be good to get experience by working for a building owner or management company,” said Chris Athineos, who owns nine buildings with 150 apartments in Bay Ridge. “You have to know so much, not just about finance and underwriting, but about plumbing and electrical. It’s not just collecting rent.”

What we’re thinking about: Melissa Mark-Viverito, who is running for Congress, unveiled her housing plan on Tuesday, which includes a call for national rent control. What do you think of her proposals? Send a note to [email protected].

CLOSING TIME

Residential: The priciest residential closing recorded Tuesday was for a townhouse at 15 East 90th Street in Carnegie Hill, at $14.3 million.

Commercial: The most expensive commercial closing of the day was for an apartment building at 154 East 29th Street in Kips Bay, at $11 million.

BREAKING GROUND

The largest new building filing of the day was for two eight-unit residential buildings at 103-105 Moore Street in Williamsburg, each of which will span 5,484 square feet. Yaniv Garbo filed the permit application.

NEW TO THE MARKET

The priciest residential listing to hit the market was for a condo unit at 522 West 29th Street in West Chelsea, at $19.8 million. Compass’ James Morgan has the listing. — Research by Mary Diduch

Word of the day

Right of first refusal: A provision in a lease or other agreement that grants a party the first opportunity to pur­chase a property before it is offered to anyone else.

A thing we’ve learned…

During a fourth quarter earnings call, Simon Property Group CEO David Simon assured investors that leasing in the U.K. has not been affected, “even with Brexit, Megxit, whatever you want.” Megxit being, of course, the decision of Prince Harry and Meghan Markle to step back from the royal family and split their time between North America and the U.K. Not exactly clear how Megxit would impact Simon’s bottom line, but thank you to Kevin Sun, who listened in on the call.

Elsewhere in New York

— The MTA is considering ways to ease the commutes of late-shift New Yorkers, The City reports. The agency is considering a partnership with ride-hailing services like Uber and Lyft to provide overnight transportation in areas half-mile from the nearest “transit station” or that have limited or no overnight bus service.

— Last February, an escalator at the Fifth Avenue and 53rd Street subway station terrified commuters when it ripped apart. The incident could’ve been avoided, the New York Post reports, but the MTA failed to perform months of scheduled maintenance on the machine.

— Michael Bloomberg plans to double his spending on ads and grow his campaign’s field staff to more than 2,000 people, according to the New York Times. The former mayor reportedly feels emboldened by the confusion surrounding the Iowa caucuses.


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