In what would be one of the more surprising comebacks in recent real estate history, Adam Neumann could soon be back in the saddle at WeWork.
Neumann’s been working behind the scenes for several months to purchase the beleaguered co-working company, the New York Times’ DealBook newsletter reported. Yesterday, his lawyers fired off a letter to the company’s advisers, calling on them to consider a takeover bid as WeWork stonewalls Flow, at least in the eyes of the latter.
Flow, Neumann’s latest venture, is looking to buy either WeWork or its assets. The company is willing to provide financing to keep WeWork going as it winds through Chapter 11 bankruptcy.
WeWork’s financial struggles — which have forced the company to shed leases in a bid to make it through a bankruptcy case ongoing since the fall — means the company could be had for scraps compared to its once lofty $47 billion valuation, which plummeted after Neumann’s exit. Some experts told DealBook the company could be sold for as little as $500 million, a fraction of its debt (at least $4 billion).
Neumann and Flow haven’t publicly disclosed how much they would bid on WeWork, but they did reveal the source of financing: hedge fund manager Dan Loeb of Third Point.
For WeWork to be sold to Neumann, its shareholders would have to buy into the idea that its former leader, who shoulders much of the blame for a failed IPO, is the right person to helm the co-working company, which has seen recent upheaval in the C-suite.
This isn’t Neumann’s first attempt at seizing WeWork back. Slightly more than a year ago, he sought up to $1 billion in financing to help stabilize the company, according to his lawyer’s recent letter. That process went nowhere.
Despite not yet officially launching, Neumann’s Flow is already facing some setbacks.
Last month, two properties billed for the venture and joint-owned by Yieldstreet were the subject of crowdfunding campaigns after facing cash flow deficits. Flow is backed by venture capital firm Andreessen Horowitz and is an attempt to “revolutionize” residential real estate, though the strategy at one of the two properties appears more reminiscent of syndicators’ strategies to pool funds, purchase properties with floating-rate debt, renovate, and then raise rents.
— Holden Walter-Warner\
This article has been updated to clarify the ownership structure of the two cash-strapped properties joint-owned by Flow.
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