WeWork sued for backing out of San Francisco development deal
The 3,000-unit Parkmerced complex was to be the site of WeWork’s WeLive initiative
An investor in San Francisco’s largest residential complex is suing WeWork for abandoning its development plans and backing out of a pledge to invest $450 million.
The development at Parkmerced — which plaintiffs allege lost a year in closing additional investments, Bloomberg reported — was intended to showcase WeWork’s WeLive initiative, featuring amenities like media rooms, hot tubs, and offering happy hours and yoga classes. The plaintiff, Parkmerced Investors LLC, is seeking at least $100 million in damages.
The legal struggle is the second in as many months between the two parties. In March, WeWork sued Parkmerced’s developer, Maximus Real Estate Partners, for not returning a $20 million “exclusivity fee” as part of the botched development deal.
Adam Neumann, WeWork’s co-founder and former CEO, told Maximus Real Estate in 2015 that WeWork would one day “be bigger than Apple,” and he wanted in on the Parkmerced investment, according to Thursday’s court filings. In 2018, WeWork agreed to pay $275 million at closing and $175 millon six months later, but later backed out of the deal, Parkmerced Investors alleged.
The Parkmerced complex has also had its share of difficulty in recent months — the 3,000-unit apartment community, which is the largest multifamily property in San Francisco and the second largest multifamily property west of the Mississippi River, requested forbearance on its nearly $1 billion mortgage due to coronavirus-related financial hardship.
WeWork’s parent SoftBank has been in turmoil of late, but despite reporting record losses, doubled the compensation of its Vision Fund chief, Rajeev Misra. The conglomerate also moved two of the vision fund’s managing partners to senior advisory roles. [Bloomberg] — Georgia Kromrei
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